The Betrayal of a Hero

In 1957, a 21 year-old kid named Otto Kuczynski showed up at Ellis Island in New York harbor with his teen-age wife, Hërta, an 8 month-old baby boy, and all the money he had in the world: $27.

For centuries, Otto’s family lived in the village of Beregomet in a fairly-tale region of primeval forests and ancient castles tucked into a corner of southeastern Europe known to the Romans as Dacia, and millennia later, to the Austrians as Galicia. When the Austro-Hungarian Empire was broken up after WWI, Galicia was made a part of Romania and called Northern Bucovina. The place became a nightmare war-zone during WWII, with Otto spending his pre-teen years trying not be killed by Nazis and Russians.

Stalin annexed Northern Bucovina, incorporating it into the Soviet Union as part of Ukraine. By then, Otto’s father engineered the family’s escape by somehow staying within the moving no-man’s land between retreating German troops and advancing Russians all the way into Germany. To this day, the greatest thrill of Otto’s life was his first encounter with American soldiers. “Now at last,” his father told him, “we are safe.”

Otto spent his teen-age years in post WWII Germany, and taught himself how to fix machines, especially those for spinning, knitting, and dyeing yarn into the clothes we wear. For all that time, he dreamt of coming to America. Otto had the dream of freedom. He did not want to fix machines all his life, but knew that would be his fate if he stayed where he was. He was determined to make of his life, and for the family he would someday have, something much better, a business of his own. He knew that more than any other place in the world, America would give him the opportunity to do so. When he met a pretty Bavarian girl who shared his dream, the time had come to turn that dream of freedom into reality no matter what.

What followed is the Classic American Success Story so inspirational to us all. Otto parlayed his mechanical skills into getting backers for a small business that he proceeded to expand into one of the largest full-service textile companies on the east coast, Fairfield Textiles in Patterson, New Jersey, with over 400 employees. Equally successful as a father, he and Hërta now preside over a bevy of grandchildren. There are summer family reunions at their cottage in Vermont, winter reunions at their condo in Cancún, and one at their New Jersey home every Thanksgiving. “That’s the most important holiday for me,” he says. “That’s the day I celebrate this wonderful country, and give thanks to America for all she has given me and my family.”

Otto was a long-time subscriber of Strategic Investment, and had been a reader of mine for several years when we met at a SI conference almost a decade ago. Right away, I knew I had met a larger-than-life character, and we quickly became fast friends. Soon it became a Wheeler-Kuczynski tradition, whenever my wife and I were in New York, to have dinner with Otto and Hërta at the world’s best steakhouse, Peter Luger’s in Brooklyn. Both my sons, Brandon and Jackson, came to idolize “Uncle Otto” as one of the coolest and awesomest dudes they knew.

I wish this story had a happy ending but it doesn’t. Otto has been betrayed by the country he gave his soul to.

On page A2 of the June 10, 2003 Wall Street Journal, there are two stories placed next to each other. “Manufacturers Warn of Impact of Plant Closings” is the headline of one, which describes how the US is close to “dropping below critical mass in manufacturing.” Such a drop below critical mass “could reduce the nation’s economic growth by half and lead to widespread declines in living standards.”

By sheer coincidence of story placement, directly adjacent to this headline is that of another, seemingly unrelated article: “Top Court Eases Way for Bias Suits: Employees Need Not Show Direct Evidence to File.” A unanimous — unanimous! — ruling of the Supreme Court now makes it “easier for workers who believe they have been discriminated against on the basis of race, color, religion, gender, or national origin to file suit” against their employer.

The case involved a female worker with a history of disciplinary actions regarding disputes with other workers and who was fired after she had a physical fight with another worker. The court ruled (again, unanimously) that she did not have to provide any direct evidence of sexual discrimination in her firing, but that circumstantial and indirect evidence would do just fine.

Every day on Capitol Hill, politicians get up on the floor of the House or Senate and pontificate on the vital importance of creating jobs for American workers. Democrats denounce Bush’s tax cuts and economic program for producing a “jobless recovery.” Republicans justify those same cuts and programs with claims they will create jobs. How many of them, then, held up this page of the Journal and on the floor of Congress pointed out the obvious causal connection between these two stories? The answer is of course, zero.

For the past several years, Otto has seen his business slowly destroyed by a flood of cheap clothing from China. Most of that flood was produced by his competitors here in the US — who closed their US factories and fired their US workers, building Chinese factories and hiring Chinese workers in their place. Otto realized that the only way to stay in business himself was to do the same.

Yet he couldn’t do it. To fire his American workers in order to replace them with $1 a day Chinese labor would be, for Otto, to betray them. To close his American factory and replace it with one in China would be for him a betrayal of his dream of freedom in America. To set up his business in a Communist dictatorship would be “sleeping with the enemy.” Otto knew China’s strategy against America was to “envelop politics with economics,” to make the Americans so dependent upon it economically that they could not afford to oppose it politically. Otto refused to be a pawn of Red China’s.

Tragically, Otto’s heroic refusal to betray America blinded him to America’s betrayal of him. The terrible truth that he never wanted to see is that while China has no political freedom, it has in many ways more economic freedom than the US.

It’s not just cheap labor. In China’s Shenzhen Province (across from Hong Kong), how long do you think it takes to go from a piece of bare ground to a fully-operating factory producing products? Six months. In the US, you’d still be in the middle of negotiations with a horde of alphabet agencies regarding zoning, environmental restrictions, on and on endlessly.

Ask any business owner and he will tell you that being an employer in America today is a very frightening nightmare. Otto views all the companies that have closed down their operations in America and opened them up in China as traitors — and there’s validity in his perspective. But they didn’t move to China just to screw Americans out of jobs and pay Chinese a pittance instead. They did so to escape the gigantic and incomprehensible mass of fascist rules and regulations the American government blackmails them with. (Just try, as a business owner, to go up against OSHA, for example. Those fascists will shut you down in an eye-blink.)

The cost of complying with these rules, the fear of being tied up in legal knots with fantastically expensive lawsuits, the direct costs of labor mandated by government such as workers’ comp and employee health insurance, the indirect costs of it being so difficult and risky to fire people (and the more difficult it is to fire people, the more difficult it is to hire them) — these are the sorts of things that drive companies out of the US and into China.

A friend of mine here in DC recently hired this young black woman as an administrative assistant. She proceeded to spend a great deal of time on the job chatting to her friends on the phone, doing her nails, and demanding to be treated like a prom queen. My friend fired her, and, surprise, got hit with a racial and gender discrimination suit. How far do you think an employee in China would get if she tried to sue her employer for “gender discrimination”?

The enormity of the obstacles our government places in the way of job creation is bad enough. Worse is that our government actually subsidizes job destruction. Washington’s Job Destruction Subsidy is officially called the Export-Import Bank. The Ex-Im provides billions of taxpayer dollars in loans and loan guarantees to US companies to set up shop in places like China. A Congressman friend of mine has been struggling in vain to put an end to this. The US Chamber of Commerce freaks out over his proposed legislation, making it very clear to him that most of these companies would never do business in China without the Ex-Im guarantees.

In other words, the destruction of Otto’s business by foreign competition was underwritten by the US government.

Otto is a true American hero, who believed in the American dream and made it real, who never compromised his principles and never sold out his country. It is so painful to see him sold out by the government he respected so much.