The Cars and the Money

As a teen-ager I toured the Ford Assembly Plant in St. Louis (actually, in Hazelwood, a suburb) with my parents in 1949, the year after it opened. Mercury automobiles were being put together there, in a pageant fascinating to watch. From various directions, parts would arrive on conveyers and the workers would attach them to the slowly moving auto-to-be moving down the assembly line. Astonishingly, at the end of the line, a man got behind the wheel of this collection of pieces which less than an hour ago had been in this pile of parts or that, turned the key, and drove it away! I've visited other auto assembly-lines since then, always with the same feeling of awe when the completed vehicle moves off under its own power. It is reminiscent of a birth: commonplace and yet somehow wonderful and amazing, for all its ordinariness.

Ford has announced that it is going to close the Hazelwood plant in a few years, and the news, apparently unexpected, has caused quite a reaction in the St. Louis area. The plant employs about 2600 people. The union which represents them is understandably unhappy. It wants the plant kept open. The president of the local said, "We'll be working with the mayor, we'll be working with the governor and we'll be working with our senators."

The mayor of Hazelwood was stunned. "We have an opportunity to try and save the Ford plant and the almost 3,000 jobs," he said. He estimated the economic impact of the plant closing at about 418 million yearly.

The superintendent for business and technology of the school district was also dismayed. "Ford is our largest taxpayer. And when you lose your biggest taxpayer, it's a hardship on the district. Any time we lose assessed value, the tax rate has to be readjusted so we don't lose funds. The taxpayers will end up paying." Obviously, getting along with less funding is unthinkable, although one cannot help but wonder if a school district could exist without a "superintendent for business and technology!"

The executive director of North County Inc., an organization of community and business leaders, expressed her disappointment. "This loss will be felt at so many different levels, it is hard to fathom," she said. We're not just looking at the incredibly detrimental loss of jobs for the more than 2600 dedicated hard-working people at Ford, but also the economic impact on the state, St. Louis County, city of Hazelwood, and even the school district."

In Washington, the representative of the area in Congress worried, "It's going to wreak havoc on our local economy. I will be joining with others in this region to help in approaching Ford Motor Co. to see if we can do something about keeping the plant open." Congressman Gephardt declared that he had "great confidence" in Ford. He would work with Gov. Holden, County Executive Westfall, and the appropriate local and union officials--. "Additionally, I will work to ensure that the Labor Department does everything possible to provide retraining and employment programs for Ford's dislocated workers."

Missouri's unelected junior Senator waxed indignant. Missouri, she said, "had gone to great lengths over the years to help this plant succeed. I hope that the company will reverse this shortsighted decision."

A Ford spokesman said something relevant. "No amount of incentives can be sufficient if you have a facility without enough customers for its product," said Della DiPietro. Ah! The product!

The local political types seem to have forgotten something fundamental. The plant was not built to provide funds for education, or jobs for local workers, or taxes for this or that community. The plant was built to manufacture automobiles. It isn't a cash cow provided by Ford to be milked by the local plunderers under color of law; it's a factory to make cars. And if people do not wish to buy the cars, the factory has no reason to exist. Interestingly, the pressure is on Ford to retain its plant, making cars which people don't want to buy. None of the bureaucratic types interviewed suggested placing pressure on local citizens to buy Ford cars, or recommended that the workers accept less pay, or that customers and/or workers get tax rebates for buying or making automobiles there. The product is irrelevant, it's the revenue that counts. The politicians seem to have forgotten that the revenue, ultimately, is based upon people providing a useful good or service. Companies don't get their income by simply putting their hand out and demanding it, under threat of fine or imprisonment! They must actually produce something. There is a relationship, even if ignored by government, between prosperity and work.

Why aren't people buying the product? Well, consider that money may have something to do with it. Between the beginning and end of a model year, the purchasing power of the fiat may decline, requiring Ford to pay more for the same parts in December than it did in January. Of course, this means a rise in the price of the car; or, perhaps, a cut in the quality. Ford can raise prices from week to week, if necessary; the wages of the workers are fixed by contract, and cannot be raised so easily or quickly. Or people may buy foreign cars which they perceive as offering more for their money. Such cars may be "cheaper" to manufacture, in dollar terms, because of the exchange rates set by the banking fraternity between one scrip and another. Those rates are not set with the St. Louis car-worker in mind! If auto workers everywhere were paid in, say, gold or silver, the "cheap labor" often associated with foreign countries would quickly disappear. And, of course, Ford borrows money regularly. The money was created from nothing, at no cost, and with no expenditure of labor, by the bankers. Tremendous labor is required to repay, and the costs of borrowing are added to the cost of the car-comprising perhaps as a fourth of the sticker price. Short of defaulting on the "debt," there is no way that this percentage cannot increase, nor can the debt be paid without more borrowing, short of monetary collapse. More "dollars" for the same car, or the same number for a smaller one, or one of lesser quality.

To preserve confidence in its scrip, our government will let nothing stand in its way; certainly not the closing of an auto plant, or two, or five. If thirty-five thousand people are put out of work, better than a loss of confidence in the monopoly money.

Fix the money, and people will buy the cars. If they buy the cars, the plant remains open. Freedom and fiat are incompatible!