I have learned through the years a good deal about wages. I believe in the first place that, all other considerations aside, our own sales depend in a measure upon the wages we pay. If we can distribute high wages, then that money is going to be spent and it will serve to make storekeepers and distributors and manufacturers and workers in other lines more prosperous and their prosperity will be reflected in our sales.My Life and Work – an autobiography of Henry Ford, pp 86
Wednesday, 2 January 2013
Henry Ford on Wages
A pertinent quote I think given that benefits are now being attacked because they are going up faster than wages.
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Great find Neil. Wonder if he would say the same today in the age of the credit card.
Wonder if he would say the same today in the age of the credit card.
One does have to keep up with the debt service though. Use of credit just draws income forward.
Would the draw forward of credit be a Fordist problem though? It removes the need for high wages and allows greater profit for less cost at the individual firm level.
Eventually the chickens come home to roost of course Minsky style, but you can run an entire career during that time period and retire to your fortified settlement on the loot.
It takes an extraordinary long time for credit problems to manifest systemically.
Neil, please would have a look at the following link; http://www.economonitor.com/lrwray/2012/08/01/more-qe-libor-bond-vigilantes-sovereign-governments-and-interest-rate-determination/ .
The part that says the US FED zero interest rate policy, removes twice the interest income from the private sector, than it reduces private sector debt service costs.
Would the same be true for the UK, or not?
In Henry Ford's day there was very little consumer credit available and standards were tight. It's only recently that the gate was opened, with predictable results. It's obvious that an economy cannot be financed for long in consumer credit without rising wages and inflation that reduces debt in real terms, i.e., # of hours worked. Otherwise, is is Ponzi finance based on IBGYBG I be gone, you be gone (with our loot when the sh*t hits the fan).
Tom, when did finance become such a key part in the car industry...such that the big players became banks that just happened to assemble cars?
It's all part of FIREnancialisation, one guesses...
@ WillORNG
The auto companies and other firms that finance their customers directly realized that there was extra money to be made from sales by taking the interest themselves instead of giving it up to banks. This was the beginning of "vehicle as mortgage" model that allowed companies to raise prices since they owned the collateral. It was a good idea until it wasn't. They kind of forget that they were manufacturing companies rather than financial firms.
An excellent quote revealing wisdom unfortunately lost by most. I think that if even Henry Ford supports high wages there must be a damn good reason.
Modern economics will bring this down as not sustainable giving the economic climate and pure competition of the the card industry as traditional auto maker brackets are melting.
And they'd be wrong.
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