Detroit is worth saving: Henry Ford vs. the titans of the Internet

|  August 02, 2013 |

Henry FordTuesday marked the occasion of Henry Ford’s 150 birthday anniversary. A week earlier, the city he helped build went bankrupt.

In the first half of the 20th Century, Henry Ford and his peers, men like Thomas Edison, John D. Rockefeller and Alexander Graham Bell, pulled millions out of poverty, created a prosperous middle class and built the arsenal of democracy, which helped win WWII.

The attainment of middle-class factory jobs by blacks in northern cities changed race relations in this country and started the ball rolling towards desegregation and civil rights. Rosie the Riveter gave women a new way of looking at what they could accomplish. In the 1940s, 50s and 60s this rising tide of prosperity and optimism lifted everybody’s boat. Big stuff, indeed.

By contrast, today’s software and internet moguls have amassed even greater sums of wealth, yet most of it piles up tax sheltered in offshore accounts. They contract labor to Asian factories where sweatshop conditions drive some workers to suicide. They put more time and money into building market share than they do cities.

No doubt the computer revolution and digital technology have vastly improved business and communication efficiency. But at the same time, that efficiency has led to a reduction in middle class jobs, offshoring of even more labor and a society where today nearly 40 percent of the people who could be working aren’t (the labor force participation rate.)

Henry Ford’s revolution made life good for every man. The computer revolution is slowly pushing the average American back down the economic ladder.

The dismal state of employment in the United States today wasn’t caused by any of the titans of the digital age individually. Bill Gates, Sergey Brin and Larry Page are terrifically talented and accomplished business people. And it’s not all the fault of computer technology. There are other economic and demographic forces at work here too. Microsoft, Apple and Google just respond the best they can to opportunities in their environment.

But therein lies the difference. Henry Ford didn’t just respond to his environment, he built a new environment. He wasn’t constrained by circumstance, he created the circumstances under which everybody could thrive. If Ford had let circumstances dictate what he could accomplish, he would have built merely cheaper and better buggies.

Larry Ellison, billionaire founder of Oracle, recently made news by spending about $300 million to buy the entire island of Lani, in the Hawaiian archipelago. (His net worth is estimated to be about $40 billion.) He’s turning the island into a first-class, tourist destination with green construction technology and a culturally astute program that respects and showcases Polynesian culture.

It’s a commendable project. But when it’s over, what’s left? Lots of jobs for maids and busboys. If the locals work hard enough they may eventually scramble up the ladder to middle management. Regardless, a tourist economy is a weak economy and heavily dependent on unskilled, minimum wage labor.

If Larry Ellison wants to leave his mark on the world, if he really wants to stand shoulder to shoulder with the titans from 100 years ago, he should buy Detroit and fix that.

Ditto for any other of today’s digital billionaires. Go big or go home. You’ve got the cash.

Some say we live in an un-heroic age. I say the only thing we lack is a hero like Henry Ford.

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