Message to Barack Obama: Why My Family Business Left Chicago

Back in May, Steve Sailer quoted the following from Barack Obama’s autobiography, Dreams From My Father:

As we walked back to the car, we passed a small clothing store full of cheap dresses and brightly colored sweaters, two aging white mannequins now painted black in the window. The store was poorly lit, but toward the back I could make out the figure of a young Korean woman sewing by hand as a child slept beside her.

The scene took me back to my childhood, back to the markets of Indonesia: the hawkers, the leather workers, the old women chewing betelnut and swatting flies off their fruit with whisk brooms. I’d always taken such markets for granted, part of the natural order of things. Now, though, as I thought about Altgeld and Rose-land, Rafiq and Mr. Foster, I saw those Djakarta markets for what they were: fragile, precious things. The people who sold their goods there might have been poor, poorer even than folks out in Altgeld. They hauled fifty pounds of firewood on their backs every day, they ate little, they died young. And yet for all that poverty, there remained in their lives a discernible order, a tapestry of trading routes and middlemen, bribes to pay and customs to observe, the habits of a generation played out every day beneath the bargaining and the noise and the swirling dust. It was the absence of such coherence that made a place like Altgeld so desperate, I thought to myself; it was that loss of order that had made both Rafiq and Mr. Foster, in their own ways, so bitter. For how could we go about stitching a culture back together once it was torn? How long might it take in this land of dollars?

Longer than it took a culture to unravel, I suspected. I tried to imagine the Indonesian workers who were now making their way to the sorts of factories that had once sat along the banks of the Calumet River, joining the ranks of wage labor to assemble the radios and sneakers that sold on Michigan Avenue. I imagined those same Indonesian workers ten, twenty years from now, when their factories would have closed down, a consequence of new technology or lower wages in some other part of the globe. And then the bitter discovery that their markets have vanished; that they no longer remember how to weave their own baskets or carve their own furniture or grow their own food; that even if they remember such craft, the forests that gave them wood are now owned by timber interests, the baskets they once wove have been replaced by more durable plastics. The very existence of the factories, the timber interests, the plastics manufacturer, will have rendered their culture obsolete; the values of hard work and individual initiative turn out to have depended on a system of belief that’s been scrambled by migration and urbanization and imported TV reruns. Some of them would prosper in this new order. Some would move to America. And the others, the millions left behind in Djakarta, or Lagos, or the West Bank, they would settle into their own Altgeld Gardens, into a deeper despair

His phrase of “once sat along the banks of the Calumet River” brought back to my mind something that changed my own life very deeply: the fact that my family business, the Vulcan Iron Works, left Chicago after 108 years there.  The reason why that took place, and the effect of an Obama presidency would have both on events such as that and our whole economic paradigm, is something that needs to be discussed this election year, because the value of his promise to “fix” the economy depends upon how he means the word “fix.”

It’s interesting to note that this year’s Democrat nominating race turned into a Chicago “cross-town” rivalry.  Hillary Clinton was always introduced as the “Senator from New York,” but in reality she’s a product of North Side Chicago suburbia, opposing a South Side Barack Obama.  It’s been a long time since the Windy City took such centre stage, but it has.  Both Clinton and Obama are disciples of Chicago community organiser and radical Saul Alinsky.  So a Chicago story like this has relevance.

My great-great-grandfather founded Vulcan in 1852.  You can see that story here, but by the time the company reached its centennial it had already relocated to the plant you see at the right.  By that time it had participated in the American success story by its manufacture of pile driving equipment.  It had its ups and downs, but the Warrington family’s aversion to debt helped to get it through the 1930’s.  It had both supported and benefited from World War II and entered its second century looking towards the future with promise, and no immediate plans to leave the city it had called home for a hundred years.

Why, then, did it leave only eight years later?  At its simplest, there are two reasons.

The first related to the changes in American industry in general and Vulcan’s market in particular.  Until World War II Vulcan was the model of vertical integration.  It had its own foundry and pattern shop; it even generated its own power.  Vertical integration, especially for a company as small as Vulcan, has become progressively more and more impractical as the sophistication of the industrial and economic base has developed.  Loosening vertical integration makes location a more flexible business if suppliers can be found in a wider variety of places.  That in turn depends upon a reasonable transportation and communication infrastructure.

The transportation part helped Vulcan in many ways, because the beginning of the Interstate Highway System (promoted by, among others, Al Gore Sr.,) coupled with postwar demand, initiated a boom for Vulcan’s product, not only in quantity but also in size.  More and larger hammers pushed the facility’s capacity to the limit, and the size trend was pushed upward further by the nascent offshore oil industry (another bête noire of Obama and his liberal friends.)  So the facility became inadequate for its task.

The second related to Vulcan’s labour situation.  Vulcan’s workforce had a trade union, and trade unions played a larger role in the 1950’s than they do now.  They were able to take advantage of the postwar boom to push wages up and help flatten the income distribution.  In Vulcan’s case, however, labour costs were never a large component of its cost structure relative to other industries.  Vulcan’s workforce, far from an unskilled, low-wage group, was for the most part skilled.

The problem Vulcan found getting progressively worse were the non-economic objectives of trade unions: the end of employment at will and assuming control of the shop floor through work rules and the classification system.  Once this takes place, it is very difficult to either eliminate inefficiencies or make structural changes in response to changed business conditions.  As the decade progressed, the inefficiencies of the operation (coupled with the inefficiencies of the facility itself) made it progressively less profitable, and management found itself unable to increase that efficiency.

Something had to give, and give it finally did.  In 1960 Vulcan moved its operations to Chattanooga, TN, to a more modern and efficient facility.  Part of that motivation concerned the economic electric power wrought by that great New Deal “Colossus of Socialism,” the Tennessee Valley Authority.  Another part was the generally high cost of doing business in Chicago.  The move itself, however, brings up two important points.

The first is that, as Obama mentioned in the quote above, we usually think of moving a manufacturing operation in terms of moving it from the U.S. to a Third World country.  But in the 1960’s and 1970’s the “third world country” of choice for “Rust Belt” operations was the Old Confederacy.  Had Obama’s fellow Ilinoisan Abraham Lincoln opted out of forcibly returning the Confederate states to the Union, it would have made such a transition more difficult.  But unintended consequences are the stuff that history is made of.

The second is that Vulcan’s move to Chattanooga was helpful in many ways but not an unalloyed success, owing to the peculiarities of the region it moved into.  These peculiarities haunt both Obama’s liberalism and John McCain’s “Theodore Roosevelt” conservatism.  But such are the nature of corporate decisions: management makes them and management must live with the consequences, especially when management is made up of the corporation’s principals.

However, in a world where the state explicitly enforces the perpetuation of “traditional” society–necessary to prevent the problems that Obama describes in the quote above–corporations will lose the power to make such decisions.  They will be forced to perpetuate operations such as Vulcan’s in Chicago in the manner they’ve been operated until the company is forced to close them without a sequel or face nationalisation, which only stalls the inevitable.

And such “traditional” societies have a strong appeal to Obama’s latté liberal core constituency, not only for purely sentimental reasons (the loss of a way of life, the lamenting of which drove Obama’s mother for so many years) but also because such societies favour the perpetuation of established elites, be those elites hereditary aristocracies or bureaucracy-ensconced mandarins.  And, to be honest, such a scenario has a strong appeal to the end product of multi-generational success like myself.

But I know that this kind of economic management would destroy the dynamism that has made this country great, even if it doesn’t suit my personal sentiments.  As my grandfather explained on the occasion of Vulcan’s centennial:

The occasion is somewhat of a story of one man from England, who came to this country, then to Chicago in 1847, worked hard and built a successful industry. We have heard such stories many times before. The one about the Detroit mechanic who put a nation on wheels. One about the brooding genius from Milan, Ohio who heated carbon filaments with electricity to produce the most brilliant illumination man had known. One about two bicycle mechanics of Dayton who were obsessed with the idea that man could fly.

We read them in school books, reread them in newspapers and magazines. We got a bit bored with success. Where, doubters asked, had it gotten us. We forgot too readily that these stories were the very fabric of America, a living history of events which built a great nation. We forget that they made us materially wealthy — that they furnished the means with which to nourish a precious heritage of liberty. They and countless others, before and after them, inspired and inspiring the precepts and philosophy of a great and growing era of free enterprise.

For all of the crises that we face in the U.S. today, with receding dollar hegemony and wealth sinking into ratholes of debt, slowing down the economy to preserve a romantic ideal–and the established authorities that rule over it–is a recipe for disaster.

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