Making Widgets

mcdtruckgov0905           I tried to explain the machine age paradigm to Ronnie.  It seems obvious to me, but I have never put the pieces together in a sequential way.

Say there’s a widget manufacturer who employs 100 people to make 100 widgets (one person/widget) per day.  He gets a machine that can do the same, so he needs only one person to run the machine.  99 people get fired.

Other than payments on the machine, its upkeep, etc., he saves in the short term.  However, as machines don’t make or spend money, he has also depleted the market for widgets, because 99 people must make do or do without.  All of a sudden, he is producing more widgets than he can sell, and it’s not so easy to adapt a machine to produce a more marketable product.  So the employer is forced to cut production or expand his market, thus generating more costs, like advertising, distribution, and the like, or to cut quality by using cheaper raw materials.

Meanwhile, the machine is pumping out widgets faster than the market can absorb them, and it requires servicing, maintenance, and other costs that were not necessary before.  Competent service becomes necessary to keep the machine operating.  If the machine must be shut down, it’s as though 100 laborers called in sick or went on strike the same day.  All work ceases, except that necessary to fix the machine.  Even if the machine remains functional, it runs the risk of over-supplying the market with monotonous product that piles up on the shelves, in storage, or on the wharves.

In the Industrial Revolution, as more laborers were replaced by machines that created debt and relentless overhead—without the flexibility inherent in a human labor force—the widget manufacturer’s problem is magnified on a world-wide scale.  The face of the labor force changes to machine operators, mechanics, salesmen, advertisers, designers and other people working to assist the machines rather than making widgets.  Those with the skills to make widgets, this’es, and that’s, have been sidelined by machines and a different labor force geared to working on the machines.  However, only the widgets bring revenue into the company, and only if the widgets sell does the company generate the revenue to stay in business (unless you count Wall Street, in which the company is in the stock churning rather than the widget making business, for all intents and purposes).

We also have overhead costs of advertising and distribution that were not necessary when the widget manufacturer had a human labor force in a market that could absorb the products as they were produced.

The automobile industry is a perfect example of the Industrial Revolution gone haywire.  Henry Ford’s assembly line concept essentially converted men to machines and eliminated labor wherever possible.  But Henry Ford believed in paying his labor enough so they could afford the cars.

State and federal governments were happy to help Henry out.  Oil magnate turned banker John D. Rockefeller also benefited mightily from the highway system government provided to support the auto industry. Thus massive government help through the highway system made autos appear cheaply available to large numbers of people.  This allowed more people to travel farther and faster, but it spawned urban sprawl and seduced people away from public transportation, passenger rail, buses, trolleys, horses, and bicycles.  It also created multiple levels of  taxation and bureaucracy to regulate and pay for the highways, bridges, gasoline, licenses, tags, and auto insurance.

As public transportation deteriorated, the automobile became more necessity than luxury.  Today, the economy is skewed in large measure to industries that work for cars—everything from insurance to tire shops, service, sales, advertising, stocks, oil, and the glut of government that the auto industry has generated.

Meanwhile, we have a superabundance of cars that fewer and fewer people can afford to buy, maintain, buy gas for, or park.  We also have the problem that there’s nowhere to go.

Every place looks like every other place in our homogenized America.  Traffic is so bad that you spend more time in the car getting from here to there than you spend at your destination.

Now Ford Motor Company is moving to Mexico.  Ever wonder if that wall The Donald wants to build is to keep Americans in rather than keeping Mexicans out?

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