What's Wrong With American Business Culture And The Economy?

[garbon]

One of his specific goals was to make sure the people who worked on his cars could have enough money to buy themselves a Ford. It's a pretty clear example of increased wages going directly back into the economy - and not only back into the economy, but into his company as well.

Which he achieved in large part by building cheap cars in what had previously been a luxury toy market for the wealthy.  Besides, what modern companies produce products that their employees can't afford?  McMansion builders?  Yacht makers?  Maybe Apple (if you count Foxconn employees as Apple employees) and athletic shoe makers.

I can't afford to purchase a market research study.

[ulmont]

Which he achieved in large part by building cheap cars in what had previously been a luxury toy market for the wealthy.  Besides, what modern companies produce products that their employees can't afford?  McMansion builders?  Yacht makers?  Maybe Apple (if you count Foxconn employees as Apple employees) and athletic shoe makers.

I sure as hell can't afford my employer's legal services.

[Savonarola]

One of his specific goals was to make sure the people who worked on his cars could have enough money to buy themselves a Ford. It's a pretty clear example of increased wages going directly back into the economy - and not only back into the economy, but into his company as well.

McDonald's has done the same thing in a sense, their workers are too poor to eat anywhere else.   

Ford was something of an idealist; but he also paid workers more because he wanted a stable (and sober) workforce.  Half the $5 a day was a bonus, workers had to be good Americans (by Henry Ford's definition) in order to get the bonus.  Immigrants had to learn English and wear American clothes.  Women couldn't get the bonus unless they were single and supporting a family.  Men whose wives worked outside the home couldn't get the bonus nor could excessive drinkers or gamblers.

[Iormlund]

It's not just American business culture.

Here short-termism is endemic as well. For example, IT industry in Spain is dominated by a few big players that can outbid anyone else on big contracts. Salaries and conditions for employees are so bad they are collectively known as cárnicas (literally: meat processing factories).

[CountDeMoney]

Ford was something of an idealist; but he also paid workers more because he wanted a stable (and sober) workforce.  Half the $5 a day was a bonus, workers had to be good Americans (by Henry Ford's definition) in order to get the bonus.  Immigrants had to learn English and wear American clothes.  Women couldn't get the bonus unless they were single and supporting a family.  Men whose wives worked outside the home couldn't get the bonus nor could excessive drinkers or gamblers.

Ford raised the wages for assembly line personnel because it was such repetitive work that he was seeing increasingly substantial turnover.  Increased wages equals increased retention.  Imagine that.

[Savonarola]

Ford raised the wages for assembly line personnel because it was such repetitive work that he was seeing increasingly substantial turnover.  Increased wages equals increased retention.  Imagine that.

That's what I had meant by a stable workforce.  Automobile making was no more repetitive than any other sort of factory work, but it did have a learning curve.  A high rate of turnover cost Henry Ford money, which is one of the reasons Ford paid twice the going rate.

It's strange to see Henry Ford held up as an paragon of capitalism (though that is a central tenant of Mein Kampf.)  As I pointed out Ford paid a bonus to the right sort of worker, and paid the wrong sort of worker the going rate.  It was a paternalistic system.

[PDH]

It was a paternalistic system.

Damn the Patriarchy

[Weijun]

Perhaps CEOs receiving a large part of their compensation in the form of stock options and companies rarely paying dividends encourage short-termism.

[Admiral Yi]

???

Not paying dividends seems the exception, not the rule.

[Weijun]

???

Not paying dividends seems the exception, not the rule.

I must be thinking Internet companies (Google, Yahoo, Amazon, etc.).  Guess that has less explanatory power, then.  Stock options do create perverse incentives, though.

[DGuller]

Even Henry Ford had to get his peeps some training and practice before they could pump out as many cars per hour as he was shooting for.

Henry Ford had his own vocational school to train his skilled workmen; my Grandfather went to it.  It ran through what would have been normal high school years; and the students were introduced to every individual aspect of machine operation, production and the like and they picked a specialty at the end.  (My Grandfather was a draftsman.)

The reason he stopped doing that was it was cheaper for Packard to hire a Ford graduate than to start their own academy.   

That's exactly the problem with any kind of training.  When you have externalities, even if positive, the resulting investment is suboptimal.

[DGuller]

As to Henry Ford, I don't know if his motivation for raising wages to $10/day was altruism/teamwork/stakeholder value (although he does seem to have been kind of a dick as a person, so maybe not), but the upshot was that his workers worked harder than before to hold onto the fantastic wages, resulting in what economists described as an "efficiency wage."

One of his specific goals was to make sure the people who worked on his cars could have enough money to buy themselves a Ford. It's a pretty clear example of increased wages going directly back into the economy - and not only back into the economy, but into his company as well.

I've heard that very often, and it hasn't made any more sense with repetition than it did the first time.  Simply put, common sense tells you that paying customers to buy your product is not a winning strategy, and more complex analysis confirms that common sense conclusion.

[viper37]

Besides, what modern companies produce products that their employees can't afford? 

Let's see.  All of luxury products, for sure.  I doubt anyone working at a Mercedes plant or garage could afford their cars.  Well, maybe the mechanics, as they are able to repair themselves these pieces of shit.
Aside that... just about any company will subcontract at some point, so technically, they ain't their employee.  But still... The guys who made my computer parts probably can't afford them, even if they work 7days a week in their country.

[Zanza]

Which he achieved in large part by building cheap cars in what had previously been a luxury toy market for the wealthy.  Besides, what modern companies produce products that their employees can't afford?  McMansion builders?  Yacht makers?  Maybe Apple (if you count Foxconn employees as Apple employees) and athletic shoe makers.

All luxury goods and services. People working at Neiman Marcus will not shop there. People working at the Waldorf Astoria will not sleep there. Etc.

EDIT: Eh, must have missed viper37's post.

[fhdz]

As to Henry Ford, I don't know if his motivation for raising wages to $10/day was altruism/teamwork/stakeholder value (although he does seem to have been kind of a dick as a person, so maybe not), but the upshot was that his workers worked harder than before to hold onto the fantastic wages, resulting in what economists described as an "efficiency wage."

One of his specific goals was to make sure the people who worked on his cars could have enough money to buy themselves a Ford. It's a pretty clear example of increased wages going directly back into the economy - and not only back into the economy, but into his company as well.

I've heard that very often, and it hasn't made any more sense with repetition than it did the first time.  Simply put, common sense tells you that paying customers to buy your product is not a winning strategy, and more complex analysis confirms that common sense conclusion.

That's clearly why Henry Ford was such a huge failure, I guess.

God, you're an intolerable idiot.