Dr. Burt Folsom wrote a book called The Myth of The Robber Barons and he has given several talks about the contents of his book. The talk I watched was mostly a case study on instances where "robber barons" were able to outcompete companies sponsored by government subsidies. About half the talk was the story of how Vanderbilt, the person, not the school, was able to outcompete a steamboat business that received millions in subsidies. He did this by entrepreneurship and innovation, creating new and better ways to make money. The other company did not have to rely on having a good product to stay in business, so they sucked at shipping people across the Atlantic. There was another story about how much better a privately funded transcontinental railroad was that the infamous government sponsored version. Dr. Folsom really drove at the point that businesses that exist because of government subsidies are more often than not bad companies. They are not incentivized to innovate, but instead are incentivized to fulfil the terms of the subsidy as loosely as possible. In the case of the railroad, this led to poorly built lines with many extra miles and sabotage of competitors. Dr. Folsom also highlighted the success of the unsubsidized companies, who innovated and ran their businesses responsibly and had much greater contributions to society without spending tax dollars. These points were made very well and very clearly. It is easy to see through these case studies that subsides create bad incentives and are not even needed since privately funded options can provide the service so much better. However, after the talk was over, I was left unsure what the actual "Myth of the Robber Barons" was. Clearly, Vanderbilt, a robber baron, had great self funded success in the steamboat industry, but I am having a hard time nailing down the point Dr. Folsom is getting at in his title.
Dr. Folsom could be talking about how robber barons were not real, though I do not think anyone believes that. He could be trying to say that they were good for society, which you could get from his arguments and the cases he talked about. However, I fail to be convinced that having robber barons is a net positive on society simply because they were wealthy enough to outcompete even the companies which had the financial backing of the government. As much as that is a testament to their wealth and entrepreneurship skills, it leaves out too many factors to consider their net benefit to society. I think the point that Dr. Folsom was most likely trying to get at is breaking down the myth that robber barons were only able to exist because of major lobbying and government corruption. A common view in history books is that much of the success of the robber barons came from massive lobbying efforts that led to government to support them with anti-competitive policy. However, Dr. Folsom points out that even when the government backed other companies, the robber baron's businesses were not only able to exist, but were able to thrive and beat out competition.
