An American Story

Ken Langone is a billionaire co-founder of Home Depot and has written an unapologetic paean to capitalism entitled, naturally, I Love Capitalism! An American Story. Like other self-made billionaires he had modest roots. [bold added]

Ken Langone (WSJ photo)

His father was a plumber and his mother a cafeteria worker. Mr. Langone worked odd jobs during high school, caddying and digging ditches...

After graduating [from Bucknell], he sought work on Wall Street, but he says that his blue-collar Italian background prevented him from landing a job at the top firms. Instead he took an analyst job in the investment department at Equitable Life Insurance Society, an insurance firm, while serving in the Army and going to business school at night.

He worked for small Wall Street firms, then helped found Home Depot, which went public in 1981.

He wrote his book because young people hear few defenses of capitalism. Without much life experience they gravitate to the ideals of

"socialism: Guaranteed income. Free college tuition. Single-payer health care. I disagree. Strongly.” He argues that such policies discourage people from bettering themselves. “I disagree with socialism not (as you might believe) because I’m a rich guy trying to hold on to my money,” he writes. “I disagree because socialism is based on the false notion that we should all be exactly equal in every single way.”

I won't be buying Ken Langone's book because I doubt it will change my world view, and, besides, he doesn't need my money. But I do agree with him about capitalism and socialism.

I look around at the most socialist-leaning state in the union, our California, where government failures abound in public transportation, education, health care, housing/homelessness and alternative energy. Despite having the highest income tax rate (13.3%) among states, collections are never enough; interest groups are always clamoring for more government spending.

(Government does deserve credit for the vast State Water Project designed in 1957; completion of its initial phase in the '70s and '80s was crucial to the development of California's economy. Wikipedia: "The SWP provides estimated annual benefits of $400 billion to California's economy." However, even the first phase of the SWP couldn't be built today. Environmentalists have called a halt to all dam- and aqueduct building.)

What has allowed California to stay afloat is capitalism, the wealth effect of having companies that are world leaders in their sectors. It's easy to tax and spend when you have a concentration of taxpaying and job-creating companies like Apple, Google, Facebook, Chevron, Visa, Wells Fargo, and Intel, all headquartered in the Bay Area and all on the list of the top-20 most valuable public companies in the U.S.

But back to Mr. Langone. Peggy Noonan has teased out the "rules for living" inferred from his book:

1. Take your religious faith seriously. His Catholicism gave him safe harbor in storms and left him “sensitive to the plight and needs of others.”

2. Marry for the long run. He and Elaine have been wed 63 years. When things were good she cheered him on; when they weren’t she let him know “she would always be there for me—win, lose or draw.”

3. You teach values by living them. Don’t say—do. People absorb eloquent action.

4. “Pray at the feet of hard work.” Be ravenous in reading about your field, whichever you wind up in and for however long.

5. Money solves the problems money can solve. Don’t ask more of it, and don’t be ashamed of wanting it. “A kid once said to me, ‘Money doesn’t buy everything.’ I said, ‘Well, kid, I was poor, and I can tell you right now poverty doesn’t do a very good job either.’ ”

6. Stay excited. Don’t be sated.

7. Admit the reality around you, then change it.

8. When you’re successful you’ll put noses out of joint, even among colleagues who benefit from your work. Be careful about jealousy but in the end roll with it, it’s human nature. When you “piss off the old guard,” become the old guard—and help the clever rise.

9. “There’s no defeat except in giving up.” You’re going to fail. So what? Keep going, something will work.

These are old-timey sayings which are cliché-ish, but that doesn't make them less true. We won't be billionaires by following them, but we'll probably end up being happier.