Somebody has to say it: America’s economy is in a death spiral. We can try to hide it by borrowing money from China, try to disguise it with ever increasing consumer debt; we can lie to ourselves, and believe a minimum wage increase or a few new trade deals will fix it. But this comforting delusion (as so many do) deliberately ignores the real problem. A malignant cancer writ into the very DNA of America’s economy. This cancer is fatal, inevitable and it has a name.
In one word, “Consumerism.” Two words, “False Economy.” The Cheap Crap Game. And China’s winning.
The cancer of consumerism is very real, but not accidental. It was created, not grown. Engineered. And the system it supports is engineered to fail…just like the products it produces.
But that doesn’t have to happen. We don’t need to fall to this malignancy. It’s not too late to cut it out, to end the death spiral of consumerism. Losing a game we could never hope to win. There is an answer here; I call it “Industrial Reform.” And this answer begins by going back to where it all went wrong; to a time before the cancer of consumerism took root, when America was truly a global economic and industrial power.
This was the era of “Carriage Industry.”
What is Carriage Industry?
The name is a reference to Coachbuilders, who operated from the beginning of the Industrial Revolution almost up to the present day. As you might guess, these coachbuilders started out building bodies for trains and horse-drawn carriages; but the practice carried forward well into the automotive era, and continues with some small volume manufacturers today.
But what is a coachbuilder? In short, it’s a small manufacturer who buys mass-produced, standardized parts from large corporations, and builds something bespoke with them.
In the early days, standardized parts would have been simple fasteners. We don’t think about it much today, but there was a time when standardized nuts and bolts didn’t exist. Same for plumbing fixtures and pipes, railroad tracks and wheels. It’s probably fair to say that the Industrial Revolution was almost entirely a result of mass production through standardization. This wasn’t just the spark; it was the fuse and gunpowder. Standardized parts are everything in industry.
As the Revolution went on, parts got more specialized, and assembled into units. Bar stock became whole chassis, castings became engines, and gears became transmissions. So on and so forth until everything on Earth was made of standardized modular components, themselves made of standardized parts. But those components didn’t assemble themselves into working machines. For that, you needed coachbuilders.
For cars, the process would typically go something like this: Couchbuilders would order a rolling chassis from one of the major manufacturers (Ford, GM, Studebaker, Bentley ect), which had most of the major functional bits needed to make a car go down the road. Sometimes they’d install another manufacturer’s engine, transmission or axle. Others not. A steering box might come from GM, the door hinges from Mercedes and the hood straps from a local saddlemaker. Couchbuilt cars could end up being total Frankensteins; which isn’t a bad thing where parts availability is concerned.
Then, the builder would assemble a custom body and interior, put everything together, and make the best car they could build for the money. It was a time of fascinating symbiosis between big business and small; the big guys made parts, the small guys made cars, and everybody made money.
Almost every major brand you can think of today started out using this “coachbuilder” approach. Most independent, smaller volume manufacturers (like McLaren, Saleen and Superformance) still do. Even GM used this approach with the Camaro, farming its bodywork and assembly to an outside company, well into the car’s production run. To say nothing of guys like Carroll Shelby, who made an entire industry of his own (largely scratch built) full-race Fords. And on whose legacy Superformance is built.
These companies, these people, have produced some of the most legendary cars ever built. By synthesizing big business and small. Corporations make standardized parts, small business put them together into new products. This was the first era of America’s true economic greatness. But it wasn’t the last.
Packard Compatible — Coachbuilt Computing
Like most emergent industries, computing started out using the coachbuilder approach. Guys like Bill Gates, Steve Jobs and Wozniak are modern inheritors of this tradition in an entirely different field.
Think about this: What would the computer industry be today without standardized components? What would it be like if transistors and processors, resistors and circuit boards had started out as integrated units? Would we have even had a computing explosion, or the laptop in your home, without the standardization of DOS and Packard-Compatible components? At the very least, “PC” wouldn’t even exist today as a term.
The computing explosion of the 90s, during what might arguably be considered America’s second great Industrial Revolution, was driven entirely by standardized components and protocols. Almost overnight, hundreds of small businesses sprung up, each offering more tailor-built products at ever lower prices. At one time, small brands were fully competitive with the big boys from Apple and IBM…because they all used basically the same modular, standardized equipment. All were able to be modified, repaired or upgraded as need be. And for that reason, DOS-driven PCs came to dominate the marketplace.
Through the PC boom, we saw an explosion in small business, Carriage Industry where everybody had a shot at economic opportunity. This was an era of intense innovation and competition, where capitalism truly got to do what it did best.
Then…it was over.
Engineered to Fail — Integration, Proprietary Parts and the Death of a Boom
Of course, none of this was to last. Because it didn’t take long for Apple and IBM to exercise their huge resource advantage to begin creating proprietary parts and programs. Worse, to begin undoing the industrial boom created by modular, standardized components. The big companies started creating integrated components; no more could we swap processors, video cards and data storage. Now, computers were effectively sealed units. And if anything went wrong with any single component, the expectation was that you’d just throw the whole thing away and buy another.
So, the computer industry entered the Cheap Crap Game…a never-ending, ever-descending race to the bottom in terms of value and quality. Instead of giving customers value, computing companies absorbed that value by constantly reselling new equipment to replace broken (and unrepairable) equipment…at a higher price each time. Their profits spiraled ever upward, while product value over time spiraled ever down.
At the same time, we saw this practice evolving in the automotive industry. While computer aided design was supposed to make cars better and better, auto manufacturers found that they could maximize profits by engineering products to fail. True, initial quality was high, but the cars themselves got almost exponentially more expensive. Far faster than they got more reliable. Meaning, but like the computing industry, auto manufacturers entered a cycle where the only way they could make money was continuing to replace broken cars at a higher price each time.
Modern cars, like computers, are almost fully bespoke. Manufacturers integrate as many complex systems as possible, specifically to reduce modularity. They do maintain standardization to reduce manufacturing costs, but only to a certain point. And never for long. They don’t want us fixing new cars with parts from 20 year old cars, because many make more money selling replacement parts and specialty tools than they do on the cars themselves.
Yeah. Looking at you, BMW.
The end goal, of course, is to make these products so expensive or impractical to own, consumers are forced to regularly buy new ones (at higher prices), because they simply cannot afford to use, maintain or upgrade the old.
This cycle of forced consumerism is exactly what gets us into the unwinnable Cheap Crap Game with China. We cannot win the inevitable race to the bottom without ending up at the bottom ourselves. Can’t be done. We must interrupt this cycle, by taking back control over the aspects of industry which have always precipitated growth and progress in developed nations.
There is a cancer at the heart of America’s failing economy; a silent death spiral, hollowing us out and putting us into no-win scenarios with nations content with subhuman standards of living. But we’re better than that; we don’t need to participate in the Cheap Crap Game, this endless race to the bottom which can only see America into an early grave. We need solutions. We need to remove this cancer.
We need Industrial Reform.
Click here for Industrial Reform (Part 2) — How to get out of the Cheap Crap Game, and Create an Economy that’s Built to Last
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