Not just the astronauts but everyone letting people speak for themselves. They knew what the nasa position was but beyond that they never, to my knowledge, controlled the statements, public statements of others and certainly they insisted on it. Up up next on booktv after words with guest host Kevin Williamson of the National Review on line. This weeks Burton Folsom and his latest book uncle sam cant count. The latest collaboration details the best and worst governments investments in bales from the days of George Washington through today. This program lasts about an hour. Host professor full something cute for joining us and welcome. Before we move on to the substance of your very interesting book i wanted to ask you a little about the process of composing it because i noticed you have a koether and colleague with a suspiciously similar surname who turns out to be your wife and someone with a little bit of experience in the subject of being married and writing books im amazed that this ended a book rather than a divorce or a trial separation or Something Like that. How intensely weird is it to write a book in that particular sort of way . Desk of the key is not to write on the same chapter at the same time. One of us will work and do primary work on one chapter and another does the work on the other chapter and then we turn it over for evidence. We were able to do that in finish the book. My wife of 35 years knows this material as well as i do. Often she is researching or at least listening to me talk about it so we discussed the ideas and often she is a definite coauthor in the writing. Host congratulations to you both on the bravery of taking on such a project and making it work. There is a line from the german hans joost which is often attributed to when i hear the word culture i reach for my revolver. I often have roughly the same feeling when i hear the Word Investment in the context of politics. It looks like at best a boondoggle and probably an outright rip off coming down the pike and it should stop before get started but this has become in the 21st century a normal part of our political rhetoric, the idea that government is not only an investor but the chief investor in society in many ways making critical investments and offering industrys guidance in everything from making cars to windmills to such things. But it seems to have started with beaver pelts at least in the formal sense. So i want to start by challenging a little bit your title which is uncle sam cant count. I would argue that uncle sam can and does count but what he is not counting his return on investment. He is counting votes instead so thats a different sort of thing and its not exactly what we normally think of when we say investments. It is hard to give me the broad outline of where this starts and where it goes. Guest uncle sam cant count the implications of the title is that these and investments as you referred who are not successful. Their money razors again and again. The limits of government are very clear in the constitution the Administrative Functions or enforcing contracts, the sort of thing. Then you have National Defense and when the government sticks to those functions it has at least a chance to do well. Most constitutional functions when it moves into the area referred to as investments and Economic Development sparking that the record is absolutely terrible at this starts with the beaver pelts and George Washington who was a great president. I teach at hills dunk College History of american presidency in washington and he was a great president. But this quote investment he made in fur. Was an exam disaster. Often starts as subsidies are investments with the idea that its either going to spark Economic Growth into something that will benefit the country out will protect the country in a pseudoNational Defense and that is what this for trade was. He was concerned the british were going to encroach on american territory during his first term and we havent rid ourselves of a bid but of course that might come down from hudson bay into United States. If we set up a government for company to. Back fur trade the british would not come down. So we subsidized a for company and it was a disaster. The englishman occurs right where the fur company is located because there training is terrible. Part of it the leaders of the company and by the time you get into the 1800s Thomas Mckinney is the one who i write about their work is almost comical. Subsidies are disastrous but there is a comical element that we need to think about too. He gets the idea that we need to sell the indians plows and Farm Equipment when the indians are hunters and gatherers. Or Something Like even pots and pans but mckinney is determined to sell Farm Equipment and that he also says we need to branch out and call to date their tastes so he buys several grosses of harps and also a chinese mandarin dress. He is surprised that the indians dont want to buy the chinese mandarin and the harps and the paraphernalia that he is put into his fur trade operation. Pretty soon the british have come in and the indians prefer to trade with the british. John jacob astor is the First American to fur trade producing competitively comes into the market and in effect moves the british someone out by his competitive practices. He has People Living with the indians in trading with them on the spot. Finally in 1822 congress abolishes the government operation there that was funding the fur trade and that subsidy was defunct. You read about it in the textbooks. We didnt learn from and thats a problem. Host the idea of beaver pelts has been a Critical National resource it brings to mind dr. Strangelove a little bit. It sounds crazy in retrospect. But from the point of view of the late 18th and early 19th century it might not have seemem insane at the time. There were i think at the time good arguments for it in the ways in which the subsidies would have been at the time hard to predict. So could you go into a little bit more detail and ways in which the subsidies produce the opposite of the results that were intended . Guest the intentions are often good. I thought your point was interesting about uncle sam cant count. He can count votes and we see the element but a lot of it is wellintentioned. We believe he can spark Economic Development for example by say funding the Steamship Company to compete with the british. Edward collins it into the steamship business and he receives the federal subsidy volunteers to receive it. He does so and then he is running a terrible bind and the costs go way up he crashes to of the four ships that he had but then the federal government continues to fund him. Even though private steamship operator Cornelius Vanderbilt has come onto the scene and has cut prices, receives no federal subsidies and is operating successfully. Congress funds collins because they say well he needs the money to be able to compete with vanderbilt. Well he runs a poor operation. Eventually he goes bankrupt and congress is very frustrated and cuts them off completely. By the time we have done that we have spent 11 million on steamship subsidies at a time right before the civil war when our total financial debt was 60 million. 20 of the debt is represented in misplace steamship subsidies. Host 11 million back when 11 million meant something. Guest it really meant something. Host to the subsidies mainly cause businesses to make bad Business Decisions because they take away the element of competition or they take away the element of having to go out and deal with ones customers in a direct and normal market way or are there other kinds of miss incentives that they create that cause these industries to perform badly once they are subsidized . Guest focusing on that is very good in both of the points you made are very good. By taking away the competition you take away innovation or an incentive you might have to produce a competitive product at a cheap price. By having the government involved it creates among the person necessity whether its the fur trade operators who receive a washington subsidy or the steamship operators or later the Transcontinental Railroad. It creates within the person receiving the idea that government was the focus here so we need to please the politicians and then more money will come. If our Current Business fails. So that removes you from competition whereas the entrepreneur, the private entrepreneur Cornelius Vanderbilt with the steamship or John Jacob Astor or the wright or others with the airplane all of those people had to be very cost conscious because they were trying to produce a product thatll would have to be marketable and they would have to do it at a Competitive Price so they were watching their cause. It caused him to be very conscious of what they were doing conscious of competition. In the case of the entrepreneurs who succeeded i guess the competitor was federally subsidized. That made the task much more difficult and thats a concern i think today is that we may be knocking people out of the market by subsidizing the wrong people. Host in biological evolution the instrument of evolution is to define a point on it, death. Death of the individual, death of the species, death of a sheet and not too much in the darwinian metaphor in the marketplace that mechanism of evolution is death as well. Its staff of the firm, death of lots of products. You bring out new koch and masses of people decide they dont want to and it dies of my favorite example of this is in the 80s clairol had a product called touch of yogurt shampoo. Go figure nobody wanted to buy this but all of the Product Development people believing it was a great product that people would run over themselves to purchase. And when you have subsidized industries and also some chartered Industries Like the Credit Rating industries which essentially are federally chartered oligopoly you remove that element of business failure from the equation. So the normal instrument in which businesses and industries get more productive, more efficient better able to connect to customers with the goods and services they want is interrupted. So its not just a matter of application. This is where we often go in this debate where people say if we only have the right people and if we only have the right policies in these things would have worked out differently. Its actually something that interrupts the fundamental mechanism of development and innovation. So your thoughts on that. Guest the implications in what you say is for example Cornelius Vanderbilt who receive the steamship would have failed and he would have made different decisions which causes failure. Some entrepreneurs, i think steve jobs being one of the modern examples and we quote cam in the introduction of the book says entrepreneurs are the crazy ones. They believe they can accomplish something. They almost believe theres a market there before there is any evidence that there is a market. They know what you want before you know you want it. That kind of entrepreneurship is essential for the countrys history. The sad possibility is that you would cut that person off when you find somebody else to do something very traditional. You dont get the kind of innovation that you get when you let opera newer entrepreneurs in the marketplace decide and try to compete for consumers interest. Host one of the stores i would like to focus on which i very much enjoyed in the book something i hadnt known about is the story of Samuel Pierpont langley who was the government funded competitor to the Wright Brothers developing the first flying machines as they were known at the time. And you look at langleys biography and his resume and he seems like the his success in creating wealth. Henry ford was not the ideological person to popularize the car. A poor background and his parents didnt last long so ford ends up being the one to make the move. Thats the thing about the marketplace you cant tell who has the good ideas and who is the perseverance. Theres a lot that goes into it that made it successful. And langley the point is exactly correct. The United States had the view in 1900 that because of the germans, the french were all experimenting and even the english with an airplane. The idea is if they could bring an airplane and they happen to be able to invent it in a foreign power would be able to take that airplane and come right over, drop something on your country and then theres nothing you can do about it. Therefore we had to be proactive so you cant wait for the market. The ideas well yeah markets may work better than subsidies but we cant wait for the market as it may be too slow and by the time he gets into year the europeans they are to have the airplane and it would be too late for us for foreign policy. If you subsidize langley in addition to all the credits you just mentioned honorary degrees from oxford and Cambridge Harvard and yale and he has written a book on aerodynamics. He has flown the small model airplane over the potomac. Going from there to doing a manned aircraft seems to be the logical thing and langley says hey i can do it. We give him two shots over the potomac in the first one is a glorious time. It goes up and then it goes right down and a couple of months later they do the second flight and it goes right up in the same thing. According to many sources it said it didnt fly at all. It went right into the air and the power that push it into the air as he believed he needed to have a catapult to launch her airplane. That was his fear so he had a boat in the potomac and applied a sling shot through the airplane and then it just went crashing in. That was his theory of aerodynamics. The Wright Brothers had their own theory. They were testing gliders at kitty hawk North Carolina because it was a windy area and there werent many people around. So they would go out and develop wind currents and how to fly and how to turn and all of this and would try to deal with all of that. And would eventually put an engine on a device. Nine days after langley with his second subsidize failure the Wright Brothers for 2000 of their own money successfully invent the airplane. Theyre the ones to do it. Its a classic example of government stepping in creating the wrong incentives funding the wrong person and somebody else you would never suspect comes in and gets the job done for the United States. Host i thought it was fascinating that the Wright Brothers had experiments with gliders and such largely worked out the engineering challenges of making this work but what they didnt have was an engine. What they needed was an engine that was at least eighthorsepower and had to weigh less than 200 pounds. They go to their Shop Mechanic and say we need an engine that meets the specs and can you do it. The 12horsepower engine weighs way under 1200 pounds you report. He does it all with parts that are basically available within walking distance of their shop and this is in ohio. Guest dayton ohio. Host dayton ohio. As someone whos followed federal contract from time to time specs matter of course but this is a really remarkable thing to accomplish. Guest it is, it isnt it was so startling that the u. S. Government then proceeded to make another bad decision after the Wright Brothers succeeded. It was so unbelievable that the Wright Brothers had been successful while langley the scientific genius had failed. There were attempts to get langley another subsidy so that he could continue because they said langley really has the right path for successful aerodynamics. The Wright Brothers for having to do with that issue and that when they finally had their plane up and ready to fly they offered it to the u. S. Government to sell it for military purposes and after all the purpose of founding langley to invent the airplane of the first places that we would have the airplane so the Wright Brothers offer to sell their lights wired to the u. S. Government and they turned him down. Instead they buy a balloon, a helium balloon because that looks like it might be really the wave of the future to buy a helium balloon. Finally in frustration the Wright Brothers to these international tests. Wilbur goes to france and flies to show the french what he can do and orville is in the United States in military bases in virginia and he does the flight tests. The ideas we are now going to start selling whoever wants to buy, we are loyal americans and we want to sell but its been five years since we invaded this airplane and we are ready for some buyers in ready to get into the commercial side of this as well. Finally the u. S. Government stepped up and bought the airplane. I particularly they describe them as buffers. Of course five minutes later they demonstrate their something else. Mr. Langley of course is the man from langley virginia is named after the town. In terms of overly funded boondoggles associated with the word langley you are still very much