Politicians promise. Capitalists deliver

Two American heroes to the middle class died on Wednesday. Herb Kelleher, the beloved founder of Southwest Airlines, died at age 87 after a gregarious life of hard-drinking and smoking. The more introspective but friendly John Bogle died at age 89.

Kelleher's staff simply adored him. Millions of investors swore by Bogle. Both brought the lifestyles of the rich and famous to the middle class.



"But Kelleher’s zaniness at times obscured his achievement in building the three sturdy pillars Southwest stands on to this day. First, he virtually invented — and then successfully operated, a rare accomplishment for a founder — a revolutionary business model, the low-cost carrier. Second, he deployed prudent financial management to keep Southwest’s wings level in turbulent times. Third, in an industry plagued by America’s worst labor relations, Kelleher managed to nurture what’s arguably corporate America’s most loyal workforce," Shawn Tully of Fortune magazine wrote.

His low-price air travel brought the skies to the people.

Air travel was out of reach due to high-ticket prices. Only the rich and businessmen could afford it.

Kelleher looked at the industry and decided volume was the way to go.

"To lower maintenance costs, Southwest operated only one aircraft model, the Boeing 737. Kelleher also found that 'short-haul' routes of less than three hours, even at low prices, were a lot more profitable than, say, transcontinental flights, because the fares charged per mile were higher, and Southwest could turn the planes far faster," Tully wrote.

But the key was keeping his staff happy. He did more with fewer people who were willing to do more because they loved their boss. A smaller staff meant he did not have to lay off during economic downturns.

Lower costs mean lower prices mean more tickets sold.

"Southwest has made money for 45 straight years, and greatly enriched shareholders," Tully wrote.

The company enriched America. You are now free to move about the country.

Bogle joined Wellington Management Co. out of college in 1951 and worked his way up to president 16 years later.

The mutual fund giant fired him in 1974. He moped around.

A year later, he started Vanguard Group Inc., a mutual fund that did to investing what Kelleher did to air travel. Bogle did not try to beat the market. He just wanted to meet it.

His most famous mutual fund, Vanguard 500 Index Investor, became a $400 billion giant. He kept costs low by not wasting too much money on research and dart boards. Instead, the Vanguard 500 simply buys stocks in proportion to their Standard and Poor 500 standing.

Investors can simply look at how the S and P 500 goes to see how their money did. Simplicity. The best thing about capitalism is simplicity.

The Vanguard 500 is just one of the company's mutual finds and many do try to beat the market. However, the Vanguard 500 was his gift to the masses.

While Wellington Management manages $1 trillion in assets for its clients, Vanguard manages $5 trillion.

Joseph N. DiStefano of the Philadelphia newspaper wrote, "If he was bullish on America, Jack’s message to savers is, in its cheerful wrapping, pessimistic: You can’t beat the market. Those pros can’t, either. The best you can do is capture broad market gains, while minimizing your fees. As rivals cut their fees to match, Jack said Vanguard should cut its fees more than it did, and never raise them, as it sometimes does, a bit."

Richard Grimes, the political editor of the defunct Charleston Daily Mail, liked to tell the story of then-Governor Jay Rockefeller asking reporters how their portfolio was doing.

Jay was the snob of the people.

A few years later, the Mail began a 401-k program. Thanks to Bogle, I can tell Jay my portfolio is doing quite well. Up (checks the S and P 500) 22% since President Trump's election.

Rockefeller promised to turn West Virginia around. He was a disaster. The press made excuses for his incompetence. (Not Grimes.)

The only thing Rockefeller did for the state was to use his personal relationship with Eiji Toyoda to get him to build a Toyota engine and transmission plant in Buffalo, West Virginia.

All Jay's government programs failed. His one venture into capitalism worked.

Kelleher and Bogle delivered on their promises. They will get no state funerals. The flag waves high and proudly. This is how it should be.