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economic situation is dire


ianrobo1

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10 workers work hard. They can each make one car per month. They produce 120 cars per year.

 

Mr Ford comes along. He splits the 10 workers out into how skilled they are at making specific parts of the car, he gets them to focus on that part of the process instead and passes it onto the next worker when their job is done. 

 

Each worker's productivity is doubled now they focus on but one part of the process. So the 10 workers produce 240 cars per year. 

 

Ford car company employ 181,000 people.....

Henry Ford is a superior to his peers because his mind alone created something which collectively benefited thousands. The fact he got his just rewards does not make him evil or wrong or the enemy of anyone. If he had no material gain he would not have been incentivised to do what he did, to innovate and then how many people would never have had jobs?

That's some kind of wierd logic, there. For me it's a massive problem with the accepted mindset of the west, or much of the governements of the west.

I have no problem with the notion that (in your example) Henry earns a higher amount of money than the other 10 folk, and that he gets more because of his organisational skills, analytical skills and ability to map out a business plan and way to change his manufacturing processes. Those abilities are rarer than the abailities of the other people to efficiently and without error assemble engines or clutches or dashboards.

However, he is not "superior" to them as a person or as a worker, really - (other than by his title as MD or whatever) - he is not in the scheme of the world "better" than them.

The wealth and work and whatnot created by Ford (in your example) is a collaborative effort. The people who work there should be remunerated fairly for their labours and their intellectual contributions.

Mostly that doesn't happen.

Mostly the directors and senior management are rewarded (in the last 30 years) by massive multiples of the other workers wages.

With no change in overall value of businesses in the US and UK (relative to inflation etc.) director salaries have gone from 20 or 30 times workers salaries, to a hundred or more times workers salaries.

The roles of the people haven't changed. Their relative worth hasn't actually changed. It's just that directors, with the nod of Gov'ts have manipulated their salaries to much greater levels, because they could get away with it.

And that new level has become kind of accepted as "well, it's just one of those things".

And the ethos of social responsibility has withered, by and large. Companies pollute and kill and rig markets and abuse their positions with suppliers and customers and they dodge tax and they further enrich a very few people who are above the ceiling, above "normal" society.

Henry Ford in your example isn't "superior", and the bahviour of the Henrys and their accomplaces in many ways makes them inferior, morally.

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Your free-market advocates say that our view of the Scandinavian model is highly distorted.

 

They dismiss Norway as an example because when a country has that much oil and such a small population, you can't really credit the system for its achievements.

 

Although, I think choosing to put oil revenues into a sovereign fund rather than squandering it on tax-cuts, is not the sort of native wisdom found closer to home.

 

When it comes to Sweden, they point out that they had enjoyed two overlooked advantages, which are almost certainly connected.

 

They haven't fought a war since 1809, which allowed them to achieve the longest period of continuous economic growth of any country in the world.

 

While the UK was destroying most of its economic wealth in wars from the Napoleonic to WW2, the Swedes were enjoying free-trade and flogging their stuff (steel, ball-bearings etc) to both sides and making themselves rich.

 

Emerging into the post-WW2 period with no debt, your industry intact and with Europe having to rebuild itself, is a substantial advantage. 

 

So Sweden were certainly rich enough and stable enough to justify their experiment, which began from 1950.

 

I can't see how the UK could ever find themselves in such an advantageous position, or would be prepared to sacrifice consumerism for the Swedish political model.

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10 workers work hard. They can each make one car per month. They produce 120 cars per year.

 

Mr Ford comes along. He splits the 10 workers out into how skilled they are at making specific parts of the car, he gets them to focus on that part of the process instead and passes it onto the next worker when their job is done. 

 

Each worker's productivity is doubled now they focus on but one part of the process. So the 10 workers produce 240 cars per year. 

 

Ford car company employ 181,000 people.....

Henry Ford is a superior to his peers because his mind alone created something which collectively benefited thousands. The fact he got his just rewards does not make him evil or wrong or the enemy of anyone. If he had no material gain he would not have been incentivised to do what he did, to innovate and then how many people would never have had jobs?

That's some kind of wierd logic, there. For me it's a massive problem with the accepted mindset of the west, or much of the governements of the west.

I have no problem with the notion that (in your example) Henry earns a higher amount of money than the other 10 folk, and that he gets more because of his organisational skills, analytical skills and ability to map out a business plan and way to change his manufacturing processes. Those abilities are rarer than the abailities of the other people to efficiently and without error assemble engines or clutches or dashboards.

However, he is not "superior" to them as a person or as a worker, really - (other than by his title as MD or whatever) - he is not in the scheme of the world "better" than them.

The wealth and work and whatnot created by Ford (in your example) is a collaborative effort. The people who work there should be remunerated fairly for their labours and their intellectual contributions.

Mostly that doesn't happen.

Mostly the directors and senior management are rewarded (in the last 30 years) by massive multiples of the other workers wages.

With no change in overall value of businesses in the US and UK (relative to inflation etc.) director salaries have gone from 20 or 30 times workers salaries, to a hundred or more times workers salaries.

The roles of the people haven't changed. Their relative worth hasn't actually changed. It's just that directors, with the nod of Gov'ts have manipulated their salaries to much greater levels, because they could get away with it.

And that new level has become kind of accepted as "well, it's just one of those things".

And the ethos of social responsibility has withered, by and large. Companies pollute and kill and rig markets and abuse their positions with suppliers and customers and they dodge tax and they further enrich a very few people who are above the ceiling, above "normal" society.

Henry Ford in your example isn't "superior", and the bahviour of the Henrys and their accomplaces in many ways makes them inferior, morally.

 

 

It has to be pointed out that Ford hated the stock market because he saw them as unproductive parasites who got rich while producing nothing.

 

He always raised his own capital, if I recall correctly.

 

The one logic which Ford understood was that it was important that workers should be paid more because they would consume more.

 

It was he who introduced, the then unheard of wage of $5 a day and it was other businesses who campaigned to stop him doing it.

 

Obviously, Ford's anti-Semitism is always held against him and rightly so, but I think if anyone needs to make a capitalist a hero, Ford is a decent candidate.

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I would like to be provided with a list please of jobs that "serve a point"

I think you took what I said incorrectly (i.e. I made a right cock up of explaining myself clearly and probably will again) and it meant we/I went off at a bit of a tangent.

By 'has a point', I meant that if there is a goal in a function then work towards that goal 'has a point'.

The efficiency of the work is more important than the effort - which I suppose is one of the messages in your Ford example.

Edited by snowychap
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10 workers work hard. They can each make one car per month. They produce 120 cars per year.

 

Mr Ford comes along. He splits the 10 workers out into how skilled they are at making specific parts of the car, he gets them to focus on that part of the process instead and passes it onto the next worker when their job is done. 

 

Each worker's productivity is doubled now they focus on but one part of the process. So the 10 workers produce 240 cars per year. 

 

Ford car company employ 181,000 people.....

Henry Ford is a superior to his peers because his mind alone created something which collectively benefited thousands. The fact he got his just rewards does not make him evil or wrong or the enemy of anyone. If he had no material gain he would not have been incentivised to do what he did, to innovate and then how many people would never have had jobs?

That's some kind of wierd logic, there. For me it's a massive problem with the accepted mindset of the west, or much of the governements of the west.

I have no problem with the notion that (in your example) Henry earns a higher amount of money than the other 10 folk, and that he gets more because of his organisational skills, analytical skills and ability to map out a business plan and way to change his manufacturing processes. Those abilities are rarer than the abailities of the other people to efficiently and without error assemble engines or clutches or dashboards.

However, he is not "superior" to them as a person or as a worker, really - (other than by his title as MD or whatever) - he is not in the scheme of the world "better" than them.

The wealth and work and whatnot created by Ford (in your example) is a collaborative effort. The people who work there should be remunerated fairly for their labours and their intellectual contributions.

Mostly that doesn't happen.

Mostly the directors and senior management are rewarded (in the last 30 years) by massive multiples of the other workers wages.

With no change in overall value of businesses in the US and UK (relative to inflation etc.) director salaries have gone from 20 or 30 times workers salaries, to a hundred or more times workers salaries.

The roles of the people haven't changed. Their relative worth hasn't actually changed. It's just that directors, with the nod of Gov'ts have manipulated their salaries to much greater levels, because they could get away with it.

And that new level has become kind of accepted as "well, it's just one of those things".

And the ethos of social responsibility has withered, by and large. Companies pollute and kill and rig markets and abuse their positions with suppliers and customers and they dodge tax and they further enrich a very few people who are above the ceiling, above "normal" society.

Henry Ford in your example isn't "superior", and the bahviour of the Henrys and their accomplaces in many ways makes them inferior, morally.

 

 

I agree with every word of your post. And to clarify by "superior" I mean his skills are rarer and hence should be remunerated proportionally to how those skills have increased productivity. 

 

The gap between those at the top and those at the bottom of an organisation has gone too far in the past 10 to 15 years. 

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The one logic which Ford understood was that it was important that workers should be paid more because they would consume more.

It was he who introduced, the then unheard of wage of $5 a day and it was other businesses who campaigned to stop him doing it.

Did he introduce that wage for the reason you suggest or rather to try and combat the staff turnover problem within his company (and the resulting effects upon productivity and labour costs)?

Edit: Or are they both myths? :)

Edited by snowychap
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Your free-market advocates say that our view of the Scandinavian model is highly distorted.

 

They dismiss Norway as an example because when a country has that much oil and such a small population, you can't really credit the system for its achievements.

 

Although, I think choosing to put oil revenues into a sovereign fund rather than squandering it on tax-cuts, is not the sort of native wisdom found closer to home.

 

When it comes to Sweden, they point out that they had enjoyed two overlooked advantages, which are almost certainly connected.

 

They haven't fought a war since 1809, which allowed them to achieve the longest period of continuous economic growth of any country in the world.

 

While the UK was destroying most of its economic wealth in wars from the Napoleonic to WW2, the Swedes were enjoying free-trade and flogging their stuff (steel, ball-bearings etc) to both sides and making themselves rich.

 

Emerging into the post-WW2 period with no debt, your industry intact and with Europe having to rebuild itself, is a substantial advantage. 

 

So Sweden were certainly rich enough and stable enough to justify their experiment, which began from 1950.

 

I can't see how the UK could ever find themselves in such an advantageous position, or would be prepared to sacrifice consumerism for the Swedish political model.

 

This is an excellent post. Denmark was occupied and suffered hardship, most notibly inflation of over 300% in 5 years but by and large avoided the devestation of Europe.

 

Still I think their current higher taxation and more accountable and efficient use of state funds is a model for many countries. 

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The one logic which Ford understood was that it was important that workers should be paid more because they would consume more.

It was he who introduced, the then unheard of wage of $5 a day and it was other businesses who campaigned to stop him doing it.

Did he introduce that wage for the reason you suggest or rather to try and combat the staff turnover problem within his company (and the resulting effects upon productivity and labour costs)?

 

 

Does it matter?  Whether he was purely altruistic, a 100% capitalist pig or somewhere inbetween, the point is that both he and the workers benefitted.

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Does it matter?

Of course it does.

The reasons behind an action are important, too.

Edit:

To expand, if Ford's motive for the hike in pay (though I've read that the $5 a day may not have been quite as simple as that - at least that's what Worstall claims*) was actually to address a severe staff turnover/labour costs issue rather than the one normally suggested then the mythologized history of him (and the lessons learnt) might need a bit of amending.

Of course, the worker issue might be the myth or they might both be or, more likely, I suppose there's a little truth in all of the suggestions.

*

link

It’s also not true that the offer was of $5 a day in wages. It was all rather more complicated than that:

The $5-a-day rate was about half pay and half bonus. The bonus came with character requirements and was enforced by the Socialization Organization. This was a committee that would visit the employees’ homes to ensure that they were doing things the “American way.” They were supposed to avoid social ills such as gambling and drinking. They were to learn English, and many (primarily the recent immigrants) had to attend classes to become “Americanized.” Women were not eligible for the bonus unless they were single and supporting the family. Also, men were not eligible if their wives worked outside the home.

Edited by snowychap
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Henry Ford is a superior to his peers because his mind alone created something which collectively benefited thousands. The fact he got his just rewards does not make him evil or wrong or the enemy of anyone. If he had no material gain he would not have been incentivised to do what he did, to innovate and then how many people would never have had jobs??

As others have pointed out, the idea of the lone genius is false, and belittles the vast contributions made by so many others. Ford profited from engineering advances made by others, he didn't invent everything he used. (Mazzucato is good on the role the state plays in this, and how supposedly pioneering and inventive firms like Apple actually rip off what the state and others have provided, corralling vast profits from no particular innovation at all).

And the idea that if it were not for Ford, many thousands of people working their guts out on his inhuman production lines to make him vastly wealthy would have been starving in the gutter rather than doing another job instead is frankly silly.

By the way, a good book to read about Ford, the production system, and its effect of the people working there, is "Working for Ford" by Huw Benyon. It's rather like what people are writing nowadays about Amazon.

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Mr Smith would indeed have challenged the claim, had he been alive to hear it. ☺

Though Mr Smith would in turn have agreed that he was simply describing what was commonly done in factories, not laying claim to a revolutionary form of industrial organisation.

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I seem to recall that the idea of the assembly line was suggested by a guy called Sorensen who had seen it in the meat packing industry.

 

Ford's greatest contribution was making cars for ordinary people, a market which did not exist at the time.

 

It has to remembered that he left his original company because of a dispute about the sort of product he wanted to make.

 

The company he left behind became Cadillac.

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And the idea that if it were not for Ford, many thousands of people working their guts out on his inhuman production lines to make him vastly wealthy would have been starving in the gutter rather than doing another job instead is frankly silly.

Presumably they chose to work there rather than doing another job for a reason then.

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One of the questions which Ford provokes is how come he managed to reduce the price of a Model T from £13774 in 1909 to £2226 in 1925, and why that sort of thing does not happen these days.

 

These days that sort of thing does not happen and modern car makers just increase their profit margins as they get cheaper to make rather than lowering the price for the customer.

 

It does seem to be a different sort of capitalism back then, than it is now.

Edited by MakemineVanilla
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