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Comment by robfitz | Hacker News Reader

But it is the influence of leisure on consumption which makes the short week so necessary. The people who consume the bulk of goods are the people who make them. That is a fact we must never forget -- that is the secret of our prosperity.

That is pretty evil mastermind... he's thinking on a whole other level.

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I love the "chess"-like planning ahead here, but it seems as though unless Ford was selling a huge fraction of the discretionary purchases in the country, it would be hard to finance this... If you spend $100 to give your workers 2 extra hours of leisure a week, maybe only $5 or $10 would be spent on Ford cars and the rest would be spent on other stuff...

He ran a "company town" - had stores, sold them lumber to build houses etc. Most of the money came right back to him.

Was he the first to do that? I read a book about Frick & Carnegie and was shocked to learn Frick had company housing and stores for the workers of Carnegie's steel empire. I wonder where this idea came from? Not even wikipedia has its origins: http://en.wikipedia.org/wiki/Company_store

EDIT: I should have clicked more. Pullman: http://en.wikipedia.org/wiki/Company_town

Company housing was very, very common in Europe when the Industrial Revolution really got started.

Many German towns which got a train connection early on have these typical big red brick houses were the workers lived, probably the most visible reminder of that practice.

And, of course, it's still very common in newly-industrialising countries like China.

It was very common in all communist countries, which pushed hard towards industrialization. They thus transformed rural farmers into suburban industrial workers.

For some reason(Correct me if I am wrong), the company town business model seem to have completely disappear.

This, to me, suggest the uncompetitiveness of company towns.

Almost completely. I don't know if Disney counts.

Having lived for a semester at Vista Way, I think Disney World's College Program is as close to a living in a company town as you can get nowadays in the US. They completely control two municipalities, and provide the jobs, the bank, the housing, the food, the fire department, the EMS, the phone company, and the transportation services.

The Foxconn facilities in China might be a contender as well, but I don't know enough to say.

Maybe, but I'm not surprised to see that they failed around the same time the notion of a large corporation took off. The goal of a large corporation is to reduce liabilities while increasing profits, not the other way round. Company towns probably just weighed these companies down while they tried to turn their attention to a national infrastructure.

You could argue that the ~10 miles surrounding any Wal-Mart Super Center are company town-ish (company suburb?); I bet most of the money paid out comes back in from employees returning to buy staples (figuratively).

It only came back to him if the company stores wildly overcharged his employees. If an employee spent $100 in a store with a 10% markup, Ford still lost a net of $90.

Do the math - paying your workers "enough to buy your product" is an utterly flawed business model. It might work incidentally (i.e., high wages might attract high productivity employees), but it doesn't work as stated.

It's effectively pure fascism. It works fine so long as you treat your workers decently and they don't revolt.

I mean, say what you like about fascists, but their factories always run at high capacity.

Of course his employees are not his entire business model. But it sure improves margins, increases volume so economies of scale work better etc.

Note the evangelical nature of his argument - it all works better if everybody else does it too. He understood that perfectly.

That other 90% doesn't drop off the planet. It goes to a company that splits it into profit and expense. Both are spent by different people, but all the cash goes back into the economy.

The profits might be spent on luxuries, the costs on materials. Once again it split up. Every time a small fraction goes to the government, or to Henry Ford.

His point is that he wants all business in America to be vibrant, not just his own (because his businesses would die if it weren't part of an ecosystem)

The other 90% drops off Ford's balance sheet. The fact that it's spent elsewhere in the economy does not help Ford.

Don't repeat platitudes, build a model. I.e., make up plausible numbers and actually do the math. You'll see that without making wildly ridiculous assumptions, it's just a net loss for Ford.

Okay, so lets pretend that you are right about vanishing money. You are failing to take into account the productivity gains you get from proper rest.

1) Tired workers make costly mistakes, often countering any extra production they may have made 2) Tired workers work more slowly 3) Tired workers miss opportunities to save time through better work methods

Reducing hours towards 32hours /week will usually net you more produtivity per week. Increasing past this will give you temporary improvements, but they won't last beyond a couple of weeks.

Not to mention - the more Ford pays per hour, the better the quality of the workers he attracts.

Yes, great plan!!! Make Ford's employee never expend a penny in anything but Ford's products. Soon enough, Ford will have all the money and his employees will be eating tires and dressing in scrap metal because the rest of the economy collapsed.

Or, may I guess, most of the people that buys Ford's cars does not work directly for Ford.

But on the other hand:

"[The well-managed business'] workmen have the leisure to enjoy life and the wherewithal with which to finance that enjoyment."

Ford theorizes that greater amounts of leisure time and better pay for workers are good for both the workers, for their enjoyment, and the employers, for having larger markets; I don't see this as evil.

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