Economics, Consumerism, and Individual Responsibility

I posted this today on Facebook; it represents my musings about trends I see in the American economy, but it also reflects on world economics.
Something worth considering:
We’ve built a middle class consumer economy in this country based on Henry Ford’s model; pay the workers enough that they can afford to buy the products. I’ll note that Ford didn’t go broke doing that; he got pretty rich, if I recall. And soon other industries leveraged that prosperity by paying steelworkers and miners and construction people better, albeit with a lot of union arm-twisting thrown in.
But then unions became overly powerful and many became corrupt. Membership declined; it’s a great cycle when looked at in this way. Much of the reasoning behind unions went away as government began doing what only unions had done before. To make it seem as if they were still needed, unions demanded ever higher amounts of money, so a cycle of inflation boomed; people got more wages, but they also paid more because everything else went up.
And government pushed quality of life issues; reducing pollution, cleaning up mine and industrial waste residue, things like that; these cost manufacturers instead of increasing profits. So they went offshore.
Gradually we’re taming this; other nations are also being faced with the necessity of controlling pollution of water, earth, air; safety of workers is also a rising issue. The great consumer market in the US, the one China leveraged to raise herself from backwardness to leadership, is faltering.
Competition has become something that companies avoid in the drive for ever greater profits. Those profits are concentrated at the very top. This really is a ‘zero sum’ game; what goes to the oligarchs isn’t available to those who once fueled the great consumer market. Not even the insane advertising industry can prop it up for long. Simply put, there’s just not enough money at the bottom or in the middle.
We once turned our economy ‘outward’ when recessions hit; we employed people making exports and brought in money from other nations. But now they’re largely in the same boat we are. All those developed nations are attempting to export goods and bring money home to aid their economies. Europe calls it ‘austerity’, but it’s the same problem; profit isn’t to be found in manufacturing, in making goods for people to buy, it’s increasingly gained by manipulating money. The stock market is part of that, banking is a large part of it, real estate and speculating in general is a part of it.
And the fallout is distrust in major employers, as well as in the oligarchs controlling our political system. People are fed up in general, disgusted with political scheming and manipulation, they dislike what the president is doing and detest Congress.
One immediate improvement is to begin teaching children that self employment is preferable to employment by a corporation. Once, an employee had a living wage, benefits, and job security if he/she worked for a large corporation; and if the corporation was multinational, that provided security against economic downturns.
No more. All those things have largely vanished. You can spend half your working life becoming skilled at making widgets, only to find yourself turned our with no prospects because a worker in some foreign nation can afford to work for half what you can work for without starving or becoming homeless.
If you become a plumber or an independent mechanic or dentist, you’ll never be unemployed; you might not get rich, but you also need not suddenly find yourself homeless.
It’s time we stopped aiming our children at a future of neo-slavery under the corporate whip; it’s time to emphasize individual initiative, individual responsibility, the necessity of taking care of our individual selves rather than expecting someone else to do it for us.
Corporations specifically won’t. Unions won’t, or can’t. Government won’t, because they’re the lackeys of the oligarchs who run the corporate world.
For those in the middle, there probably isn’t a universal solution. What’s left of your working life is more bleak than rosy.
But maybe it’s not too late to let the future learn from what’s happened in the late 20th–early 21st Centuries.


7 Responses to “Economics, Consumerism, and Individual Responsibility”

  1. David Friedman Says:

    If you take Ford’s argument seriously, I suggest doing a little arithmetic. Ford’s workers were a very small part of the labor force, and there is no particular reason why Ford’s workers would spend their income on his products rather than food, clothing, housing, … . If Ford spends an extra million dollars on wages, by how much would that increase expenditure on his cars?

    Suppose his million dollar expenditure increases expenditure on his cars by a hundred thousand, which strikes me as a generous estimate. Selling another hundred thousand dollars worth of cars doesn’t give him a net of a hundred thousand, because it costs money to make cars. Suppose his profit on a car is 10%, I think also a generous estimate. He has made himself a million dollars worse off, ten thousand dollars better off. Not an effective way of getting rich.

    • jlknapp505 Says:

      You’re right, but if I recall correctly, that wasn’t the thrust of the argument.
      Regardless of what Ford’s employees chose to spend their money on, they wouldn’t have had the option if Ford hadn’t paid them a wage sufficient for them to afford to buy his product. And since they were building the cars, why wouldn’t they buy what they were making if they could afford one?
      That’s still true today in a general sense.
      A side comment, based on where you teach: do you perhaps know Jonathan Vos Post? He’s a member of my FB group, the Intelligent Round Table. Does considerable writing too, I think.
      Meanwhile, FWIW, I’m a KSCA, Pel, and FBar among other things. You might know what those things mean, based on links I found on your blog.
      I thought of sending a manuscript to Baen, but considering my age I opted to go Indie. I’m on Amazon, publishing under Jack L Knapp. I’ve got a comedy that was written in Elizabethan style (toned down so as not to scare off readers!); I plan to publish it this week.

  2. David Friedman Says:

    I wrote a long comment in response, but it seems to have vanished. Is it just in a delay in appearing, or did I do something wrong and not click the right button to submit it?

  3. jlknapp505 Says:

    What I see above this is all I saw, David; there’s nothing else showing on my desktop. I’ll go to my blog, and if it turns up there, I’ll let you know.
    Otherwise, the gods of the internet have taken their sacrifice.

  4. David Friedman Says:

    I’m not seeing any email from you, so I’ll try to reconstruct my reply.

    Henry Ford Keynesianism, as you may know, was Hoover’s response to the beginning of the Great Depression. He attempted to persuade businesses not to lower wages. Holding wages above their market clearing level doesn’t result in making everyone rich, it results in demand for labor being lower than supply of labor, with the result that some people don’t have jobs.

    It doesn’t make sense in the large, but that isn’t obvious. But I think it is obvious that doesn’t make sense on the small, if just Ford does it. And your “I’ll note that Ford didn’t go broke doing that; he got pretty rich, if I recall” seemed to imply that it did.

    I don’t know Jonathan Vos Post. I gather from a quick Google that he is in southern California. I’m in northern. Two different states that happen to share a governor, legislature, and two senators. Also, I’m not a mathematician, which I gather he is, although I was a theoretical physicist for a little while early in my career.

    Yes I recognized your SCA references. What kingdom?

    I was sorry to see you leave the Climate group on Facebook, but your reason was correct. While I suspect that your views on the subject are in part mistaken, you are obviously a more reasonable person than most in that particular conversation. You might try participating in the SCA groups on FB if you haven’t. On the whole a more reasonable set of people.

    I published my first novel with Baen, but it didn’t do very well, Jim Baen died, and his successor wasn’t interested in my second novel. So I published that as a Kindle on Amazon. That doesn’t make much money, but I do get comments, some of which are interesting.

    My wife and I have self-published two books on our SCA interests as POD on Amazon, which is amazingly easy. One of them, the Miscellany, is in its 10th edition. Now I never have to fill another order.

    My first book (non-fiction, libertarian) was published more than forty years ago. When I recently completed the third edition, my agent was unable to persuade the publisher of the second edition to accept the terms she thought appropriate—licensing the print edition to them while retaining translation and eBook rights. So we published it as a Kindle on Amazon.

    Apropos of your Elizabethan, my younger son is currently working on his first novel, which he describes as King Lear with super villains.

  5. jlknapp505 Says:

    I can’t reply until I get your email address; until then, this must work. You can email me at to transfer our conversation to email.
    I was knighted in Atenveldt, but became an Outlander when we split off. I remain a member, but I’m much less active than I was before.

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