A few months back, President Obama, during a political speech, somewhat smugly commented to businesses, "You didn't build that.", and he went on to say that it was the government that built the roads and bridges and provided the education to workers, and so on. It may have been smooth political talk but it lost sight of the fact that none of those government "contributions" would have been possible had it not been for the tax revenues that emanated from the businesses he was trying to disparage. As an aside, the current administration has only 8 percent of its advisors with backgrounds in the business community. The historical average, Democrat or Republican, is around 50 percent. Perhaps that was a factor in the president undervaluing those people, those entrepreneurs, who risked all because they believed there was a market need they could fill. It was they who built this country, not the government. They took the risks, they competed, and the strong survived, and filled the market needs of the people. Their achievements are what led this country to become the most prosperous nation in the world.
Using Henry Ford as an example, we find an entrepreneur who literally changed the world. He took the risk, and all that that entailed, to build an automobile . . . before there were (government built) roads and bridges and super highways. Mind you, when Ford began, there were only 8,000 cars and 144 miles of paved roads in the entire country. It wasn't the government largesse that made Ford a success, it was Ford and others like him that spurred growth that provided the tax revenues that allowed the government to build those roads and bridges that the president talked about.
Ford's innovation of the assembly line was a manufacturing breakthrough that spurred heretofore unknown mass production. Even today, that process is a marvel as every single component that goes into an automobile arrives at its appropriate work station at precisely the right time. Each worker has been trained and has become skilled at performing the function necessary to install that component in the automobile.
In 1903, when Ford Motor Car started in business, the average U.S. worker earned between $200 and $400 per year; $4 to $8 per week. In 1913, Ford's offer to pay every worker a minimum of $5 a day, and reduce the work day from nine to eight hours, resulted in men lining up as far as the eye could see, all in hopes of getting hired by Ford. At that time, the average wage for workers in the auto industry was $2.36 for a nine hour shift; $0.26 an hour
Ford's concept of "Let the worker buy what he can produce." was a world changing idea. He understood that if the automobile market was to be expanded and grown, the average person would need to make enough money to buy the products they were producing. In 1909, the cost of the Model T automobile was $220. But Henry Ford understood the "Laffer Curve", even before Economist Art Laffer was born. Ford continued to lower the price of the Model T automobile and by 1914, they were being sold for $99. During that period, the company's net income rose from $3 million to $25 million and market share grew dramatically from 9.8 percent all the way up to 48 percent, dominating the world market for automobiles. (That same principle, now called the "Laffer Curve", shows that lowering tax rates actually increases tax revenues.)
As great as those achievements were, Henry Ford was not done. When World War II broke out, automobile production was suspended and manufacturers turned to producing military vehicles, armored vehicles, aircraft engines and airplanes. In 1942, Ford received a government contract to build aircraft engines. During the first year, it took Ford workers a little over 2,300 hours to build a Pratt and Whitney engine. True to form though, by 1944 Ford was able to produce the same engine in less than half that time; 1,028 hours. All told, by the end of 1944, Ford's Rouge plant had produced almost 58,000 aircraft engines for the war effort.
As great as was the Rouge Plant achievement, Ford's shining star was its plant at Willow Run where they manufactured the B-24 Liberator Bomber. In a three year period, Willow Run produced almost 7,000 of the B-24's and had manufactured and sent the parts for an additional 1,900 bombers to be assembled at Douglas Aircraft and Consolidated Aircraft plants in Oklahoma and Texas.
Ford also produced a large number of tanks, almost 15 percent of all military vehicles, over 27,000 tank engines, and various other items necessary for the war effort. Historians have noted that American businesses were able to significantly out produce the AXIS powers in providing weaponry and its associated equipment. That ability contributed significantly to the Allies successful war effort.
The facts are, Mr. President, that for the most part, the government has been the beneficiary of the largesse of businesses . . . not the other way around.
(Bob Meade is a Laconia resident.)