LETTERS TO THE EDITOR - Can we learn today from Henry Ford?


On Jan. 5, 1914, Henry Ford distributed $10 million of company profits to his workers. Then he doubled the minimum wage his company paid.

The nation was shocked; Ford was not known for his compassion.

He was an entrepreneur, known for his inventiveness and the ability to spot business trends. He created the assembly line and made his fortune with two simple rules: "The work must come to the worker, and it must come waist high."

So why would the world's consummate capitalist pay $5 a day to employees who were doing well with $2.32?

For one thing, he hoped this would cut down on employee turnover. Secondly, having no love for unions, he wanted to prevent their getting a foothold in his factories.

Most importantly, he recognized that his workers, their incomes so dramatically increased, would now be able to afford a Ford. And sure enough, before long, most were driving their own Tin Lizzy.

Today, his definition of capitalism seems strange.

"There is one rule for the industrialist," he said, "and that is: "Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible."

With this, he disagreed with economists before him, who believed with David Ricardo (1820) that, "There is no way of keeping profits up but by keeping wages down."

Of course, Ford's unprecedented action forced other industrialists to raise wages. He doubled his profits in a year and effectively transformed the country from recession into a booming economy. This created, particularly after WWII, such a prosperous and productive middle class that, for more than a half century, American capitalism was the envy of the world.

The operating principle held that business and labor both fared best when workers were paid enough to afford the products America manufactured. The symbiotic relationship began to erode in the 1980s with the advent of trickle-down economics, which turned the mind of business toward making themselves super-rich rather than preserving a system that worked for everyone.

The birth of multinational corporations completed the erosion. We didn't need a prosperous working class any more; the whole world was now the market.

Today, our middle class is disappearing, and we seem unable to do much about it. And when it's gone, what malignant thing will be waiting in the wings, ready to feast on the spoils of the American dream?

Paul McCaw



Use the comment form below to begin a discussion about this content.

Sign in to comment