I blame Henry Ford. Everybody’s blaming somebody for all the messes we’re in these days. So, I blame Henry Ford.
Ford’s introduction of the affordable Model T in 1908, which was manufactured using an “assembly line,” became the springboard for numerous other industries that, with a few hiccups along the way, have produced the greatest economic expansion and prosperity the world has ever seen.
The oil industry boomed along with the steel industry and many others related to the manufacture of automobiles. Road construction also took off so that all those horseless carriages could get around much easier. Our mostly agrarian economy became mostly industrial as many left their farms to seek their fortune in other parts of the country.
During the Great Depression, many of President Roosevelt’s programs helped to create a vast infrastructure built around the automobile. And that, with some help from the GI Bill after World War II, put millions of Americans on the road to suburbia. Home ownership then became the asset of choice. This spurred a concomitant growth in the home construction industry as well as the home furnishings, fixtures and appliance manufacturers, along with the utility companies and the home supply and home repair industries. Financial institutions also saw phenomenal growth during this period – banks, savings and loans, credit unions, and insurance companies. But, the automobile still held sway. In the 1950’s the mantra was, “What’s good for General Motors is good for the country.” Much of this would have been more difficult, I argue, without Henry Ford and his Model T.
But, there’s more. To keep labor unions at bay, and to reduce employee turnover, Ford stunned the industry with his $5.00 per day plan in 1914; more than doubling the average worker’s pay. Later he would offer a profit-sharing plan, but only to those who were qualified by his “Social Department.” Of course, Ford was not about altruism. He was about making money.
For those manufacturers that refused to follow Ford’s lead in the treatment of employees, labor unions stepped in to fight for benefits. As a result, collective bargaining units became a significant part of the work force in virtually all industries, peaking in 1954 with 28.3% of all full-time employees.
During the first half of the 20th century, the notions of outsourcing and down-sizing were unheard of. Unions were therefore able to obtain substantial benefits for their members during this period, including paid vacation and sick leave, health insurance, and retirement/pension programs. But, as productivity increased and as cheap labor became available elsewhere in the world, union membership declined along with America’s manufacturing base. In 2010, unions comprised only 11.9% of the labor force. But, the legacy of their fight for employee benefits still lingers. After all, who wants to give up weekends?
Also, during the 1950’s and 1960’s, Japan and Germany had mostly recovered from the War and had established a substantial manufacturing base that was very competitive with the U.S., including automobiles like the Toyota and the Volkswagen, and electronics, lots of electronics. But, while Americans were trying to set the clocks on their VHS players, India, and later China, decided they would rather establish their own industrial base. In fact, during the 1980’s, with the introduction of the personal computer, information technology would overtake manufacturing as the new growth industry; much of it coming from Asia.
Somewhere along the way the idea of “globalization” entered the vocabulary. White collar and blue-collar workers alike were left to the mercy of their employers. Strikes by unions were no longer effective against low-cost labor in other parts of the world. As a result “at will” employees became expendable. As corporate America unburdened itself from the expense of its workers and sought cheap labor elsewhere, the middle class eroded and the disparity between the haves and have-nots in income and wealth grew further apart. It was then left to government and to the rest of society to provide some kind of safety net for the dispossessed.
All the presidents and members of Congress since the Great Depression have expanded government involvement into virtually every aspect of our lives. The social security system was expanded to include virtually all workers, their spouses and children, and even added disability benefits. And don’t forget Medicare and Medicaid. To help the poor, the government offers welfare payments, food stamps, minimum wages, and unemployment benefits. Then there is government help for home owners with government backed mortgages, for college students with grants, for farmers with subsidies for crops, and, for all of us, more security (say some) with the largest military in the world. Meanwhile, the cost of all this benevolence begins to add up. If I didn’t know better, I’d swear our Representative Democracy has morphed into Socialism.
As a result of all this tinkering, everybody now has a stake in government. Consequently, special interest groups sprang up and Washington has become overrun with lobbyists. Of course, the elected officials tend to pay more attention to those with deep pockets since election campaigns are expensive. So, the rich are rewarded the most, not only by pork-barrel projects, but through the tax code, which, by the way, has been changed 15,000 times since 1986. All this favoritism, all the promises made, have come at great cost. And we’ve been painfully reminded of that in the recent “debt ceiling” debate. Congress has been sawing on the wrong side of the limb for a long time. But hey, that’s what we voted for.
So, I lay all this at the feet of the late Henry Ford with his Model T moving lazily down the assembly line. His vision helped propel the idea that we could have it all, that we could have it all now, and that we could do it all on the cheap. On the other hand, as Ford himself once said, “Don’t find fault, find a remedy; anybody can complain”
Published in the Joplin Globe on August 23, 2011
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