Dr. Love is Chairman of the Department of Agricultural Economics and Rural Sociology at Virginia Polytechnic Institute.
About 45 years ago, when he had more than a hundred competitors, Mr. Ford started integrating the processes in manufacturing automobiles. Through this “better way,” he was able to give the mass consumer an opportunity to have a car. When this development began, a Chevrolet touring car sold for $2,100, and the top and windshield were extra. But in a few years Chevies were about one-third that price and Fords were less than $500. Thereafter, Mr. Ford’s competitors dwindled to a half dozen or so. Just think what this great innovation in the manufacture of autos did for the people in the United States!
There is another side to this story which would, by modern standards, provide the basis for government action.
Assembly line manufacturing brought cars out by the millions, sealing the fate of blacksmiths, horse breeders, buggy manufacturers, about one hundred of Mr. Ford’s competitors, and a host of others. Those fellows were all forced out of business. Or, as some looking back now would see it, they were forced into business. A more grim side is that automobiles have served as a vehicle of death and taken more lives than all of the nation’s wars. Again, looking back on this record of economic dislocation and human slaughter it would seem that, by modern standards, an enlightened people would have made a political issue of this potentially destructive device and rationed the right to produce automobiles.
It may be that the people of that “horse and buggy” era did not know any better. Or, it could be that they chose to accept the hazards of progress as being in their best interest. Or maybe they had enough foresight to be concerned about the best interest of their posterity. That’s us. What might be our fate had they, by acceptable modern standards, made the other choice?
Butter vs. Oleo
Many years ago the dairy industry launched a seemingly innocent and just campaign to thwart the development of oleo. In the early stages government was not asked to give any direct support to dairying. It was just asked to help keep an “inferior” or cheap “imitation” product from being palmed off on supposedly innocent and unenlightened consumers. For quite a few years the dairy industry succeeded in “protecting” the consumers.
This protection for the consumers was later found to be a two-sided proposition. Alas, it developed that on the other side the dairy industry had been sheltered to the extent that its competitive vigor was withering. Of course, it felt mighty nice to sit over there in the shade and have less to worry about, but the temperature went up when the economic sun crossed the meridian line of “protection for consumer.” The problems also became more numerous and were greatly intensified.
This seemingly innocent action on the part of the then leader in the race was a tragic mistake. He lost the lead in the race to supply consumers with a fat which was used generously and held in high esteem by all. Somehow the industry overlooked the fact that continuing to hold the price of its product at higher than the market level tended to place a premium on the efforts made by those developing the competing product. The would-be competitors tried harder to find ways to enter the market and finally hit pay dirt.
As would be expected in the free enterprise economy, the then budding oleo industry made great efforts to discover the secrets necessary for the development of a product which would win the race. As a result, oleo has been well ahead, as measured in pounds consumed per capita, for a number of years and still seems to be gaining ground. In fact, the figures show butter consumption to be at least one-half a lap behind, and time is running out.
However, it is always interesting to speculate in a situation of this kind as to what might have been the outcome in the butter-oleo skirmish if the dairy industry had chosen to apply its resources to find ways to outdo oleo through a more liberal application of progressive action. As of now, “the fat is in the fire” and the race is rather one-sided. Meanwhile, the dairy industry has asked for and gotten more direct government intervention in its affairs. This was a logical step since anything that tends to deplete the economic vigor of a group or of an individual—firm, farm, or other—may be expected to lessen its ability to stand without government assistance. The moral to this story might be that it is good business to keep on your toes in your industry at least to the extent of being sure that if a substitute product is to be found, you will find it.
The Pinch of Competition
These developments are, of course, not by any means limited to agricultural endeavor. A few months ago there appeared on the market a writing paper which is sold under the trademark of NCR. For all practical purposes this appears to be just plain ordinary paper of the usual kind. However, some enterprising individual has discovered that by applying a chemical, copy may be carried through on as many as eight sheets at a time. The NCR means No Carbon Required. How would you like to be in the carbon paper business? It’s never safe to underestimate the resourcefulness of other businessmen who are in the game for keeps. They will come up with the unexpected at the most inconvenient times. There are also others who will help to market the better or cheaper product. When these conditions develop, how long will it be before the fellows who are being pinched request government price supports to save their industry? Shifts of this kind are made one step at a time. Socialism is a gradual process.
The essence of the matter is that:
1. Freedom and science will bring rapid growth and change.
2. Progress — the fruits of rapid growth and change — flourishes among the thorns of risk and insecurity.
3. Those who would exchange freedom for security deserve neither and will lose both.
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Ideas On Liberty:
Limited Government: Unlimited Opportunity
History shows that great general prosperity occurs only where something approaching a free economy has been reached, and that prosperity always diminishes as government economic regulation increases. A free economy alone offers unlimited opportunity to all.
Thomas H. Barber, Where We Are At
