Not the Shares, but the Stakes (with Rachel Slade)

Why is making it in America so hard?

John D. Rockefeller was, far and away, the wealthiest American of all time, amassing a fortune worth some $320 billion in 2023 dollars—about two percent of the country’s entire gross domestic product. Fanatical about both quality and efficiency, he pushed for both horizontal and vertical integration; he wanted a hand in all phases of oil production, from extraction to refining to distribution to retail sales. This broad, monopolistic control gave the company higher profit margins, but it also made the finished product better, safer, and more uniform.

At the turn of the last century, the company Rockefeller and his partners founded, Standard Oil, controlled some 90 percent of U.S. oil production. When the government found Standard Oil in violation of antitrust laws in 1911, it was broken up into 43 separate companies. Forty-three! Standard Oil of New York, or Socony, became Mobil. Standard Oil of Indiana became Amoco. Standard Oil of California became Chevron. And Standard Oil of New Jersey, the mothership, became S.O., or Esso, which was eventually changed to Exxon, presumably because very wealthy people have an affinity for the letter X.

Late in life, when Rockefeller decided to give away much of his fortune, he quickly became irritated by vetting all the randos showing up with a hand out. Applying his same principles of efficiency to the world of charity, he basically invented modern philanthropy. In this, too, he was wildly successful. Hookworm was eradicated. Important projects were underwritten. Real estate was given away, including the site of the United Nations facility in Manhattan.

Geraldine Dodge, William Rockefeller’s daughter and John D.’s niece, maintained a large estate in Madison, my hometown. Her son Hartley died young, in a car accident in France. In his memory, she financed the construction of a gorgeous borough hall building that is way nicer than any neighboring town’s municipal facility. She also donated the train station, featured in a number of movies, including The World According to Garp. She was a philanthropist, sponsoring arts programs, poets, sculptors, and anything to do with dogs. The town benefited from her largesse.

Esso’s corporate headquarters was in Florham Park, New Jersey—a ten-minute walk from the house where I grew up. My paternal grandfather, who served in the army in World War II (in what capacity I’m not sure, but I know he was in the Pacific and that he did something with chemicals), went to Seton Hall on the G.I. Bill, and then worked for years as a chemist at Standard Oil. (“Olear” means “oil man” in Slovak, so perhaps this was meant to be.) He complained about his job, from what I was told, but he made enough money to support a family of five, owned a house he built himself, moved to Southern California in 1965, when he was in his mid-forties, and retired young by today’s standards. Thus did the Olear family directly benefit from Rockefeller’s legacy.

There was much to dislike about John D. Rockefeller, too. He was a monopolist, which had a devastating effect on competing companies and their employees. He wielded way too much power. He didn’t pay any income tax for most of his fat years. He is responsible for popularizing rich person golf culture. But he wanted his companies to do excellent work. He insisted on the highest quality for his products. He was a good boss, especially for that time, regarding his employees as part of “The Standard Oil Family.” He gave a shit about the communities where he lived and where his businesses were set up. And he cared enough about other people to give away much of his wealth.

Again, I don’t want to overly glamorize a complicated figure, or ignore his many faults, or dismiss the negative impact of his monopolies on the economy. But what Rockefeller valued was: the highest quality of product; optimal operational efficiency; a talented, well-cared-for workforce; and the betterment of the communities in which he lived and worked.

For the most part, that just isn’t the case anymore. Among U.S. CEOs, that worldview is practically extinct. Today’s corporate behemoths value low cost over quality. They will move their operations to a different state, or to a different country, if it will save them a few pennies on the dollar. They will happily lay off loyal longterm employees for the same reason. And they don’t give a rat’s ass about their communities. Modern Rockefellers like Jeff Bezos and Elon Musk are more interested in going to Mars than making life better on Earth.

Why is it like this? How did it get this way? And can we reverse the process before the plutocrats leave us all to die on an uninhabitable planet as they fly off to Triton on their rocketships?

There are plenty of reasons, but it’s all tied to manufacturing. The decline in U.S. manufacturing is tied to the decline of labor unions, the decline of once-prosperous cities and small towns, and the decline of the middle class. In her excellent new book Making It In America (The Almost Impossible Quest to Manufacture in the U.S.A. (and How It Got That Way),¹ the inimitable Rachel Slade—my guest on today’s PREVAIL podcast—walks us through the past and present of American manufacturing through the prism of the founders of American Roots, a Maine-based small business that makes hoodies using only American materials. This is a lot harder than it sounds, and much harder than it should be.

The difficulty is a byproduct of the current prevailing corporate philosophy—what I would call shareholder über alles. CEOs make every decision based on the stock price going up. Nothing else matters.

“In 2023, most corporations are still operating under Milton Friedman principles, which are: you are beholden only to your shareholders,” Slade tells me. “Whereas before 1970, before Milton Friedman basically gave them a theoretical framework to be greedy, there was a sense, a gentleman’s agreement among American businesspeople, that they were beholden to their stakeholders. And their stakeholders of course included shareholders, but also included their workers, and the communities in which they worked, you know, where their factories were.

“It didn’t last very long. But there was this strong sense in American business—it lasted about 80 years—that if you set up a business, you were responsible to everybody you touched, from your supply chain, to the workers making your stuff, obviously to your shareholders, and also to your customers, by the way, that you were producing stuff that was solid and good and would last. It was a moment in time.

“And I’m not nostalgic and I don’t want to be revisionist, and certainly there were a lot of problems, but it’s quite clear that we have lost so much by giving that up—over only the past 30 years, like, quite within my lifetime. This is not ancient history. This is something that just kind of, you know, happened, and spread like wildfire across the United States.”

The good news is, we don’t have to accept being a nation of people who can no longer make anything, who just buy cheap crap from China at Walmart, or via Amazon delivery truck, and are at the mercy of ocean freight. Nor do we have to abandon capitalism. We just have to make it work for us better.

“It is new,” Slade says, “and therefore it is reversible. Like, we’re not that far away from a time where corporations actually felt a deep responsibility to the communities where they were, and to the workers who worked for them. And that’s why they offered pensions, you know, instead of 401(k)s. There were so many ways that corporations actually helped, or showed that they had a responsibility to the people who were working for them.”

This is a choice we have collectively, if unknowingly, made. It is not preordained. It doesn’t have to be permanent.

As Slade says, “We don’t have to live like this.”

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LISTEN TO THE PODCAST

S6 E15: Making It in America (with Rachel Slade)

Greg Olear is joined by the journalist and editor Rachel Slade, author of the new book Making It in America: The Almost Impossible Quest to Manufacture in the U.S.A. (and How It Got That Way). They discuss the history of textile manufacturing in the United States, how the towns NAFTA devastated were hidden, the perils of free trade, the Gen X mindset, Prohibition trivia, all things labor movement, how and when organized crime infiltrated unions, the multiplier effect, New Americans, and what the purpose of government actually is. Plus: merry MAGA Xmas.

Visit Rachel’s website:
https://www.rachelslade.net/

Buy her new book.

Follow her on Instagram:
https://www.instagram.com/rachelmslade/

1. I have been waiting with great anticipation for many months for this book to come out, and I’m pleased to report that it was worth the wait. Making It in America is a treasure trove of fascinating, relevant historical information—a Buy American manifesto disguised as a narrative. It’s both a delight and an education to see how Rachel puts all the information together and how she chooses to construct it.