Friday, February 08, 2013

Small is beautiful: Economics as if People Mattered

"In 1923 (in the midst of a dire slump in the car industry) Sloan became president of GM. It was there that his reputation was made. He reorganised the company in a way that became the template for virtually every corporate entity for the rest of the century. He divided the company into separate autonomous divisions that were subject only to financial and policy controls from a small central staff.   This “federal decentralisation”, as he called it, is said to have taken only a month to set up, but its results were enduring and dramatic. Within six years the company had moved from being a laggard in the industry (way behind Ford with its famous Model T) to being the market leader with a turnover of $1.5 billion and a share price that had almost quintupled" - The Economist, Jan 30, 2009

"Henry Ford couldn't get off the farm and into the factory fast enough, but he provided the best of both worlds to rural Michiganians when he created his innovative Village Industries.  Village Industries were a series of small factories established mostly in the 1930's.  They employed local farmers to produce automobile parts while they maintained their farms. ... The more complex question is why Ford established these tiny businesses, some of which employed as few as a dozen or so people.  It seems a contradiction to Ford's construction of the then-largest auto assembly plant, the Rouge complex, which employed thousands to produce everything for the automobile. The Rouge was hailed as the world's industrial showcase of its day.   ...  Ford's 1939 pamphlet described work life at a Village Industries plant:  "He works in a small factory where noise and strain are reduced to the minimum.  He lives in an American village - or on a plot of land near the village... His family has the advantage of the clearer air, the more natural tempo of life, the rather higher level of neighborhood character... He is within an hour and a half of the big city.  He probably indulges in a propensity for gardens and chickens, which supply some of his needs and lighten the pull on his income.  His work is likely to be steadier. "... The results and achievements of Village Industries are mixed.  "Did they succeed? Yes and no," concluded Segal.  His research indicates Village Industries never made money.  "But, adminstratively, they were successful alternatives to large scale manufacturing and production - and were pleasant places to work."" - Michelle Krebs, June 1 2003, on milfordhistory.org

"Smith took on the massive GM bureaucracy with disastrous results. A sea change in how GM would market and build cars in the future, the 1984 reorganization was intended to streamline the process and create greater efficiencies; the reverse actually occurred. Combining the nameplate divisions, Fisher Body, and GM Assembly into two groups, C-P-C (Chevrolet, Pontiac, Canada) to build small cars and B-O-C (Buick, Oldsmobile, Cadillac) to build large cars, the effort was subsequently criticized for creating chaos within the company. Longstanding informal relationships that greased the wheels of GM were severed, seemingly overnight, leading to confusion and slipping new product programs. The reorganization virtually stopped GM in its tracks for 18 months, and never really worked as intended, with the CPC division building Cadillacs and BOC building Pontiacs. The reorganization added costs and created more layers of bureaucracy when the new groups added management, marketing and engineering staff, duplicating existing staff at both the corporate and division levels. Almost ten years elapsed before the 1984 reorganization was unwound and all car groups were combined into one division." - Wikipedia article on Roger Smith, GM's CEO in 1981.

"In 1971, President Richard Nixon appointed [Earl] Butz as Secretary of Agriculture, a position in which he continued to serve after Nixon resigned in 1974 as the result of the Watergate scandal. In his time heading the USDA, Butz revolutionized federal agricultural policy and reengineered many New Deal era farm support programs.
For example, he abolished a program that paid corn farmers to not plant all their land. (See Henry Wallace's "Ever-Normal Granary".) This program had attempted to prevent a national oversupply of corn and low corn prices. His mantra to farmers was "get big or get out," and he urged farmers to plant commodity crops like corn "from fencerow to fencerow." These policy shifts coincided with the rise of major agribusiness corporations, and the declining financial stability of the small family farm." - Wikipedia article on Earl Butz, retrieve 2-8-2013

"The farm-to-city migration has obviously produced advantages to the corporate economy.  The absent farmers have had to be replaced by machinery, petroleum, chemicals, credit, and other expensive goods and services from the agribusiness economy, which ought not to be confused with the economy of what used to be called farming.  But these short-term advantages all imply long-term disadvantages, to both country and city.  The departure of so many people has seriously weakened rural communities and economies all over the country. And that our land no longer has enough caretakers is implied by the fact that, as the farming people have departed from the land, the land itself has departed.  Our soil erosion rates are now higher than they were in the time of the Dust Bowl.  At the same time, the cities have had to receive a great influx of people unprepared for urban life and unable to cope with it....In a country that puts an absolute premium on labor-saving measures, short workdays, and retirement, why should there be any surprise at permanence of unemployment and welfare dependency?" - Wendell Berry, 1985 "What are People For?"

"Even as the little neighborhood schools shut their doors, the local livestock markets closed, one by one.  There was once a stockyard in Harpster.  Both it and the one in Upper Sandusky closed in my youth.  Now, with livestock to sell, I watched the stockyards at Carely, Arlington, Marion, and Kenton fade away.  Only Bucyrus remained close enough for practical hauling.  We were in the grasp of some awful, monolithic, monopolistc economic power that was relentlessly desroying local independence.  Local everything.  Where would it all end? ... .. "I was trying to hold down a factory job at the time and run the store too, and I wanted to get started in blacksmithing." he says.  "It got to be more than my wife and I could handle at the time.  But now we hope we've found a way to keep the store alive, too.  "I think what finally kills villages is a lack of love."  I was stunned by his remark.  I knew that's why farms died too." - Gene Logsdon,  Home Villages, in "You Can Go Home Again", 2002

"As the earth's population continues to concentrate in cities and resources become more scarce, the [Michigan State] university believes that the world will become increasingly dependent on urban farming to meet its food needs.
“By 2050, food production will need to double – using less water and energy than today," MSU President Lou Anna K. Simon said in a release. "We see great opportunity to do good locally and connect globally.”
At press conference at Mayor Bing's office on Wednesday, Simon said that, by positioning itself as a leader in urban agriculture, Detroit would be able to take advantage of opportunities presented by the Farm Bill, which recently passed the U.S. Senate and is now in consideration in the House of Representatives."  - "Detroit Urban Farming Gets Boost From New Michigan State University Agricultural Innovation Initiative", 6-23-2012, Huffington Post Detroit, retrieved 2-8-2013


 
 

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