Can't Spell Affordable Without Ford

It's not just the spark plug maker who takes a hit when a car plant closes, or even slows down, but also the restaurants and grocery stores who cater to their well paid employees.  Ford is also one of the nation's largest advertisers, representing a significant portion of income to both giant media companies as well as newspapers, magazines and local TV and radios stations.

Henry Ford's little operation had a reputation for taking care of its workers.  Not necessarily out of any altruistic sense of civic duty.  But rather, Ford harnessed a concept for corporate self-interest heretofore untouched (at least on a major scale) for harnessing the capitalistic profit motive for the benefit of the community.

It truly was a brilliant concept.  A company stays healthy so long as it can market it's goods and/or services.  Ford needed to pay its workers enough to afford it's product, and could only make cars cheap enough for economies of scale to work it's magic if he hired a lot of workers who made a lot of cars, so that the cost per unit was affordable to those very workers.

Good pay meant Ford was creating customers as well as laborers.  A healthy workforce was also essential to maintain productivity.  Thus, company provided health insurance was as much, if not more, a result of the profit motive than any union pressure.  Likewise, extending those benefits to a worker's family meant they were less likely to take off work to minister to a sick child or spouse.  Dangling a decent retirement package at the end of a lengthy term of service also works to the benefit of the company which would otherwise suffer greater turnaround in employees -- necessitating increased cost and inefficiency required to train new workers more often.

The model works, and works well for all concerned.  Yet, whenever the root cause of the current malaise in the manufacturing industries of the Great Lakes region are discussed, invariably greedy and corrupt unions are thought to be the culprit.  Now I will grant that there are "unionistas" out there who seem to have little or no regard for a company's financial health, blaming all corporate woes on management.  But such militants are actually quite rare, and only the most ignorant union member would insist on eating the golden goose that provides them with a job.

The global marketplace provides enormous sales opportunities for American products. "Make in America" is a brand that not only means quality and durability, but also represents to the world that the workers who made them benefit as much from the purchase as the financiers on Wall Street who own the company's stock.

That brand, Brand America, the representation that capitalistic greed not only out performs every other economic system but is universally beneficial in the long run to all concerned, is a structure worth preserving and protecting.

Globalization, in its many forms is destroying that structure.  American workers cannot, and should not be expected to compete in an international marketplace that does not likewise tap into a community responsive system that compensates its workforce to the point where they also can be their company's best customers.

As our out of control trade deficit illustrates ($202 billion last year with China alone); American workers are the world's customers.  If we are purchasing foreign goods and services unaffordable to the population of other nations.  We are inevitably undermining our own ability to continue to support other nation's economies through our buying power.

This phenomenon becomes especially stark with the advent of job outsourcing.  But the incentives are exactly backwards.  Instead of competing for cheaper labor, international companies should be promoting competition between customers.  They can create demand, and afford to raise prices, if they create customers the Globally the way Henry Ford did in Michigan at the dawn of the industrial age.

We basically have two choices.  Insist that the cost of accessing the America marketplace include a competitive wage for foreign workers who's products are shipped here, or accept a lower standard of living for the American workforce.  (That means you, too.) 

[U.S. Labor Secretary Elaine] Chao explained on the September 4 “American Morning” that consumer spending was strong and that the economy had “not so much a wage gap, but a skills gap” requiring more training and education for workers.

The Labor Department's panacea of education and re-training is a mere band-aid so long as we are competing with slave wages in developing countries.  Without an incentive for a foreign company to make customers out of it's own people -- instead of relying almost exclusively on the affluent western democracies to purchase their products -- they will continue to pay barely subsistence wages to their indigenous workforce.

Many will argue that any attempt to address these inequities is protectionist -- and protectionism is bad.  Rightly so.  But what is most often seen as a way of "protecting" American products from underpriced competition loses it's undesireability when put in the context of protecting American jobs and an economic structure dependent upon compensation commiserate with the quality level we expect from American goods.

Simply put, you not only get what you pay for -- you should expect to pay for what you get.  As the third world develops, and emerging economies like India and China become economic powerhouses, we do ourselves a great disservice not to make them expect to compete with our standard of living, but rather fall into the trap of competing with theirs.

It is no excuse that an American company would do better by exploiting a workforce that does not insist for themselves on decent wages, health care and retirement benefits than it can here.  By refusing to put American jobs first as an integrated policy of our trade representatives and Labor Department, willing when necessary to impose tariffs where warranted, or otherwise restricting foreign competitors access to the American marketplace, we are in effect subsidizing the perpetuation of a system that will inexorably lead to the destruction of our American way of life.

Personally, I think that raised tariff's are a punishment of last resort and does nothing to help foreign workers compete as customers for our products if companies decided the tariff is merely the cost of doing business as usual, and less expensive than paying their own people what they deserve. But deny their products and services our lucrative marketplace and they will turn around in no time at all.  Even the threat of denial of access to United States' ports of entry will cause foreign and multinational enterprises to promote their labor force into customers if only as insurance.

Think about it. More customers means more production at lower cost per unit, while only pushing prices upward. Supply-siders have had their run for several decades, with the result that poverty has increased and labor intensive productivity has risen yet we still can't compete abroad.

It's time for some Demand-Side thinking.

Of course corporate profits are rising, GDP grows, and companies on Wall Street are holding their own.  But that is a false indicator of prosperity.  You don't hear about companies on Wall Street that are not profiting their investors -- because they don't stay on Wall Street -- or never were there in the first place.  Harvard, Yale, Stanford and Cornell all put out excellent, world class products every year.  But you don't see those institutions traded on the Nasdaq.  The Yankees would be a DOW component if it's stock were made public, but they'd never play the Indians or Brewers again -- because the teams would have folded after their shares became penny stock.

Baseball exists despite competition from more popular past-times like the NFL and NASCAR because Congress saw fit to preserve the industry, granted it anti-trust exemptions, and the industry rewards it's workers far in excess of their real-world value.  Sports leagues represent a downright anti-conservative if not anti-American economic model.  The NBA and NFL are almost communistic in their share-the-wealth division of profits among competing teams, and rewarding their principle laborers, the players, more than management.  It's absurd, but it works.

I only bring these aberrations up to point out that there are different economic models that are quite successful, American as apple pie, yet fly in the face of supply-side, trickle-down economic voodoo.

At present, the only force acting in opposition to the siphoning off of our prosperity to other shores is organized labor.  Profit obsessed corporate management has no reason address the greater long term good, and our current administration consists either of corporate apologists or foreign adventurers more interested in global hegemony than domestic tranquility.

Company management, faced with the dilemma of fixed overhead, ever increasing cost of raw materials and competing with cheap foreign products, either has to reduce it's labor costs or ship jobs overseas.  Our current policies, aiming merely to maximize Wall Street's bottom line with no concern for the long term effects of preferring profits to the exclusion of all else, actually promote the further decline of our financial health.

The illegal immigration problem we are experiencing with Mexico highlights this problem in sharp relief.  The fact that so many would risk so much for a mere chance at a decent job, is testament to the illogic of creating a free trade zone that included a nation whose people can barely find subsistence level employment.

The reality that there is little or no enforcement against "illegal employers" in this country who hire undocumented workers is one half of the coin.  The fact that the Mexican economy does not create indigenous customers for products created there, but ships their customers instead of their merchandise here instead, is a cycle that will not be broken without a strong incentive to compensate their workers enough to support their own economy.