Looks like I was wrong.
Turns out his real motivation had more to do with reducing turnover than with building a middle class. Altruism myth busted.
The thing is, it doesn’t really matter why he did it. What matters is the effect of the decision: the fact that other manufacturers had to increase their wages in order to compete, the fact that a growing middle class was good for the entire economy, and the fact that Ford ultimately benefited from paying a fair wage rather than a minimum wage.
Regardless of motivation, the reason Ford was able to afford to pay such a ridiculously high wage was, of course, the increased productivity offered by his assembly line. And if a little increase in productivity is a good thing, a big increase in productivity must be a GREAT thing, right?
Not necessarily, of course. Ford’s increase in productivity allowed workers to be paid more --workers who were likely to spend that higher income on goods and services, multiplying the net economic effect and improving conditions for a large section of society. But in a well-reasoned and thought-provoking piece called “How the Internet is making us poor,” Christopher Mims argues that certain types of productivity increases have the opposite effect, as improvements in robotics and automation continue to eat away at middle-class jobs.
“In a gleaming new warehouse in the old market town of Rugley, England, Amazon directs the actions of hundreds of ‘associates’ wielding hand-held computers… Each person’s performance is monitored, and they are given constant feedback about whether or not they are performing their job quickly enough… ‘You’re sort of like a robot, but in human form,’ one manager at Amazon’s warehouse told the Financial Times. ‘It’s human automation, if you like.’ And yet despite this already high level of automation, Amazon is already working on how to eliminate the humans in its warehouses all together [sic].”
If you are running Amazon, and you eliminate the majority of your workforce while improving productivity, you’re doing a great job. The problem lies in extrapolation: If all companies eliminate the majority of their workforces, the economy collapses.
In a perfect world, we would be able to process the emergent effects of our decisions on the complex systems in which we operate. We would have some way of reconciling the micro and the macro, of understanding the fact that sometimes the decisions that make the most sense for us as individuals or organizations don’t do us any good when everyone is making those same decisions.
In this perfect world, we would think like critic Evgeny Morozov, who, as described in the Columbia Journalism Review, wants us to “integrate the debates about technology into the broader debates about politics, economics, history, and culture… When discussed in purely digital terms, for instance, letting a company like Uber transform a city’s taxi service is a no-brainer. When the digital is integrated into the political, however, this becomes a more complicated debate about regulation and infrastructure and the rights of cab drivers.”
Let’s be real, though: that’s not going to happen. If Uber founders Garrett Camp and Travis Kalanick had stopped to consider the political implications of their service, someone else would have stepped right in.
If we can’t adequately contemplate the macro effect of our actions, and if behavior that has a positive effect at the individual level creates a negative effect at the collective level, we have to challenge other assumptions. Assumptions like the idea that we can’t just pay everyone a universal wage. But that’s a discussion for another day.
Back to Christopher Mims, who said, “as technology aids the gutting of the middle class, it destroys the very market required to sustain it.” Whether it was Henry Ford’s intention to boost the middle class or not, it was the outcome. He was lucky enough to have his micro and macro stars align. Will we be so lucky?