Henry Ford was obsessed with improving the assembly line and standardizing his product as the means to gain efficiencies and cost savings. All inputs to production were carefully studied to ensure that they were acquired at the lowest cost which was then reflected in the lower sale price of the cars he manufactured.

Yet, Ford never considered labor to simply be another production input, or a "human resource" to be carefully managed to gain its utility at the lowest possible cost. Instead, Henry Ford had a pretty clear understanding of the fundamentals upon which to build a consumer economy. He understood that the growing economy required consumers that were able to attain a degree of wealth that would allow them to purchase the products being manufactured.

In his time, Henry Ford was roundly criticized by his peers and by Wall Street for doubling the wages of his workers as well as adopting progressive labor provisions such as the 40 hour work week. It was seen as a wasteful loss of profit. More importantly, it represented a threat to the social order. If workers were recognized as co-beneficiaries of this economy rather than simply another resource, it stood to reason that they would simply want a greater share of the profit that was made.

"Have You Driven A Ford Lately?"

Ford's success at business, however, ultimately established this focus upon consumer wealth as a fundamental requirement for a successful economy. If this economy was to thrive, then it needed to work to the benefit of both the ownership class and the working class.

After over 100 years of development, it's incredibly distressing to see how the corporate overlords of this economy and its chattering class in the press would now have us regress to those days before Henry Ford. Common Wisdom expressed by many economists and pundits assumes that we have somehow taken a step back in time when workers were exploited as a human resource to be bought cheap, used up, and replaced - much in the same way you would use the coal that fires industrial boilers or the grease for the gears on your machinery. In this global economy, they will tell you, the American worker must be competitive. Ultimately, they imply that our labor force is compelled by our "free market" to accept wage rates and working conditions that exist at the most exploitative margins within the world economy.

Workers as Human Resource 

Yesterday, for example, the Wall Street Journal printed a news article that is so callous in its disregard for workers as to invoke thoughts of galley slaves at the oars on the ship of commerce. To wit:

"There may have been a silver lining for the economy in the horrific December job losses reported Friday by the Labor Department. Companies are cutting back so aggressively that they actually might be increasing their productivity even in the face of a wrenching economic shock...businesses appear to have squeezed more out of the workers they kept on staff, increasing business productivity."

Ebeneezer Scrooge could hardly have written the glad tidings of joy about this economy any better than did the editors of the Wall Street Journal.

From the Ebeneezer corporate perspective, this might indeed look like "good news." For the Bob Cratchit worker, however, it only adds to the anxiety of worrying about job loss by promising a heavier workload at no additional pay if he or she is allowed to keep their job.

The simple fact that the WSJ could declare this to be "a silver lining for the economy" offers a firm understanding of just who they think this economy is supposed to serve. In their estimation, it ain't us workers.

In Defense of Sweatshops

To further make this point, today we have Nicholas Kristof of the New York Times weighing in on a related topic where he dreams of sweatshops as tools for providing sound economic development in underdeveloped countries. (I'm not making this up!)

"Mr. Obama and the Democrats who favor labor standards in trade agreements mean well, for they intend to fight back at oppressive sweatshops abroad. But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don't exploit enough."

Kristof's argument is that the sweatshops are an improvement over the dumps in places like Phnom Penh where the poor scavenge plastic and other recyclables for sale. And he is right. These dumps and the lives lived by those who sometimes even live within them represent a "Dante-like vision of hell" as Mr. Kristof explains it. The sweatshops thus offer a marginally improved existence for the workers they exploit.

But Kristof misses the point. In arguing against trade regulations that determine minimum labor standards to be met, Kristof does indeed argue that worker exploitation is acceptable provided it doesn't stoop to the absolute lowest kind of debasement and injury to the workers involved.

Sweet Jeezus, I would hope we would strive to do better than that!

Building Corporate Profit From the Exploitation of Labor 

Consider the following:

1.) Many of the sweatshops perform work for the major multi-national corporations that have outsourced these jobs from the U.S. and elsewhere.

2.) Most of the product generated is sold to consumers around the world in developed markets such as the U.S., Japan, and Europe.

These two factors show the disconnect that has occurred from the economic fundamentals that Henry Ford so brilliantly understood. In Kristof's world, labor is to be acquired at the lowest possible price to manufacture products that are then sold at inflated prices in more developed markets. The concept of "working for a living" is abandoned and replaced with some notion that foreign laborers work - be it in dumps or in sweatshops - simply to have something to do with their time.

"The best way to help people in the poorest countries isn't to campaign against sweatshops but to promote manufacturing there. One of the best things America could do for Africa would be to strengthen our program to encourage African imports, called AGOA, and nudge Europe to match it...

 

"Look, I know that Americans have a hard time accepting that sweatshops can help people. But take it from 13-year-old Neuo Chanthou, who earns a bit less than $1 a day scavenging in the dump. She's wearing a 'Playboy' shirt and hat that she found amid the filth, and she worries about her sister, who lost part of her hand when a garbage truck ran over her.

 

'It's dirty, hot and smelly here,' she said wistfully. 'A factory is better.'"

Pretty simple, eh? We need only assure ourselves that the exploited worker in these foreign countries isn't exploited too much as they manufacture our clothing and other consumer goods. Never mind that Kristof fails to indicate where to draw the line, this "Exploitation Lite" concept allows Nike and others to enhance their bottom line while providing "jobs" to foreign laborers, and that is the objective here, right?

Maybe not. In fact, it is easy to see that such a system is not sustainable in the long run.

Common Wisdom: American Workers Need to Be "Competitive" In This Global Economy 

The American "human resource" simply can't compete with labor acquired at pennies/hour in the sweatshops and the dumps and the prisons overseas. The result is that we have seen most of our manufacturing base exported to other countries to gain access to cheap labor. This has resulted in a stagnation of earnings for America's middle class consumer while the ownership class amasses great wealth.

But who will continue to buy these products that are sold by these corporations? The answer gets a bit fuzzy, at best, and downright scary when we look at recent developments in our domestic economy.

Much of the recent recession is reflective of the debt accumulated by the middle class. What they have lost in earnings over the last decades has been made up in debt, thus leaving an allusion that they continue participating in this economy as effective consumers of products to be sold. The collapse of the housing bubble, however, robbed the middle class of the "home as an ATM" dynamic that fueled many of their purchases. In addition, the debt crisis will rob them of the credit cards that also allowed for purchase of products that would otherwise have been forsaken as "unaffordable.".

We now have a situation where the economy is in the tank mainly because consumers were suddenly awakened to their debt dilemma with the crash of the housing bubble. They now find themselves incapable of purchasing the consumer products that drive this economy.

How might the American consumer be encouraged to once again participate in this economy? Well, it probably starts with replacing some of these debt purchases with purchases made from earnings income. And that means raising the income levels of the middle class by way of providing family supporting jobs.

Unfortunately, however, most "family supporting" jobs that were previously found in our manufacturing sector have now been exported overseas. In their place we find service sector employment and other jobs offered that barely provide a subsistence wage. This is by design, for Kristof and the WSJ will tell us that the American worker must compete with foreign labor willing - or compelled, in most cases - to provide labor at exploitive rates of compensation in oft times grueling conditions..

The result is that we have allowed corporations to severely undermine the consumer base that drives our economy, and we now find ourselves at an impasse as this economy grinds to a halt.

"Exporting Jobs" as a Means to Truly Develop Foreign Economies 

What is the solution? I suggest that it is necessary to truly treat this as a global economy. And it begins with an understanding that exploitation of labor is not to be allowed in any circumstance.

We must apply the lessons taught by Henry Ford over 100 years ago. If Nike or General Motors or Motorola choose to establish manufacturing facilities within the Malaysian economy, for example, then they should be compelled to use this industrial base thusly established to help develop the Malaysian economy. Just like Ford did in his time, this begins with providing a wage and working conditions sufficient to encourage its workers to purchase the products being manufactured.

We must also remove all incentives to engage in the exploitation of labor, either here or abroad. This begins by establishing trade policies that in fact encourage corporations to establish an industrial base within developing economies. But these same trade policies must ensure that the products made offshore are not targeted for U.S. consumers but rather for the resident economy. Only in this way will incentive be provided to welcome the foreign workers as participants in this global economy rather than as a human resource to be exploited.

Henry Ford understood that unregulated capitalism is an extremely cruel system that is driven by greed and self-interest and that it is unsustainable over the long haul. As Kristof points out, it results in a hell on earth for its worker/victms, be it in the dumps of Cambodia or the sweatshops of the Mariana Islands.

Yet Ford and the subsequent labor movement in the United States have shown the ways in which a regulated capitalist economy can greatly serve the interests of all participants. We need now to look at bringing our manufacturing jobs back home to reinvigorate our consumer economy. And we do well to encourage entrepreneurs, industrialists, and our corporations to establish a presence in economies abroad. Use our capitalist resources to help build those economies much like Henry Ford envisioned building our own. In this way, we can export the blessings of liberty for all who participate in those economies while putting an end at last to the exploitation of foreign workers in pursuit of short-term, unsustainable profits.