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I have published the account of this incident before, but it
is important that I repeat it here, because it explains a major
factor in America's rise to the highest living standard in all
human history.
"You are now paying the highest wage rate in the automobile
industry, right?" I began.
"WRONG!" came back Mr. Lee, with emphasis. "We are now
paying the lowest wage rate."
"But is not the union scale at other plants $3.75 per
10-hour day, and are you not now paying $5.00 per 9-hour day?"
"Oh yes, but we figure what we pay in terms of what we GET,
and we GET twice as much work accomplished per 9-hour day as
other factories get per 10-hour day. In other words, other
factories pay $7.50 to GET the same amount of production we get
for $5.00."
This left me a little bewildered.
"You see," Mr. Lee explained, "we have now gone on the
assembly-line system of mass production. This automatically sets
the pace of each man's work. The machinery now does much of the
work formerly done by hand. We have a mass market which makes
possible MASS MACHINE PRODUCTION. That's the reason we can sell
the Model T Ford at such a low price. That MASS PRODUCTION by the
assembly-line method lowers production cost. No other automobile
company has a market large enough to go on this method of
production."
But it was only a matter of a little time until all United
States automobile makers were on machine mass-production.
American population was growing. Mass machine production greatly
lowered labor costs in production. No other country at the time
had a market large enough to warrant mass machine production.
Perhaps this might have made America's capitalists far
richer, but labor unionism was growing by leaps and bounds at
that time. They went after and got their share of the benefits
of this lower-cost machine production.
Result: In a few years America's laboring class produced a
new and vast MIDDLE-class population.
But by about 1960 something significant had happened. The
average American wage was about three times that of Britain and
Europe--and almost four times that of Japan. But meanwhile, the
Common Market had given European nations a MASS MARKET, and they
had gone to mass machine production. Result: European nations
had come to mass machine production with low-cost labor, while the
United States had mass machine production with HIGH labor cost.
This in turn got the United States' dollar into trouble abroad
due to unequal cash balances.