If a genius like Henry Ford emerged today, ready to work his influence on Michigan's economy, what would likely happen to him? He would probably be crushed.
Such is the judgment of Howard Eldred Kershner. The amazing aspect of his analysis is that he made it in 1936.
Kershner, an entrepreneur and onetime newspaperman who spent the last half of his life in international children's relief efforts, was a member of the camp that declared President Franklin D. Roosevelt's New Deal a disaster. That assessment is shared today by many economists and historians, although the statist-minded still venerate Roosevelt. The numbers, however, speak adversely to his favor. After four years of his economic experimentation the nation's unemployment rate was 16.9 percent - one out of six out of work. Three years later in 1939 it was 17.2 percent - still more than one of six unemployed. Full employment did not occur until the U.S. entered World War II.
Plenty of critics railed against the New Deal debacle at the time. Kershner was one of the more outspoken. He titled his 1936 book "The Menace of Roosevelt and His Policies."
The problem, he maintained, was government intervention into the economy. It imposed rigidity, and any free-flowing economy must be flexible to adapt to changing conditions. Recessions and depressions are naturally correcting when all factors adjust to a slump, including wage rates. A depression in its sixth year was ipso facto a testament to political incompetence.
Kershner noted that Australia, propelled into a depression by collapsing commodity prices in 1930, allowed its wages to decline. By 1935 the unemployment rate had been cut in half from its 1932 peak, and economic recovery rapidly brought wages up again.
By contrast, President Herbert Hoover's big blunder was to try to keep wages high after the 1929 stock market crash. Unemployment rose from 8.7 percent in 1930 to 15.9 percent the next year and 23.6 percent in 1932.
According to Kershner, recovery and sharply rising employment were imminent in the autumn of 1932 as factory orders piled up because of pent-up demand. But business requires an environment of certainty for future planning. After Roosevelt's election the orders were cancelled under a precautionary wait-and-see policy. The feared nightmare became worse than imagined as Roosevelt went on a 100-day blitzkrieg of economic intervention. The great monstrosity of his program was the National Industrial Recovery Act, which imposed rigid codes on industry and commerce that forced wages and prices upward.
Kershner wrote, "Economic planning involves rigidity. How can the planners tell when their well-laid plans are going to be upset by scientific genius, new inventions, accidental discoveries, new wants, new conditions and new demands. The emergence of a genius now and then changes the whole organization of industry. How would the planners have dealt with Ford or Edison? Probably by suppressing them or plowing at least one of them under in the interest of stability and to the everlasting injury of society."
Today the planners are even more arrogant. Michigan has set quotas for various types of energy production, mandating inefficiencies antithetical to consumer interests. Planners are working behind the scenes to reshape the Michigan economy by regulation under the pretext of putative climate change. A new brand of entrepreneur has been created, one who zeroes in not on potential markets but on government subsidies attached to planner-favored projects. Despite the failure of the Michigan Venture Capital Fund of a generation ago, state government continues to throw money into marginal but supplicant private enterprises.
Where would a Henry Ford of today fit into all this? The bureaucratic mind would probably dismiss him. He was a crackpot who built his first contraption so large in his garage that even if it should work, he couldn't drive it out the door. But it did work, so he merely knocked a bigger opening in the garage.
Today's Henry Ford would probably disdain government money, for it softens the spine, changing the obsession to succeed as a responsibility to investment backers into a plea for government handouts and favors.
Is today's Henry Ford alive and well somewhere in Michigan? If so, he finds an adverse political climate that is still self-defeating and hostile to private capital. He encounters a nearly 4,000-page Natural Resources and Environmental Protection Act administered by overzealous regulators who view unfavored enterprise as an enemy. He would run up against an establishment of economic planners that in Kershner's words would likely "suppress" him or "plow him under."
Is there a Henry Ford around today? No doubt. But he probably moved somewhere else.
Daniel Hager is an adjunct scholar with the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.