Heroes of Capitalism
by Doug French by Doug French
Doug French was the “Mystery Speaker” at the 2006 Mises University.
Given the conditions here in Auburn, I think it appropriate that we honor a man who is critical to Mises University. A guy named Willis Haviland Carrier. No, he wasn’t an Austrian Economist, but he is recognized as the "father of air conditioning". Although he didn’t invent the very first air conditioner, his system was the first truly successful one that is today modern air conditioning.
Carrier and six other engineers formed the Carrier Engineering Corporation in 1915 with starting capital of $35,000 (today’s equivalent would be about $650,000). Last year, the company’s sales topped $12.5 billion and employed 45,000 employees.
In 1924, Carrier installed a cooling system in the J.L. Hudson Department Store in Detroit, Michigan. Shoppers flocked to the store. The boom in cooling spread to theaters, restaurants and shopping malls.
Four years later, Carrier developed the first residential air conditioner.
Willis Haviland Carrier made a huge difference in many peoples’ lives, people that have never heard of him. Can you imagine Mises University in August in Auburn without it? Would millions of people be moving to Phoenix and Las Vegas without air conditioning?
But, that’s what great entrepreneurs do: make people’s lives better and most of time they receive little or no credit.
In fact, the public’s image of entrepreneurs and businessmen as mean, conniving, miserly, greedy crooks has been shaped from the time of Charles Dickens’s Ebenezer Scrooge to the modern day Michael Douglas character, Gordon Gekko, in the movie Wall Street.
This image essentially puts a face to the Marxist class struggle theory. According to the theory, “the primary form of exploitation is economic." The ruling class expropriates part of the productive output of the exploited or, as Marxists say, "it appropriates a social surplus product and uses it for its own consumptive purposes.”
Of course, the negative stereotype of businessmen is as false as Marxist theory itself. While millions have, and continue to, suffer under Marxist or socialist economic regimes, entrepreneurs at work in the capitalist world invest capital, organize resources, develop new products, create jobs and make the world a better place for the millions that are affected by their energy and vision.
“The vehicle of economic progress,” wrote Ludwig von Mises in Human Action, “is the accumulation of additional capital goods by means of saving and improvement in technological methods of production the execution of which is almost always conditioned by the availability of new capital. The agents of progress are the promoting entrepreneurs, intent upon profiting by means of adjusting the conduct of affairs to the best possible satisfaction of the consumers. In the performance of their projects for the realization of progress they are bound to share the benefits derived from progress with the workers and also with a part of the capitalists and landowners and to increase the portion allotted to these people step by step until their own share melts away entirely.”
Ron Yanke was an entrepreneur who touched the lives of thousands. He died a couple years ago in Boise Idaho. Yanke grew up working in his father’s machine shop and took over the family business in 1973 upon his father’s passing. Yanke Machine Shop is now in its 64th year in business, serving contractors, mining companies and the forestry industry. Speaking at Yanke’s funeral service, Tom Nicholson, Yanke’s friend of 55 years, mentioned a number of machine shop employees who had worked for the business for over 50 years. Nicholson told the hundreds in attendance that Yanke would “do anything for any employee,” and that in turn, “the employees would walk through fire for him.”
The machine shop business was just the beginning for Yanke. He owned two sawmills in Montana, a charter air service company, and a company that manufacturers firefighting equipment. He was also a rancher and owned vast amounts of timberland in the western United States as well as owning and developing a number of other real estate projects. Yanke held significant ownership interests in a mechanical contracting firm, a manufactured housing firm and two banks.
But, Yanke is best known for being one of the three original investors in Micron Technology, the second-largest memory chip manufacturer in the world and the largest private-sector employer in Idaho. Yanke, along with Nicholson and another friend Allen Noble, funded brothers Ward and Joe Parkinson who started Micron in 1978 in the basement of a dentist’s office. As Ward Parkinson told Idaho Statesman reporter Julie Howard, “There wouldn’t be a Micron if it wasn’t for Ron.”
From those humble beginnings, Micron stock is now traded on the New York Stock Exchange and the company has $8 billion in assets, $5.8 billion in shareholder equity and employs nearly 19,000 employees worldwide.
Reverend James Wilson told those at the Yanke funeral that there was “not a mean bone in Ron Yanke’s body,” and described him as a “gentleman” in the true sense of the word — “a gentle man.” Friend Jim Nelson told those assembled that Yanke was the “hardest worker anyone had ever seen,” and “the hardest player anyone had ever seen.”
Nicholson amplified that point, telling the crowd that Yanke had one speed for both work and play — peddle to the metal.
Despite being a man with considerable wealth, Yanke’s tastes were not expensive. Yanke was a big supporter of the Boise State University football program, and would allow the coaches to use his airplane for recruiting trips. However, to attend bank board meetings once a month in Las Vegas, Yanke, Son-in-law Bryan Norby and Tom Nicholson would fly Southwest Airlines, with lunch after board meetings being at the soup-and-salad bar in a small local casino.
The Boise media never mentioned Ron Yanke’s investment in a community bank located in southern Nevada. In relation to Micron and some of his other businesses, the bank is probably too small to merit mention. But, just as in the case of Micron, there wouldn’t be a Silver State Bank if it wasn’t for Ron. Yanke and Nicholson invested $5 million to start the bank 10 years ago. Today the bank has $1 billion in assets and employs 190 people.
As one of those employees, I thank my lucky stars for Ron Yanke and his friend Tom Nicholson for the opportunities they have created for me. If it were not for people like Ron Yanke, the world would not only be a poorer place but an emptier place. There will never be another Ron Yanke and very few like him. As Jim Nelson said at Ron’s funeral, “God doesn’t make too many like Ron Yanke. They are too complicated.”
Ronald Yanke was a big man, with a larger than life personality. It’s been said that he never had a bad day, and you should believe it. The only other person I have been around who was as constantly cheerful as Yanke was a person near and dear to my heart: Murray Rothbard.
Of course everyone in this room knows of Murray Rothbard and a few of us knew him personally. I’m proud to say I am one of those people.
After moving to Las Vegas in 1986, I decided to go back to school and pursue a Masters degree in Economics in the fall of 1989 at UNLV. Why economics? I minored in the subject as an undergrad and kind of liked it. But, at the time MBA degrees were all the rage (probably still are), and I was advised that an MBA would be better for my career, but I decided on economics anyway.
By the fall of 1990, I had taken 12 hours worth of Masters’ courses and was trying desperately to stay away from statistics and econometrics classes. I spotted “History of Economic Thought” with Rothbard as the instructor in the UNLV course catalog and thought — perfect!
But, when I mentioned to one of my classmates that I would be taking the course with Rothbard, he strongly advised against it, contending that Rothbard was “a kook.” He said I should take the course independent study with another professor.
I didn’t know who Murray was, or what Austrian Economics was, nor had I heard of the term Libertarian. But, since I worked all day and took classes at night I didn’t have time to hassle with lining up an instructor for independent study so I went ahead and took Rothbard.
The first night of class, Murray hit the door and was already talking (like he had started his lecture out in the hallway) about dumb politicians threatening the evil oil companies that were raising gas prices (some things never change). From that thought, he just continued right into his History of Economic Thought lecture. He didn’t take roll, or hand out a syllabus. Murray didn’t have time for that; he had centuries of history to cover.
So the 8 or 10 of us in the class furiously took notes trying to keep up. I didn’t know it at the time, but only half of us were taking the class for credit, the other half were just auditing the course, having taken it previously for credit. Murray changed his History of Thought lectures each semester, so students took it as often as it was offered. In the fall of 1990, the course had a financial history emphasis. In fact if you want to read the notes to Murray’s History of Economic Thought class, read his An Austrian Perspective on the History of Economic Thought (2 Vol. Set).
As Murray launched into his opening lecture for ECO 742, I knew that this was economics the way it should be taught. Forget the graphs, equations and other nonsense I’d endured my first two semesters; this was: good guys vs. bad guys, human action stories told at the pace of a Robin Williams monolog, punctuated with the occasional cackle and a dozen or so reading references a night — book title, author, year published, and usually the publisher name.
I also took Murray for US Economic History the following semester. But, I still didn’t know Murray at all. The only time we spoke was one night when there was a bomb scare at Beem Hall where our classroom and the school of business instructors’ offices were housed. Not being able to enter the building I went to the student union and saw Murray sitting with one of my classmates. I asked what was going on, and Murray mentioned the bomb scare. I sardonically suggested to him; “We should send some underclassman in there to find it.” “I like the way you think, Douglas,” Murray shot back, cackling.
At this point I needed to decide whether to take a comprehensive test to complete my Masters or write a thesis. I was actually leaning toward the testing route but someone thankfully talked me into writing a thesis.
But, other than the bomb scare conversation and taking him for two classes, I still really didn’t know Murray all that well and wasn’t comfortable asking him to be my thesis advisor.
But when another instructor turned me down, I then went to Murray and re-introduced myself. I asked if he would be my thesis advisor and proposed a subject. Murray welcomed me with open arms. He proceeded to rattle off about 20 sources on speculative bubbles to get me started and away we went.
I was very lucky that the “Theory and Policy track” was still available in the Economics Masters degree program. I believe that I was the last student to graduate via that program. Subsequent to my graduation, the economics department graduate coordinator and others managed to dump the “Theory and Policy Track” to keep students from coming to UNLV to study under Murray and Hans Hoppe.
I got to know Murray during the researching and writing of my thesis. But, I really still didn’t realize his greatness. To me he was just a good guy. He called me "the efficient banker" because I became fairly adept at getting approval forms signed by the various authorities inside and outside the department and providing copies of my paper for committee members as it progressed.
Over time I realized how brilliant he was. As a banker, I meet a lot of people — other bankers, customers, regulators, etc. who think they are brilliant, and are anything but (especially regulators). They constantly work at convincing you that they know everything. And anyone who has made millions in real estate, well, they really think they know it all.
Murray was a guy who actually did know everything — but he didn’t act like it. He was never pompous, nor did he ever talk down to me or anyone else that I know of.
When I asked him a question he would start his answer almost humbly with “Well, in my view…”
He didn’t act like he had all the answers…but he did.
As for his professional stature, I didn’t have a sense of it until I attended a Mises conference at Stanford. When I told some people I was from Las Vegas and studied under Murray these folks proceeded to beg me for my class notes.
Of course Murray was a walking bibliography. Every time I would meet with him he would give me more sources for my project. He provided not just the title, but author, publisher and often the year published. I can’t imagine having a better thesis advisor. But, perhaps Murray’s best advice concerned my writing. My initial drafts were very wordy, with long complicated sentences. Murray told me, “If you want to learn how to write well, read H.L. Mencken. Start with A Mencken Chrestomathy.”
However the UNLV economics Department Chair, Dr. Thayer didn’t give Murray high marks for his 1991 annual evaluation. Although the chairman rated Murray satisfactory in the area of teaching, he criticized Murray for having “only limited contact with most economics students.” Incredibly, in the area of “Scholarly Research or Creative Activity” Thayer wrote; “Professor Rothbard’s performance in the area of professional growth has been disappointing.” Thayer also wrote that Murray was disappointing in the area of “Service.”
Chairman Thayer gave Murray an overall Satisfactory rating, but concluded his evaluation with: “Also, we expect professor Rothbard to participate in departmental affairs, to teach more students, to be available as a role model for junior faculty.”
As one would expect, Murray blasted Thayer with a 3,000 word “comment” calling Chairman Thayer’s evaluation an “outrage.” Murray pointed out 11 of his scholarly accomplishments for 1991 that for some reason Thayer had overlooked.
Commenting on Thayer’s rating him disappointing for service, Murray wrote:
In the economics department, I have attended and participated in all department meetings, and I have not refused appointment to any department committees. I don’t know what Chairman Thayer means by “seldom participating in the daily life of the department.” Teaching courses, advising students, keeping office hours, attending department meetings: what other “daily life” am I supposed to be missing?
The only clue in Chairman Thayer’s remarks is that I am supposed to be “available as a role model for Junior faculty.” Apart from wondering why Mr. Thayer should possibly want someone of “limited professional growth,” to serve as a “role model” I must say that the best way someone, including myself, can so serve, is to be allowed to go about his business as a scholar and teacher without being subject to harassment.
Along with Chairman Thayer, the Graduate Coordinator Tom Carroll was also antagonistic towards Murray and his students. After I subjected my committee and the others who attended my torturous 90 minute thesis defense, Murray handed me a sarcastic memo that Carroll had circulated to the economics department faculty.
On Thursday, April 2, at 3:00 PM, Doug French will defend his thesis in room 518. Since he has not shared his thesis topic with me, you will have to learn that on Thursday. As far as I know, his committee consists of Murray Rothbard, Hans Hoppe and Terry Ridgway. Nevertheless, all graduate faculty from the department are permitted to attend the presentation, ask questions, and to make recommendations to the candidate’s committee.
Of course the idea that Carroll, as Graduate Coordinator, didn’t know what my topic was, or who was on my committee was complete nonsense. He signed off on my Thesis Prospectus form on October 2, 1991 approving my topic, and signed my Appointment of Examination Committee form on November 21, 1991 approving my committee members.
Carroll’s memo clearly bothered Murray, but he didn’t want me upset so he didn’t show it to me until after I had completed my defense. Also, I remember being quite apprehensive as the day for my thesis defense approached, knowing that all graduate economics department faculty were invited. Trying to quell my fears, Murray told me, “don’t worry, you know more about bubbles than anyone in the room.”
Murray’s mentoring didn’t stop when I completed my thesis and graduated. I moved to Reno, but we stayed in touch by mail.
Murray encouraged me to take the part of my thesis that dealt with Tulipmania and submit it as an article for publication in various mainstream economics journals. He felt that I had a good chance for publication, believing that I had made, as he put it, “a contribution.” However, none of the seven or eight economics journals I tried shared Murray’s view.
In a December 1992 letter Murray wrote:
Your experience with the journals reminds me that every time I’ve been rejected by a scholarly journal, I’ve been infuriated, not because of the rejection, but because the referees all seemed to be a pack of morons who missed the point of the article. Hence, I rarely submit stuff to the journals anymore.
But, Murray wanted me to continue trying and mentioned three other journals to submit to.
A year latter Murray wrote:
That’s monstrous about these rejections; I might have told you that I’ve never received a rejection letter that furthered the alleged purpose of offering helpful criticisms, and I guess it’s still a perfect record. If you haven’t tried Economic Inquiry, and the Southern Economic Journal, you might try them, if Journal of MCB turns it down. I f all else fails, don’t forget the Review of Austrian Economics, which will certainly be receptive.
I was back in Las Vegas in December 1994, and went to see Murray. I waited over an hour for him to show up for his office hours. I gave up and took the elevator down to leave. But, as the elevator doors opened on the ground floor, there he was on his way to his office. We chatted for a while before he had to give one of his finals and (as was his custom) catch the red-eye to New York that night after grading all of his final exams and term papers.
I told Murray about a Liberty Magazine conference that I had attended that fall and a talk given by Bill Bradford entitled “Why Libertarians Love to Hate.” The speech was about Ayn Rand and Murray. Murray howled with laughter when I told him about it. I had ordered a tape of Bradford’s talk and we made plans to get together after he returned from New York to listen to it — what fun that would have been.
Unfortunately that’s a laugh we were never able to share.
These gentlemen I talked about today have had and continue to influence lives even after their deaths. And that is true greatness.
Meanwhile, the mainstream press is gushing over Warren Buffett’s $31 billion contribution to the Bill & Melinda Gates Foundation. Although being very astute at accumulating wealth, now these two wish to bask in the glow of world wide praise, solving problems that their money is not needed to solve.
Gates says he and Buffett are looking at problems that the free market cannot or will not solve and Buffett claims; the market system has not worked in terms of poor people.
I agree with Doug Casey, who in his International Speculator newsletter calls Gates and Buffet "Idiot Savants", that they are anti-capitalistic, limousine-liberals.
Buffett is pro-high property taxes and along with Bill’s dad supports taxing the dead.
The Gates Foundation focuses on world health and on improving U.S. libraries and high schools. Ironically, one disease that the Foundation focuses on is malaria. But Lew Rockwell wrote a couple weeks that there is already a cure for Malaria, DDT: and the government has banned it. Improving high schools? Again, get government out of the education business and that will be fixed.
Gates and Buffett should continue to do what they do best: make money and accumulate capital. The accumulation of capital, no matter who owns it, adds to the demand for everyone’s labor, and so enriches everyone.
If these billionaires want to truly help the poor and the sick, and insist on donating their vast fortunes, they should support the teaching of Austrian economics. What the world needs now, are free markets and unfettered capitalism, Gates and Buffett should use their billions to spread that message. But, something tells me they haven’t dropped by the Mises Institute with a check.
So it’s left to us: To carry on Murray Rothbard’s work and ideas, ideas that will stop the devolution of society and allow entrepreneurs like Carrier and Yanke to make the world a better place. It is only free markets that can do that, not increasing amounts of government interference, not billionaires spreading their money around perpetuating the same frauds, or rich ex-basketball stars being governor.
John Mackey, the CEO and co-founder of Whole Foods, believes "Business has a much greater purpose than just profits, and is possibly the greatest force for good on the planet today,” He said “When executed well, business increases prosperity, ends poverty, improves the quality of life, and promotes the health and longevity of the world population at an unprecedented rate.”
But Mackey thinks: “The Left has the young audience captured, because Leftists are idealists who want to change the world.” I think Mackey is wrong. We have a roomful of idealistic young people that want to change the world right here. You have your whole lives in front of you, and with that you have a chance to change peoples’ lives for the better. By serving customers as an entrepreneur, or following in Murray’s footsteps as a scholar and teacher.
Austrian economics is the intellectual backbone for the freedom movement. The Mises Institute is the wellhead for its education. You in this room are the best and brightest we have. The future of the freedom movement (and Murray Rothbard’s legacy) is in your hands. I know you are up for the task.
Doug French [send him mail] is executive vice president of a Nevada bank and associate editor for Liberty Watch Magazine. He is the 2005 recipient of the Murray N. Rothbard Award from the Center for Libertarian Studies. He has endowed the $2500 French Prize for the top student each year at the Mises University.