top business, media, and political leaders have turned their backs
on the vision and economic values espoused by Henry Ford and have
placed America in grave danger.
America has lost about 60% its manufacturing
base over the last four decades. America now suffers from a
serious structural inability to reverse its chronic trade deficits
through the production of tradable goods. America has also seen
and declining real wages. America is continually losing skilled
jobs to cheaper labor overseas and is not replacing these jobs on
a net level with more jobs that have equal or greater pay.
Americans are rapidly increasing total personal, corporate, and
in an effort to make up for shortfalls. The Federal Reserve Banking
System has increased the money supply at a rate of roughly 10%
a year for the last decade, and is prepared
to launch into hyperinflation as a last resort.
No country in history has ever achieved true economic growth or
prosperity simply by increasing debt or the money in circulation;
to the contrary, Third World countries do this quite often and none
of them are rich.
A little over one hundred years ago, Henry Ford started a company
that played a key role in helping America become what was once the
most economically successful and powerful country in the world.
He was a brilliant inventor who tinkered in his garage and helped
turn the Detroit area into the “Silicon Valley” of his
day. He learned how to steadily manufacture cars of increasing quality
at increasingly lower costs. He increased wages for workers at rates
that were often nearly twice the automobile industry average. He
continuously reinvested in new plant and equipment here in America,
while replacing lower paying jobs with higher paying jobs. He also
vastly improved the efficiency of certain hospitals and railroads
and their social value.
A libertarian economist once noted that by steadily decreasing car
prices to make them ever more affordable for the general public,
Henry Ford gave Americans new mobility that made it far easier for
them to find better and more productive jobs. Hence, he did more
to reduce unemployment and underemployment than all the government
jobs programs that have ever existed in America put together.
Henry Ford had solid answers for America “back then.”
I believe that his approach remains valid for today. It is laid
out in this book. If enough people follow him, I believe that America
could be turned around.
There are an increasing number of economists today who are rediscovering
Henry Ford’s principals and economic ideas. They often identified
with a “bottom up” or “laissez fare” school
of economics also called “Austrian” economics. When
I first read My Life and Work, I was surprised
at how the overwhelming majority of views expressed by Henry Ford
correspond with the views of many contemporary “Austrians,”
and particularly those who factor a certain nationalistic “charity
begins at home” orientation into their economic theory.
Unfortunately, most Americans today have been conditioned to accept
the massive economic distortions created by government and central
bank intervention. Henry Ford’s fundamental approach may at
first seem strange to them. They need to remember that up until
1913, Americans were unburdened by a highly inflationary central
bank and a progressive income tax. Government played a relatively
minor role in the economy (less than 5-10% of GDP, compared to over
40% today). By 1913 the dollar was worth about 50% more than a century
before. This was due to steadily increasing productivity and declining
prices during relatively long peacetime periods in the 1800’s
where the money supply was held constant under a gold standard.
The reader may also need to mentally translate some of Henry Ford’s
terminology in certain places. For example, his use of the word
“service” regarding manufacturing operations may seem
confusing since today we distinguish between “service”
and “manufacturing” sectors of the economy. I think
that the contemporary analog in entrepreneurial literature is “the
value proposition.” That is, compared to competing products,
the ability of a particular product to provide a superior ratio
of quality and usefulness relative to price. However, today’s
literature usually does not broadly construct this term to mean
total returns to society as well as to the entrepreneur. Henry Ford
implies this broader meaning with his concept of “service,”
a concept clearly lost on so many of today’s executives who
outsource jobs overseas at the drop of a hat.
Hopefully this work will help the reader to appreciate Henry Ford
as one of the truly great giants of the 20th century.