Speaker 1: In Elon Musk's case, I'm not trying to diminish what
Speaker 1: he's done, but he seems to be less about building
Speaker 1: something rather than moving from one entrepreneurial activity to another.
Speaker 1: And we'll see if that's sustainable wealth. Historically, it has
Speaker 1: not been welcome to one day university talks with the
Speaker 1: world's most engaging and inspiring professors discussing their most popular courses.
Speaker 1: This podcast is your chance to discover some of our
Speaker 1: top rated lectures on your own schedule. I'm Steven Schragis,
Speaker 1: can you name a billionaire? I bet you can. They're
Speaker 1: as famous as Hollywood celebrities Musk, Bezos, Zuckerberg, Gates. But
Speaker 1: how well do you know the wealthy Americans of the past?
Speaker 1: Names like Vanderbilt and Carnegie and Rockefeller are plastered all
Speaker 1: over buildings across the US. How do these and impact
Speaker 1: our lives today? Professor Jeremy Surry talks about this in
Speaker 1: his one day university lecture called A History of American Wealth.
Speaker 1: He teaches history at the University of Texas and he
Speaker 1: co hosts his own weekly podcast, This Is Democracy with
Speaker 1: his son. Jeremy explains that to understand wealth in America today,
Speaker 1: you have to first understand its history. I think there
Speaker 1: is a tendency to treat wealth as very specific to
Speaker 1: a time and place, and so we tend not to
Speaker 1: think about comparing someone like Cornelius Vanderbilt, who builds railroads,
Speaker 1: with someone like Elon Musk who builds electric cars and
Speaker 1: twitter and things of that, and they seem so different.
Speaker 1: I came up though, with this comparison. I think this
Speaker 1: comparison is absolutely important because as a historian, what I'm
Speaker 1: interested in are the lines of continuity as well as
Speaker 1: disc continuity from one period to another. And the way
Speaker 1: to think about history is to think about it like archaeology.
Speaker 1: It's layered, and so the new is not built on
Speaker 1: the destruction of the old. The new is actually built
Speaker 1: on the old and their elements of the old. In
Speaker 1: terms of our legal structure, our practice, our culture, the
Speaker 1: way we think about wealth that are still related to
Speaker 1: that period long ago. I think this is important in
Speaker 1: helping us to understand what it is that makes for
Speaker 1: wealth today and how it builds on the layers of
Speaker 1: what came before. I'm going to say the phrase wealth inequality.
Speaker 1: You have people who think it's not a problem, it's
Speaker 1: a big problem. It's a huge problem. It's not a
Speaker 1: new problem. Yes, I think this is a really important point.
Speaker 1: I think if there's one thing to remember from the lecture,
Speaker 1: it's that we have been struggling as a society to
Speaker 1: make sense and figure out what to do about wealth
Speaker 1: inequality since the late nineteenth century. This Stephen is what
Speaker 1: Mark Twain is commenting on when he coins the phrase
Speaker 1: gilded Age. It's an ironic phrase, as everything is with
Speaker 1: Mark Twain. And why is this. Our system does a
Speaker 1: very good job of rewarding innovation. Those who produce something new,
Speaker 1: the John David Rockefellers, those who create a new industry,
Speaker 1: as Rockefeller did, they get rewarded handsomely in the American
Speaker 1: capitalist system. And that's of course what encourages them to
Speaker 1: do what they do. That's what encourages immigrants to come
Speaker 1: to our society and become business people in this way,
Speaker 1: but in rewarding innovation, that means that those who are
Speaker 1: less innovative are often left far behind, and there is
Speaker 1: a very deep hole that people can fall into. Failure
Speaker 1: is as possible in our society as success. And the
Speaker 1: question is if we are to be a peaceful, stable,
Speaker 1: democratic polity. What do you do with those who haven't
Speaker 1: been as fortunate, who haven't been as successful. The late
Speaker 1: nineteenth century shows us that when our system is perhaps
Speaker 1: working best in terms of producing innovation, Stephen, it's also
Speaker 1: producing a lot of people who get left behind and
Speaker 1: are barely subsisting. We struggled with that then and we're
Speaker 1: struggling with it today. We have to see that's not
Speaker 1: just a problem of today. That's a problem of our system,
Speaker 1: and we need to think about what kinds of systemic
Speaker 1: reforms we believe are appropriate. Franklin Rosal had an answer
Speaker 1: to that. That's what the New Deal was about. We
Speaker 1: have to ask ourselves today, what kind of answer do
Speaker 1: we want. I'm living in Austin, Texas right now. We
Speaker 1: have some of the wealthiest Americans who are moving here,
Speaker 1: are becoming wealthy here, and now we have a huge
Speaker 1: homeless problem. At the same time. These two things go
Speaker 1: hand in hand. It's an old problem. It's a systemic problem.
Speaker 1: It's not about the current individuals. How do we address that.
Speaker 1: That's a historical question, and history helps us to see
Speaker 1: how important it is. You mentioned Mark Twain coined the
Speaker 1: phrase guilded age give us a little more. When did
Speaker 1: he do that? What did he mean by gilded age? Yes,
Speaker 1: great question. I was just talking to my undergraduates about this.
Speaker 1: So Mark Twain wrote a novel, who wrote many, many novels,
Speaker 1: of course, Huck Finn, Tom Sawyer. He wrote a pretty
Speaker 1: mediocre novel in eighteen seventy three with a co author,
Speaker 1: and the novel was called American The Guilded Age. And
Speaker 1: that's where he used the phrase guilded Age. And he
Speaker 1: meant that the country after the Civil War, especially in
Speaker 1: the North, especially in New York, was coming to look
Speaker 1: more wealthy and becoming more of a world power, but
Speaker 1: that beneath the gold surface, beneath the surface of the wealth,
Speaker 1: there was a lot of crud, a lot of difficulty,
Speaker 1: a lot of poverty, and so it was not a
Speaker 1: golden country. It was a gilded country. And he was
Speaker 1: commenting on both the wealth on the surface in a
Speaker 1: place like New York City and the poverty and the
Speaker 1: continued suffering, particularly in the South. Suddenly, I've recently written
Speaker 1: about right the problems of integrating that region and integrating
Speaker 1: African Americans into the larger development of the American economy.
Speaker 1: You chose three wealthy individuals from an earlier time, and
Speaker 1: you chose three very wealthy individuals from our time. Now,
Speaker 1: those are not the only wealthy individuals you could have
Speaker 1: chosen from either group. For instance, the first group Vanderbilt, Carnegie,
Speaker 1: and Rockefeller. Why did you choose those three? And who
Speaker 1: did you almost choose but left out? Oh? Great, great question.
Speaker 1: So the person I almost chose was Jay Gould. And
Speaker 1: Jay Gould, I hope some of your listeners know about
Speaker 1: Jay Gould. There's been a lot written about him. He
Speaker 1: was also a railroad mogul like Cornelius Vanderbilt, and he
Speaker 1: was responsible for a huge bubble of overinvestment in railways
Speaker 1: and then the collapse of the American economy in what
Speaker 1: turned out to be almost as bad as the Great
Speaker 1: Depression is so called Panic of eighteen seventy three. So
Speaker 1: he was a great man of success and a great
Speaker 1: man of failure who in some ways brought down the
Speaker 1: American economy, brought down the Grant presidency. But I didn't
Speaker 1: want to get lost in that debate about the eighteen
Speaker 1: seventy three depression. I chose three individuals who I thought
Speaker 1: had some name recognition, who people recognize their importance, but
Speaker 1: didn't know a lot about them. And that's particularly true,
Speaker 1: I think for Vanderbilt. I grew up in New York City.
Speaker 1: If you go to Grand Central Station, of course it's
Speaker 1: on Vanderbilt Avenue. The name Vanderbilt is all over the place,
Speaker 1: so it's a name people recognize, but most people don't
Speaker 1: know much about. And that's often, I think a very
Speaker 1: good strategy for getting people interested in history. Take something
Speaker 1: you recognize and then help people to see what it's
Speaker 1: really about, where it came from. Let's skip to the
Speaker 1: last three, Bill Gates, Jeff Bezous, and Elon Musk. Why
Speaker 1: those three WHO'DU leave out so many? I left out
Speaker 1: Mark Zuckerberg for example, I left out then they're also
Speaker 1: the oil people, Howard Hunt, various others here in Texas.
Speaker 1: You know, I chose the three people there who I
Speaker 1: thought were in the news most now who have become
Speaker 1: more than just wealthy individuals, but political figures in our society.
Speaker 1: Musk obviously with Twitter as well as Tesla. Bill Gates
Speaker 1: is always commenting on environ mental issues and things of
Speaker 1: that sort. And Jeff Bezos, because he's also been so controversial,
Speaker 1: he comes up in every discussion of main street stores
Speaker 1: and how to story survive with Amazon. So in this case,
Speaker 1: I was choosing figures who I figured people knew a
Speaker 1: lot about, but I was trying, just as you said
Speaker 1: so well before, Stephen, to connect them to the earlier
Speaker 1: figures we know less about. And so I thought that
Speaker 1: made sense. And then the other thing is I think
Speaker 1: these are three certainly of the most important individuals. You
Speaker 1: could make an argument that Zuckerberg is equally important and
Speaker 1: come up with a few other individuals, but it would
Speaker 1: be hard to find three people more important to our
Speaker 1: economy today than these three individuals. After the break, what
Speaker 1: philanthropy meant to these ultra rich men and what wealth
Speaker 1: might look like in the future. A really interesting part
Speaker 1: of your talk where you're talking and contrasting philanthropy and
Speaker 1: wealth and the relationship between the two, and how it
Speaker 1: was different and the thinking was different among these six
Speaker 1: very wealthy individuals. And I really loved this part where
Speaker 1: you were contrasting Carnegie and Rockefeller, both very philanthropic but
Speaker 1: very different in their thinking. Can you tell us about
Speaker 1: that a little sure? I think one of the really
Speaker 1: important points here is that the great wealth produced in
Speaker 1: the late nineteenth century creates a whole new area of
Speaker 1: activity called philanthropy. But what philanthropy means, as you said
Speaker 1: so well, Stephen, is different from individual to individuals. So
Speaker 1: for Carnegie, he really thinks about doing something for other
Speaker 1: immigrant boys like him, for those who are really trying
Speaker 1: to make their way in society, and in particular the
Speaker 1: Carnegie libraries, which are still a mainstay of so many
Speaker 1: communities in the United States, many small towns. The main
Speaker 1: library is still what was originally a Carnegie library, funded
Speaker 1: by carne Age's wealth. He really wants to do something
Speaker 1: that's evident and that reaches out and touches quite frankly, young,
Speaker 1: down and out people and gives them a chance to
Speaker 1: improve themselves. What better than a public library in your town.
Speaker 1: For John David Rockefeller ad something different. He wants to
Speaker 1: create institutions that he believes will create the kinds of
Speaker 1: behavior and systemic changes in America that he thinks will
Speaker 1: be beneficial for the United States and for the economy
Speaker 1: as he thinks about it. So that's why the Rockefeller
Speaker 1: Foundation gets involved, not in building libraries per se, but
Speaker 1: in trying to fund particular kinds of research in health
Speaker 1: and medicine, founding a university, the University of Chicago. It's
Speaker 1: educational in the way that the libraries are, but it's
Speaker 1: designed to be an elite institution. The University of Chicago
Speaker 1: is to compete with the Harvards in the Yales and
Speaker 1: so as a different approach that John David Rockefeller has.
Speaker 1: And he's not an immigrant, and Rockefeller does think more
Speaker 1: in terms of hierarchy in a more traditional religious sense.
Speaker 1: Let's move on to the layer group, the current billionaires.
Speaker 1: What about their philanthropy, I mean, in a certain way.
Speaker 1: That's too early to tell, but it is clear that
Speaker 1: Bill Gates has made a very strong commitment to give
Speaker 1: most of his money away and to invest it in
Speaker 1: areas where he believes that brain power will make the
Speaker 1: biggest difference. He's a nerd who made his money as
Speaker 1: a nerd, and so he's investing in nerdy things like
Speaker 1: trying to find the right vaccine to help cure disease
Speaker 1: around the world, investing in technologies that will help to
Speaker 1: mitigate climate change. It's a very technical centered way. Jeff
Speaker 1: Bezos seems to be investing in things that will stabilize
Speaker 1: the society. That Amazon is selling products to so the
Speaker 1: Washington Post. I think of that he bought The Washington Post,
Speaker 1: and I don't think he's doing it to make money
Speaker 1: at all. But I think he believes that having a
Speaker 1: serious new serve helps to stabilize the country. It's a
Speaker 1: public service that also helps to stabilize the world that
Speaker 1: Amazon works in. And then Elon Musk. I have to say,
Speaker 1: it's really too early to tell. Most of Elon musk
Speaker 1: stuff seems to be self promotional so far, but I
Speaker 1: don't want to be unfair because he's probably doing things
Speaker 1: we don't see yet. One phrase you used describing Elon
Speaker 1: Musk was that he is a new type entirely. You
Speaker 1: said he was a quantum leap in how we think
Speaker 1: about being wealthy. What were you getting at when you're
Speaker 1: talking about Elon Musk. Well, the thing about Musk, and
Speaker 1: we'll see whether he stays wealthy or not, is that
Speaker 1: his wealth has been not in just doing one thing.
Speaker 1: It's been in fluctuating from one thing to another. I
Speaker 1: happen to be a fan of Tesla cars. I driver Tesla.
Speaker 1: I think he helped push forward the electric car industry.
Speaker 1: But he's doing SpaceX, He's doing Twitter he's doing all
Speaker 1: sorts of other things, I think, often to the detriment
Speaker 1: of some of his core attribe. But he is more
Speaker 1: the entrepreneur than the business builder. And let me make
Speaker 1: this clear. Entrepreneurs make a lot of money in American history.
Speaker 1: But the billionaires, the ones who are super wealthy, the
Speaker 1: ones we're talking about here, they usually built something. Rockefeller
Speaker 1: built the oil industry for the world. Carnegie built the
Speaker 1: steel industry in the United States. Vanderbilt built the train lines,
Speaker 1: Bill Gates built the operating system that ran most of
Speaker 1: our computers. Right, Jeff Bezos created the Global Department Store.
Speaker 1: In Elon Musk's case, I'm not trying to diminish what
Speaker 1: he's done, but he seems to be less about building
Speaker 1: something rather than moving from one entrepreneurial activity to another.
Speaker 1: And we'll see if that's sustainable wealth. Historically it has
Speaker 1: not been. Okay, Now here's a phrase I had never
Speaker 1: heard before, geographic wealth clustering. What's going on here? So
Speaker 1: this is a concept that sociologists use. It. It's what
Speaker 1: my grandmother would call high salutant language for a very
Speaker 1: simple thing, which is that wealth tends not to be
Speaker 1: evenly distributed across territory. It tends to grow together, it
Speaker 1: tends to cluster together, it tends to be in hubs.
Speaker 1: And that's for at least two reasons. One is that
Speaker 1: there's usually something about a particular place that produces wealth.
Speaker 1: So one of the things I tried to show in
Speaker 1: the lecture is that this region we might call the
Speaker 1: Upper Midwest, from western New York State all the way
Speaker 1: across to Chicago, including Cleveland and Detroit, this area has
Speaker 1: a comparative advantage in producing wealth in the second half
Speaker 1: of the nineteenth century because it's located where the railroad
Speaker 1: meets the Great Lakes. It's also an area that has
Speaker 1: a lot of labor, immigrant labor and migrating African American
Speaker 1: labor from the South. And it's an area that has
Speaker 1: a lot of water, and the factories are running off water.
Speaker 1: So it has all the resources needed in the way
Speaker 1: Texas doesn't then to produce a lot of wealth. And
Speaker 1: so that's why you get the Vanderbilts, the Rockefellers, the Carnegies,
Speaker 1: all in this region at that time different from today.
Speaker 1: No one would say that area today is producing the
Speaker 1: greatest wealth. People would look actually to Austin Texas, they'd
Speaker 1: look to Silicon Valley. So there are reasons why wealth
Speaker 1: occurs in part in particular places. There's a second phenomenon,
Speaker 1: which is that wealthy people like to be around other
Speaker 1: wealthy people. We see this in Austin, Texas today. One
Speaker 1: of the reasons why wealthy Californians are moving to my
Speaker 1: city to Austin is because other wealthy people have moved
Speaker 1: from California to Austin. And it's not just that they
Speaker 1: want to be around other wealthy people to show if
Speaker 1: their wealth. It's that, in the case of Austin, people
Speaker 1: who are very tech savvy and really into technological entrepreneurship,
Speaker 1: they want to be around other people doing that. So
Speaker 1: it's an intellectual climate. There's a university that filters that.
Speaker 1: So it's both the resources of the space at a
Speaker 1: particular time and the people and then the ways in
Speaker 1: which you get a kind of crowd effect as more
Speaker 1: of one and moved to one place. All right, let
Speaker 1: me throw out a couple of phrases, anti trust laws
Speaker 1: and income tax. How do they factor it the banes
Speaker 1: of so many people's existence. Yes, so anti trust laws
Speaker 1: are created in the late nineteenth century and they are
Speaker 1: promoted by people like William Jennings Bryan and of course
Speaker 1: Theodore Roosevelt. Antitrust laws are created to prevent monopoly. The
Speaker 1: trusts were the monopolies, and the targets for Theodore Roosevelt
Speaker 1: were the mining companies, the railroad companies, and other entities
Speaker 1: that became so large that they controlled the economy, and
Speaker 1: that meant there was no competition, which meant they could
Speaker 1: basically charge people whatever they wanted. The classic example of this,
Speaker 1: of course, the biggest anti trust case in the world
Speaker 1: in modern history is of course Standard Oil, Rockefeller's company,
Speaker 1: which is broken up in the early twentieth century into
Speaker 1: the Seven Sisters, each of which is still a huge company.
Speaker 1: But the antitrust argument, very straightforward, was that Rockefeller not
Speaker 1: only owned all the oil, he owned all the oil distribution,
Speaker 1: all the refineries, and so that meant that in some
Speaker 1: ways he controlled everyone's life as people started using more
Speaker 1: and more oil. The approach most have taken is to
Speaker 1: either break up and create competition, that's what anti trust
Speaker 1: would say, or to create public utilities. In most of
Speaker 1: our states, con Edison in New York, Austin Energy in
Speaker 1: Austin is a utility that's a regulated monopoly. Antitrust laws
Speaker 1: are designed to prevent monopoly. They were often, though, used
Speaker 1: against labor unions and other groups, so they could be
Speaker 1: used not just against economic monopolies, but against those that
Speaker 1: were perceived rightfully or wrongfully as other kinds of monopolies.
Speaker 1: Income tax. The income tax is also created in the
Speaker 1: early twentieth century. It's the sixteenth Amendment nineteen thirteen, and
Speaker 1: the income tax is an effort to redistribute the exorbitant
Speaker 1: earnings of certain individuals in the economy and to use
Speaker 1: that money to invest. This is what progressives want, like
Speaker 1: Theodore Roosevelt, to invest that money in building at least
Speaker 1: a floor, some foundation for those who are not as fortunate.
Speaker 1: Before there was a income tax, a federal income tax.
Speaker 1: Most of these very wealthy people were talking about paid zero.
Speaker 1: They didn't pay a state or federal income tax. There
Speaker 1: was no capital gains tax. The federal government got most
Speaker 1: of its revenue before the twentieth century from tariffs on
Speaker 1: trade and from rents and selling land owned by the government.
Speaker 1: The income tax then becomes a major source of federal revenue,
Speaker 1: and it starts out as a very small tax for
Speaker 1: the very wealthiest of individuals. Final question, We're going to
Speaker 1: go back to that concept of wealth clustering, and you
Speaker 1: described it back in the Gilded Age, and you described
Speaker 1: it now. Let's pretend a little and jump forward. What
Speaker 1: do you think wealth clustering will look like many years
Speaker 1: from now? Any predictions? I think. I'm going to make
Speaker 1: these predictions based on my students. What I see my
Speaker 1: students interested in when I was in college, and I
Speaker 1: think when you were in college to even everyone wanted
Speaker 1: to live in New York City and work for Goldman
Speaker 1: Sacks because that's where the money was. My students don't
Speaker 1: want those jobs now, I mean some will still take them, right.
Speaker 1: They want to live in a cool place, they want
Speaker 1: a high quality of life. They don't plan to go
Speaker 1: to the office every day. So where is the clustering
Speaker 1: going to be. It's going to be in cool places
Speaker 1: to live with climate change. It's going to be in
Speaker 1: places that have nice climates, that have good internet access,
Speaker 1: places that are cosmopolitan with interesting people, interesting entertainment in
Speaker 1: the arts. So it's going to be cities, but they're
Speaker 1: going to look different. Austin is kind of a little
Speaker 1: bit like this, but it won't remain the only place
Speaker 1: or the top place that people come. I think we're
Speaker 1: going to see more and more communities, maybe a Boulder,
Speaker 1: Colorado that has a lot of the lifestyle choices people
Speaker 1: want to make that will draw people, and it will
Speaker 1: be less office based, more living based. Jeremy, thanks so much.
Speaker 1: Your electron Wealth really was probably one of the most
Speaker 1: interest hours we've ever had at Monday University. Thank you, Stephen.
Speaker 1: I always enjoy working with you and with One Day University.
Speaker 1: Thanks for joining us here at One Day University. Sign
Speaker 1: up at our website one dayu dot com to become
Speaker 1: a member an access over seven hundred full length video
Speaker 1: lectures from the world's finest professors. You can also download
Speaker 1: our app. There you can learn more about today's episode
Speaker 1: and watch University of Texas Professor Jeremy series lecture on
Speaker 1: the history of American wealth, as well as its talks
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