Economist agrees with me

[blazespinnaker]

http://www.economist.com/blogs/babba...l-intelligence

AN APOCRYPHAL tale is told about Henry Ford II showing Walter Reuther, the veteran leader of the United Automobile Workers, around a newly automated car plant. “Walter, how are you going to get those robots to pay your union dues,” gibed the boss of Ford Motor Company. Without skipping a beat, Reuther replied, “Henry, how are you going to get them to buy your cars?”

Whether the exchange was true or not is irrelevant. The point was that any increase in productivity required a corresponding increase in the number of consumers capable of buying the product. The original Henry Ford, committed to raising productivity and lowering prices remorselessly, appreciated this profoundly—and insisted on paying his workers twice the going rate, so they could afford to buy his cars.

[astonas]

Re: Economist agrees with me

http://www.economist.com/blogs/babba...l-intelligence

AN APOCRYPHAL tale is told about Henry Ford II showing Walter Reuther, the veteran leader of the United Automobile Workers, around a newly automated car plant. “Walter, how are you going to get those robots to pay your union dues,” gibed the boss of Ford Motor Company. Without skipping a beat, Reuther oreplied, “Henry, how are you going to get them to buy your cars?”

Whether the exchange was true or not is irrelevant. The point was that any increase in productivity required a corresponding increase in the number of consumers capable of buying the product. The original Henry Ford, committed to raising productivity and lowering prices remorselessly, appreciated this profoundly—and insisted on paying his workers twice the going rate, so they could afford to buy his cars.

Great story! It subtly highlights the difference between true capitalism, where one seeks advantage by acknowledging and better adapting to the broader societal context within which one exists (Ford I), and modern ideological capitalism, wherein one simplistically uses the language of free markets as a tool to rig the system so you can "win" (Ford II).

I wonder how many of our elected officials (and, for that matter, candidates) understand the difference?

[Thailandnotes]

Re: Economist agrees with me

It's a myth that a benevolent Henry Ford raised wages to help enlarge a middle class that could buy his product. He cut costs by raising wages, something that is still conter intutitive to many.

[mikedev10]

Re: Economist agrees with me

It's a myth that a benevolent Henry Ford raised wages to help enlarge a middle class that could buy his product. He cut costs by raising wages, something that is still conter intutitive to many.

could you elaborate? better workers, more productivity/less problems?

[blazespinnaker]

Re: Economist agrees with me

That's pretty much it, mikedev10.

[Sidewinder]

Re: Economist agrees with me

As a small business owner I can attest to the value of a higher pay rate, but requires a bit more. Simplistically it comes down to a few rules.

One **must** involve the staff in the hiring/vetting process so everyone has skin in the game - if you will. Encourage and reward innovation, encourage people to suggest or make changes in processes to increase productivity, increase quality or both.

At the end of the year share the wealth assuming you have a good one.

The reward: Combined production and QC along every step - errors are extremely rare, everyone tries to produce a quality product in an efficient manner, little or no resistance to changes in process. High morale.

SW

PS - This does not happen quickly.

[gwynedd1]

Re: Economist agrees with me

As a general rule slaves always gravitate towards their own subsistence. One reason is they never innovate. In Rome it was difficult for Roman freemen to compete with slave labor, but overtime they would become inventive in their labor saving efficiency until such point that the slave owner was not making any profits.

[c1ue]

Re: Economist agrees with me

As a general rule slaves always gravitate towards their own subsistence. One reason is they never innovate. In Rome it was difficult for Roman freemen to compete with slave labor, but overtime they would become inventive in their labor saving efficiency until such point that the slave owner was not making any profits.

Do you have a source for this, or is it just belief?

http://en.wikipedia.org/wiki/Latifundium

The latifundia quickly started economic consolidation as larger estates achieved greater economies of scale and senators did not pay land taxes. Owners re-invested their profits by purchasing smaller neighbouring farms, since smaller farms had a lower productivity and could not compete, in an ancient precursor of agribusiness. By the 2nd century AD, latifundia had in fact displaced small farms as the agricultural foundation of the Roman Empire.

[lektrode]

Re: Economist agrees with me

its just phreaking amazing what you guys come up with...
its also amazing (or perhaps frightening) just how closely life in The US is devolving to that of ancient rome, n'est pas?

[astonas]

Re: Economist agrees with me

Do you have a source for this, or is it just belief?

http://en.wikipedia.org/wiki/Latifundium

gwenydd1 may be referring to later (perhaps the 3rd or 4th century?) when the Roman Empire had stopped expanding. The reduction in the number of fresh slaves from conquest did indeed have profound economic consequences, leading to both the collapse of the monetary system and the onset of an early form of feudalism under Diocletian.

[Raz]

Re: Economist agrees with me

Great story! It subtly highlights the difference between true capitalism, where one seeks advantage by acknowledging and better adapting to the broader societal context within which one exists (Ford I), and modern ideological capitalism, wherein one simplistically uses the language of free markets as a tool to rig the system so you can "win" (Ford II).

I wonder how many of our elected officials (and, for that matter, candidates) understand the difference?

+1.

[c1ue]

Re: Economist agrees with me

gwenydd1 may be referring to later (perhaps the 3rd or 4th century?) when the Roman Empire had stopped expanding. The reduction in the number of fresh slaves from conquest did indeed have profound economic consequences, leading to both the collapse of the monetary system and the onset of an early form of feudalism under Diocletian.

Indeed, hence my inquiry as to his source.

But the conclusion that I drew from that situation wasn't that free workers were more competitive, it was that the relative lack of slaves broke the latifundia business model.