October 1, 2006
What Would Henry Ford Do? Posted by Joshua Zeitz at 10:25 PM EST A few days ago I inadvertently inspired a debate over the federal minimum wage when I made note of Henry Ford’s dual policies of paying his workers $5 a day (later raised to account for inflation) and granting them 40-hour work weeks. My intention was simply to point out that Ford understood that in a consumer-driven economy, a reasonable distribution of income and wealth was needed to secure long-term economic growth. As it so happens, 98 years ago today Henry Ford launched an earlier and equally important innovation. He rolled out the first Model T car and inaugurated America’s love affair with the automobile. At the dawn of the twentieth century cars were still viewed as impractical and unsafe. Their tires fell off; they buckled and spun out at the slightest provocation; when it rained, their wheels got mired in mud and muck. At best they were playthings of oil tycoons and bankers’ sons. San Francisco, Cincinnati, and Savannah slapped drivers with a maximum speed limit of eight miles per hour. Vermont required all motorists to hire “persons of mature age” to walk one-eighth of a mile ahead of their cars, waving red warning flags for the benefit of innocent pedestrians. The technology revolution hit America almost overnight. In the years before World War I, Ransom Olds inaugurated the mass production of automobiles, Henry Leland experimented with interchangeable car parts, and Henry Ford took advantage of both advances to usher in a radical phase in the ongoing transportation revolution. By the late 1920s the automobile industry was turning out nearly five million cars each year and Americans collectively owned 26 million automobiles, which translated to one car for every five persons. To support this new car culture, state and local governments saddled themselves with over $10 billion of debt to construct modern highways, roads, tunnels, and bridges. Florida cut through the Everglades swampland to raise the Tamiami Trail; Arizona bisected its vast desert; Utah paved a road over Lake Bonneville; and New York erected the Bronx River Parkway. It’s ironic that today, 98 years after Ford introduced the Model T (which, he famously said, customers could purchase in any color, as long as it was black), Detroit is struggling to keep its head above water. Ford, Chrysler, and General Motors—the Big Three—are slashing production, buying out and laying off workers, closing plants, and cutting costs in order to compensate for record losses in market share to Asian firms that build smaller, more fuel-efficient cars. One wonders what Henry Ford would do. Innovator that he was, I’d like to imagine he’d see the future for what it is, and insist on retooling the American auto market for the production of lighter, more fuel-efficient models. One would also like to think that he’d concede the necessity of a national health insurance program—not necessarily single payer—to relieve Detroit firms of the need to pay costly health care premiums for their unionized workers. I very much doubt this, however. Ford would likely have opposed unions, not private health insurance. And, of course, it’s all counterfactual speculation anyway.
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