I recently read an interesting piece about Henry Ford, the person who almost singlehandedly put America on wheels and introduced manufacturing to the "moving assembly line". He was an innovative thinker for sure.
Consider this: In 1914 the average daily wage for a blue collar worker (in high-wage Detroit) was $2.34. Henry Ford was having difficulty with employee turnover at his car factory (300% annually) so he addressed it by raising the wages of (almost all) his workers to $5.00 a day. In other words, he took money out of his pocket (and his investor's pockets) and put it in his employee's pockets. WHAT? Without being coerced by government or a union? Was he NUTS? Some might call that a massive transfer of wealth. I wonder what his Board of Directors had to say about it at the time? Was Henry a closet Socialist?
But in reality here's what happened: His Model T sales went from 250,000 cars in 1914 to 472,000 in 1916. How? All those now-well-paid employees could afford to buy the cars they were building. Plus increases in productivity dropped the price of his basic Model T by approx. 50% to $360. And to keep their employees motivated other automakers had to follow Ford's lead, and most of them (both the workers and the owners) prospered greatly also. But it was Henry Ford and his company and his family who prospered the most. Well-to-do before, the Ford's became wealthy beyond their wildest dreams when his workers prospered, too.
Well....was he a Socialist?* Was Henry a "re-distributor of wealth" or just a "pump primer"? Is there a difference? Could his example have any relevance for us today? That's a tough one. A policy to tax the rich like that being carried out today by Socialist French President Francois Hollande (with a top tax rate of 75%!) seems to be more vindictive than based on business logic. But as Henry Ford demonstrated, a more balanced income distribution across the board can yield huge positives for workers and entrepreneurs alike. It's all just a numbers game....unless a thriving middle class can afford to buy what entrepreneurs are offering, businesses stagnate or fail.
It seems to me the trick is walking the fine line between a vindictive Socialist "share the wealth" money grab and finding that ideal "pump priming " point. Do the ends ever justify the means? Semantics aside, was Henry Ford's social experiment a good idea or not?
*Henry was NOT a "card-carrying" Socialist. In fact he was outspokenly anti-Socialist, anti-Communist, anti-union, and unfortunately anti-Semitic, too.