About the legend of Henry Ford and the middle class
Andy Kessler has a great op-ed in today’s Wall Street Journal explaining why President Obama’s policies regarding government handouts and tax rates on wealthy investors are wrong-headed. It’s worth reading in its entirety. But along the way, he dispenses with a popular myth about Henry Ford, wages and the middle class:
In his acceptance speech at the Democratic convention in Charlotte, N.C., this month, President Obama said, “We believe that when a CEO pays his auto workers enough to buy the cars that they build, the whole company does better.” …
This myth — that you can just give money to the middle class and good things happen — is widely shared and is at the basis of a lot of government policy. And it is why the recovery is stuck between lack and luster.
Let’s go back. Henry Ford is popularly credited with inventing the middle class by doubling his workers’ salaries to $5 per day in 1914. A multiplier for the economy, right? Wrong.
The year before, Ford revolutionized manufacturing with the moving assembly line, slashing automobile build times to just 90 minutes from 14 hours. That’s productivity. It allowed Ford to reduce the price over time of his Model T to $290 from $950. Demand took off because it was far cheaper than the cars made by his 88 competitors.
By 1927, 15 million Model Ts were sold to people (most of whom did not work for Ford) and businesses that retired their horses and used these new automobiles productively to lower their own costs, fueling a boom. Raising wages was a byproduct, not a cause. From Ford Motor’s corporate website about the wage increase: “While Henry’s primary objective was to reduce worker attrition — labor turnover from monotonous assembly line work was high — newspapers from all over the world reported the story as an extraordinary gesture of goodwill.”
As they say, read the whole thing. (Here is the page from Ford’s website to which he refers.)
Btw, one of Kessler’s other points is about the folly that food stamps represent a kind of economic stimulus. You’ll have to read his piece to see his treatment of that notion, but it brought to my mind a statement by state Sen. Charlie Bethel, R-Dalton, during the debate about state unemployment benefits in this year’s legislative session. Taking on the argument that unemployment checks boost economic growth, Bethel noted his town’s extraordinarily high number of people on unemployment and said, “If it were true that unemployment checks stimulated local economies, we’d be doing great in Northwest Georgia. We’ve cashed a lot.”
– By Kyle Wingfield
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339 comments Add your comment
Gravy Train
September 19th, 2012
10:39 pm
You still didn’t address the racket…pleading the 5th huh? Also, your customers decided to give you a try and you provided a service. At the end of the day you are nothing without them and you know it. You’re not the only one with business acumen, Boag. There are thousands of other dentists to take your place. Thanks for your little heart string story mixed with the standard Fox News talking points. For your sake, I’ll just assume you are telling the truth in the first place. However, when you start throwing out moronic statements like: “I did build it myself” I have my doubts
Hillbilly D
September 19th, 2012
10:40 pm
David R. Boag, DDS @ 10:05
That isn’t really surprising. Self-discipline is something that seems to be fading as the years go by, at least in my part of the world. People want patience…….and they want it right now. Is it any wonder the world’s a mess?
Reminds me of something I heard attributed to Steven Colbert (who I don’t really care for) the other day, he said about this year’s election “The fate of our country is now in the hands of people who don’t think about what they want until they get right up to the register at McDonald’s,” referring to the “undecideds”.
mike
September 19th, 2012
10:43 pm
“The only way that the rising costs of health insurance will be curbed is when health insurance will be treated like hazard insurance & vehicle insurance. When health insurance is used during a crisis, then health insurance is actually health insurance.” –Linda
For once, Linda, I agree with you. I remember when health insurance was “major medical.” In other words, only used if something really bad happened to you.
Now it’s just a medical administration service. And I’m paying for everyone else’s “pecker pills.”
Linda
September 19th, 2012
10:46 pm
Gravy@10:26, If you think it’s cool to call me names, you are misguided. If you think that calling me names will cause me to cower in my basement, you are misguided.
I hope that Kyle will sever your ties to this blog forever. .
Gravy Train
September 19th, 2012
10:50 pm
Boag, where did you go, pal? You can run your business and carry yourself however you like. It doesn’t mean squat if the customers don’t come through the door. Lots of people come up with great ideas to make money in a service industry, only a few will survive. Why is that? The idea is great and the management is sound but not enough customers are coming through the door. Turn off the lights, lock the door, closed for business within a year. Stop trying to push your fairy tale and pray your arrogance doesn’t diminish your customer base
Hillbilly D
September 19th, 2012
10:51 pm
Now it’s just a medical administration service.
Seems to me that these problems started back in the 70’s. People griped about health insurance then, too, but looking back on it, things weren’t that bad. Then along came something called the HMO. As I remember, and I’ll admit my memory gets hazy sometimes, one of the selling points was that you’d only pay a co-pay for doctor visits. The HMO was supposed to be the be-all, end-all of problems in health care and rising costs. Quickly behind that came, for profit hospitals, corporate groups (It’s hard to find a family doctor who owns his own practice any more), etc. Then the HMO got phased out and in came the PPO.
I’ve known several doctors, who for various reasons, had their own private practice but were forced to sell out to a corporate practice. A visit to them immediately changed. No longer could they take their time with you, some of them told me in confidence about constantly being pressured to “see more patients”. I even personally know one doctor who was fired for “spending too much time with the patients”.
In my opinion, what we have now doesn’t work for doctors and it doesn’t work for patients. I don’t think any of this has been progress. There’ve been great strides in the medical side of things but the business end sucks.
Linda
September 19th, 2012
10:52 pm
Kyle, Gravy’s comments @10:26 are entirely over the top, totally inappropriate.
Gravy Train
September 19th, 2012
10:52 pm
I didn’t call you a name, lady. I was referring to the author of the crap Kyle is pushing on us. Reading comprehension is your friend.
Matz
September 19th, 2012
10:53 pm
The Dentist imagines:
“To my knowledge, I’ve never held a gun to anyone’s head to make them come to see me. They choose to do so, because they want what I have to offer, and I don’t hide who I am, because I live my life honestly and in the open.”
Bless your heart, but NO they don’t. There are two reasons people come to see you: (1) They have dental insurance as part of their compensation package at work, and want to make use of it regularly while they still have jobs because they could not afford it otherwise, and (2) Painful or broken teeth.
They might come back to you because they like you, how you run the office, what you yammer at them while their mouths are propped open and full of stuff, etc. Or maybe they come back because you were not overly offensive or ouch-ful — for a dentist.
But hey, I like the way you make it all about YOU. Heh…. Sure it is, buddy. Sure it is.
Gravy Train
September 19th, 2012
10:54 pm
Kyle, Linda is obviously lacking in basic comprehension. I demand she be banned as well. LOL
Hillbilly D
September 19th, 2012
10:54 pm
It’s true that a lot of new businesses fail, for various reasons. In my personal experience, the number one cause of business failures in new businesses is that they underestimate how much operating money they will need. They may manage to make a small to modest profit but they run into cash flow problems and it sinks a lot of them before they can get squared away.
David R. Boag, DDS
September 19th, 2012
11:10 pm
Gravy,
“You still didn’t address the racket…pleading the 5th huh? Also, your customers decided to give you a try and you provided a service. At the end of the day you are nothing without them and you know it. You’re not the only one with business acumen, Boag. There are thousands of other dentists to take your place. Thanks for your little heart string story mixed with the standard Fox News talking points. For your sake, I’ll just assume you are telling the truth in the first place. However, when you start throwing out moronic statements like: “I did build it myself” I have my doubts”
You’ so close to getting it, because you’re right, there are thousands of others they are also free to choose. I wonder why they keep choosing me, then? Could it be that they receive some kind of benefit that they desire and that I just happen to be able and willing to provide it at a fee that seems fair to them?
You make it sound like I’m taking something from them. I am not. I am simply providing a desired service for which my patients are willing to part with their money. My business is providing dental services in a caring manner. That they give me money for doing so with their permission is both their choice and a testament to the way that I care.
That you cannot see that what sets my business apart from ALL the others is ME, but rather giving the credit to the patients for building my business is short-sighted. Where were they when I signed that $400K loan when I chose to begin to build the office? Nowhere. Without building the office, they don’t show up.
So, you can run away from it all you want, but the fact is that this business started with me, and I continue to drive it: who I am, what I do, and HOW I do it, and the people I have selected and who have chosen to work for me are committed to continuing our commitments to those principles. We have to continually work at it. It is not easy.
Gravy Train
September 19th, 2012
11:10 pm
@ Linda, show me where I called you a name. You asked me what I thought about the referenced article. Here is my reply: “It’s the opinion of a douche bag, Linda. It takes place in the GOP land of make believe. Henry Ford was an antisemitic Nazi and he spent much of his fortune promoting those views. I’m still waiting for Kyle to take on the plutocrats that are wrecking the GOP. I wont even mention the “brain drain” epidemic of the last 12 years within those same ranks. How about the fact that there are still a few logical R’s left, but they are allowing plutocrats and the morons who follow them to lead the party straight into the jaws of another crushing defeat.”
Unless you are an opinion of a douche bag, I see an insult addressed to you no where.
MarkV
September 19th, 2012
11:14 pm
David R. Boag, DDS @ 8:10 pm
Was that supposed to be an argument about anything?
David R. Boag, DDS
September 19th, 2012
11:17 pm
Matz @ 10:53:
“Bless your heart, but NO they don’t. There are two reasons people come to see you: (1) They have dental insurance as part of their compensation package at work, and want to make use of it regularly while they still have jobs because they could not afford it otherwise, and (2) Painful or broken teeth.”
Question, Matz: Why don’t they come to see you? Why me instead of you? What’s the difference?
Gravy Train
September 19th, 2012
11:18 pm
Boag, I respect your gamble, I really do. Where did you accumulate enough capital for collateral on your loan without your customer’s monies? But you are being disingenuous at best by not acknowledging the racket all hospitals, medical offices and dentists play with the insurers. Then there are the pharmaceutical reps that give you incentives to push their products. I’ve seen the inside, too. I know how the game works. Let’s get back to reality, shall we?
David R. Boag, DDS
September 19th, 2012
11:20 pm
MarkV @ 11:14,
“Was that supposed to be an argument about anything?”
Nope. Just an explanation. That’s what the previous writer was referring to regarding unemployment checks supposedly stimulating the economy.
Gravy Train
September 19th, 2012
11:24 pm
If you were really all about dentistry, as you claim Boag, why not set up a non-profit office for under privileged children? Your repeat customers obviously like you well enough to come back. Then again, you may just be the closest office covered by their plans. Ever thought of that? Let’s talk about “sliding price scales” now? Perhaps blatant over-billing to insurers because you know they are going to come back with a lower number?
Gravy Train
September 19th, 2012
11:28 pm
How about the inflation of prices to cover the loss of the inflated claims the insurers refuse to pay? Maybe you service uninsured people who wont pay as well? Care to talk about how you factor all of this into your pricing to maximize profits?
David R. Boag, DDS
September 19th, 2012
11:32 pm
Gravy @ 11:18,
Dang you do like your assumptions about how it works. Let me be blunt and honest:
We dentists don’t get ANY of our products for free. Those toothbrushes and toothpastes we give away? Did those use to be given to us by manufacturers? Yep, but they stopped doing that LONG before I ever started practicing.
And BTW, until last year, I was completely non-contracted with insurance companies. That means that patients paid me for my services 100% and not an insurance company. I only just began to participate in insurance at the beginning of last year, and I did so to provide more opportunity for more people to experience what I do and the way that I do it. I will not be in-network forever. And if and when the gov’t ever tries to FORCE me to provide my services at whatever fees they decide, I will sell my office and do something else.
There is nothing–NOTHING–as honest, simple, and MUTUALLY gratifying as being able to offer a beneficial service to my patients and them willingly pay a fee that both parties deem fair to get it without involving anyone else. If they want to have an insurance company reimburse them for a prtion of what they pay, that is their business, and I’m glad they find that valuable in making what I do fit their budget better. But by doing the services for an honest fee, it allows me to diagnose honestly–I don’t have to try to push people to do more expensive things, because I’ve set all of my fees myself for every procedure, knowing that if I do that procedure for that fee, I’ll be happy, and hopefully they will too.
Is that really so hard for you to understand or believe? If it is, it says more about your preconceived notions that you brought with you into this dialogue than it does about me.
Linda
September 19th, 2012
11:34 pm
Gravy@10:52, You just don’t seem to get it. Your four-letter word that starts with a “c” is inappropriate. Thank you for emphasizing my parents’ role in my upbringing.
Linda
September 19th, 2012
11:38 pm
Gravy@10:54, I won’t miss you.
Gravy Train
September 19th, 2012
11:44 pm
Okay Boag. I understand that you wouldn’t be wise to get real. Not only are there legal ramifications, but I suspect you are now fearing the potential alienation of current or prospective clients. I think many of them will be able to read between the lines of your diatribe as it were. You are really running a max profit business disguised as a dentist office. Where did you get the capital to use as collateral for your loan?
Gravy Train
September 19th, 2012
11:48 pm
Sorry Linda. I don’t see any four letter “c’” words in my post. Care to point them out? I’ll re-post again:
It’s the opinion of a douche bag, Linda. It takes place in the GOP land of make believe. Henry Ford was an antisemitic Nazi and he spent much of his fortune promoting those views. I’m still waiting for Kyle to take on the plutocrats that are wrecking the GOP. I wont even mention the “brain drain” epidemic of the last 12 years within those same ranks. How about the fact that there are still a few logical R’s left, but they are allowing plutocrats and the morons who follow them to lead the party straight into the jaws of another crushing defeat.
Do you know what a plutocrat is? Is that what you mean?
Linda
September 19th, 2012
11:54 pm
Gravy@11:10, Do I need to explain to you how inappropriate your comments are?
You reiterated that noun that started with a “d” & ended with another noun that was “bag.” How revolting!
Thank you for reminding me what great parents I had.
If Kyle banned foul-mouthed liberals from his blog, he could take his days off for investigative reporting.
Matz
September 20th, 2012
12:15 am
Dr. Boag: “Question, Matz: Why don’t they come to see you? Why me instead of you? What’s the difference?”
What makes you so certain they don’t… or won’t?
David R. Boag, DDS
September 20th, 2012
12:18 am
Gravy,
“Okay Boag. I understand that you wouldn’t be wise to get real. Not only are there legal ramifications, but I suspect you are now fearing the potential alienation of current or prospective clients. I think many of them will be able to read between the lines of your diatribe as it were. You are really running a max profit business disguised as a dentist office. Where did you get the capital to use as collateral for your loan?”
If I’m so afraid, Gravy, then why do I put my actual name on here?
I’m not a discount dentist. I do not compete for the low end. I worked in that environment (Medicaid and HMO) for many years, and when I found out that I couldn’t even offer my very best to my patients in that environment because I couldn’t do it and make money, I decided to open my office and live honestly. I provide excellent value for what I do. You don’t sound like a value shopper to me. That’s fine. Nothing wrong with that. It just means I’m probably not a good fit for a guy like you. Fair enough. There are others who are looking for the kind of care I provide, and they are willing to pay more for it than you might be. I fail to see how you can justifiably call me a crook for doing so or at least treat me like one any more than you can call Porsche a crooked company for selling their cars at the prices that they do. If you actually do think that, you have that right, but it doesn’t make you correct. It just means that having a fine automobile isn’t a priority of yours, whether by choice or not by choice.
There is absolutely nothing evil about charging a fee that both parties are willing to agree on before we proceed with care, despite what seems to be a driving force for your point of view, that you believe that is true. My patients don’t have to sign any treatment plan they dont want to. They are free to leave my office, and some do, and that’s OK. i wish them well. I want everyone to feel good about the treatment they receive, even if it means they won’t get it at my office. I decided long ago that trying to be the dentist for everyone did not fit my skill set or my heart. I could not get comfortable cutting the corners that are required to do dentistry at HMO or Medicaid fees and stay profitable. Anyone who believes that they are getting the best care in those environments or even in a PPO envrionment is fooling themselves. I don’t know if this also applies in the medical setting or not, but I can tell you for dang sure that it is true in dentistry. I know that our profit margins are typically lower than those in medicine, because our startup costs are WAY higher. Even now, for my in-network patients, I STILL cannot offer them my best dentistry, but at least I don’t try to dishonestly try to fake it that I am. Most people don’t necessarily want the best…until they do, and usually that comes from having had it done less-than-the-best and been disappointed.
Some will. Some won’t. Some wait. So what? How is that different from any other business out there?
The reason my business is different is me.
David R. Boag, DDS
September 20th, 2012
12:25 am
Matz @ 12:15 am,
“What makes you so certain they don’t… or won’t?”
Nothing at all. You’re welcome to join our profession if you think you can do it successfully. It’s a great profession. That’s the great thing about it. Maybe there’s something about you that you have to offer that might attract them to you. I wouldn’t hold it against you. Business, even if the face of this bad economy is getting better for me. There is a reason for that. Word’s getting around. It’s a good thing.
Listen, it’s late. It’s been real guys! Goodnight to all.
Gravy Train
September 20th, 2012
12:57 am
Anyone else notice how quiet Boag is about where he got the capital to use as collateral for his supposed $400K loan? Could it be that he actually got some help along the way? Either that or his whole diatribe was just another GOP fairy tale to begin with. I understand not wanting to discuss the billing racket on a public forum for previously stated reasoning. Some people just can’t admit that they are not as all encompassing and powerful as they would like to think they are. Boag is your proof.
Gravy Train
September 20th, 2012
1:05 am
Linda, again the term was not directed at you. Have you ever thought that your ideology could be just as offensive to people as you think that term is? Yes, call me a liberal because I don’t buy your crap. You have no idea what party, if any, that I belong to and further, you have no idea how I vote. Typical of the narrow minded xenophobe. And they wonder why the GOP is having such a hard time courting new and diverse members. By the way, if Kyle would keep people like you off of these blogs, he might get a much broader audience. Rational people tend to shy away from people like you…
David R. Boag, DDS
September 20th, 2012
1:14 am
Gravy,
Here’s the BIG SECRET: I used a specialty lender for dentistry. I used my personal assets as collateral. But the truth is that it really wasn’t enough. They gave me the loan because actuarially it is VERY rare when dentists don’t succeed. Or at least that’s how it was when I obtained the loan. It was different then than it is now, I’m sure.
So, the truth is that I didn’t have collateral, and no one else signed for the loan but my wife and myself.
Can you come off your high horse now?
David R. Boag, DDS
September 20th, 2012
1:22 am
Oh, and that risk they are taking in giving me the loan without all the collateral is reflected in my rate, in case you haven’t figured that out yet. Probably should have said that. It wasn’t a basement bottom rate. You forgive me if I don’t share any more details than that. It’s not really any of your business, but its the reality and since you don’t seem to be aware of it, I thought I could help bring you back to it.
Once again, have I hidden anything from you? Can you please let go of your incorrect assumptions and realize that many conservatives are just normal people like you and me and not the monsters that the left likes to caricature us as?
Thanks. And finally, goodnight. This time, I mean it.
Lil' Barry Bailout - Vote American
September 20th, 2012
5:17 am
Y’all shouldn’t let Gravy get you all riled up…no one can be that stupid. She’s merely trying to keep you busy responding to her inanities.
marko
September 20th, 2012
6:04 am
People being paid enough to buy the products they produce a myth? As a case of revisionist history, this has got to rate right up there with the Constitution being based on the Bible. Evidentially America’s a place where you can never be sure about your past. The truth is the founding fathers may have been philandering, duel fighting, slave owners, but they never used phony bankruptcy laws to steal the pension plans of their employees.
The truth is that Henry Ford may have been an anti-Semitic Nazi lover, but at least he wasn’t a vulture capitalist. Look up Fordism. I’d also suggest that you spend a couple of minutes researching your subject matter.
cc
September 20th, 2012
6:23 am
Lil’ Barry Bailoutt@5:17 am:
Any prognostication of what and who will be bailed out next?
Lil' Barry Bailout - Vote American
September 20th, 2012
6:23 am
they never used phony bankruptcy laws to steal the pension plans of their employees
———
…and employees were never lame and careless enough to trust the government or their employer to provide for them in their old age.
Lil' Barry Bailout - Vote American
September 20th, 2012
6:26 am
The next bailout? Looks like either California or Illinois, two Democrat nirvanas that apparently can’t raise taxes fast enough to pay their bills!
cc
September 20th, 2012
6:34 am
I do believe you are right. California has committed fiscal suicide with its ‘social programs’ and their tax base is busily relocating in other states. Illinois has almost unionized themselves out of existence.
yuzeyurbrane
September 20th, 2012
10:46 am
Gravy Train—-the sooner you realize this is Linda’s blog and that Kyle is her assistant, the better off you will be. She could have banned you but was lady enough to simply deplore your use of language.