If you haven’t read Part One of this article, please take the opportunity to do so now. Probably also wouldn’t hurt to read The Macroeconomics of Scale, and Infracompetition. This section represents something of a culmination of concepts; our Endgame, if you will. If you want to skip everything previous, go ahead. But this will make a lot more sense contextually if you don’t.
See you in a bit.
Getting Down the Track
There are three critical components to winning any drag race: the Holeshot (initial launch), 60-foot (getting moving) and trap speed (how fast you’re going at the end of the track). The first requires reaction time, the second traction and the third raw horsepower. Fail in any one of them, you lose the race…also possibly your car, and girlfriend.
Keep this in mind.
What is Industrial Reform?
“Industrial Reform” refers to industry regulation specifically created to save capitalism from itself. Primarily by broadening our industrial base, and restoring power to the small businesses and manufacturers which form the foundation of any economy, and without which Capitalism becomes an auto-cannibalizing enterprise.
We must return to an economy in which small business plays a predominant role. Not exclusive, because of course there are things Big Business does better. Mostly, in terms of mass producing the standardized parts small business needs to function. When it comes to producing safety and performance critical components on the cheap, you’re not going to do much better than global enterprise. I trust Shane to replace the struts on my Supra all day long; not so much to build the landing gear for 747s.
So, Industrial Reform doesn’t seek to replace Big Business entirely, but rather to create a sustainable synthesis between disparate ends of the corporate spectrum. Our goal here is to keep Big Business doing what it does best (making lots of interchangeable widgets), and small business doing what it does best (providing jobs and supporting communities).
Entire books could be written on Industrial Reform; especially considering the fact that I coined the term myself, and haven’t finished the definitive book on it yet. Yes, it’s coming. Eventually.
But to summarize: Industrial Reform initiatives rest on three basic components. In drag racing terms, you can think of them as the holeshot, 60-foot and trap speed.
- Purchasing Assistance — Launches us off the line
- Standardization — Gets us moving down the track
- Modularity — Provides the raw power to win the race
These components include two of the four prerequisites for value in durable goods: Standardization, Modularity, Repairability and Upgradability. With these, any machine or device can last practically forever, drastically increasing the value proposition for consumers. The latter two obviously being dependent upon the former.
We’ll get into those momentarily. But since victory depends on a good launch, we’ll start with that first.
Holeshot — The Federal Purchaser’s Union
A Federal Purchaser’s Union would help to limit the Macroeconomy of Scale a bit more organically than the tax structure proposed earlier. Essentially, the Federal Purchaser’s Union would give small companies the purchasing leverage of much larger ones by banding together to collectively negotiate prices. The same way major corporations use their purchasing power to reduce expenditures, small business owners nation-wide could unionize to do the same.
Imagine being an independent truck driver who could buy fuel, insurance and tires at the same rate as Swift or JB Hunt. Mom’s grocery getting peanut butter and toilet paper for the same price as Walmart or Target. What if independent mechanics paid the same for parts, tools and equipment as factory outfits and major chains? How about if small-market retailers could get shipping rates at the same price as Amazon?
The FPU could operate either within the government utilizing governmental trade policy tools, or it could even be an independent union like any other. Just a matter of organization; Hell, I might just do it myself. No reason it couldn’t be arranged as a private nonprofit, the same as any other union.
60-Foot — Standardization Initiatives
The best start in the world is a fail if all you do is blow off tires for the next 20 yards. Standardization is our hook; it’s how we dig in, and translate industrial power to useful movement. Always has been, always will be.
Be it through nuts and bolts, or computer chips and circuit boards, Standardization is absolutely critical to the foundation of industry.
Assuming you read the first part of this article, you already know why standardization increases competition and innovation, encourages immediate growth of small manufacturers, and shifts manufacturing bases from large overseas suppliers to smaller local ones. You also know why the lack of standardization immensely favors big business, at the expense of small.
First example from personal complaint: There’s no reason why more than four different oxygen sensors, alternators, microwave magnetos or refrigerator compressors need to exist. They all do the same thing in the same way. And there’s not reason at all why any of them should have different connectors and fittings. this nonsense does is drive up price, drive out competition and kill innovation. Both on the front end of supply, and the back ends of maintenance and repair.
Second example from personal complaint: Is there any reason why every German automaker on Earth uses twelve different oil filters, each one requiring bespoke tools to replace? Tools which, as it happens, are only available from the manufacturer because they own the patents for them? BMW, Mercedes and Audi are notorious for this, increasingly so as the years go by. While it is true that Germans generally have a love for specialized tools, it also happens to work out in BMW’s favor if they’re the only ones making that specific tool.
It doesn’t even have to be a physical tool; the software needed to diagnose vehicle faults is often the most important tool in a mechanics box. This was something many of us discovered in the late 80s and 90s, when every manufacturer on Earth required a different computer and software protocol to pull and clear codes. This proprietization of coding was very nearly the death of the private mechanic; until the government stepped in, and required manufacturers to standardize on a common protocol and common connectors under OBD-II.
Without question, this standardization saved private mechanics from the brink of extinction. But, corporations being what they are, eventually found a way to screw us again. OBD-II was created to allow for emissions agencies to check for engine faults, and it still performs that function. But it didn’t take manufacturers long to figure out that they could hide almost all the really important data behind “Manufacturer Code” paywalls. Which, of course, required licensed software from the company to access.
By exploiting Manufacturer Code exemptions, corporations tipped the balance back in their own favor and away from private mechanics. True, we could still get a general idea what was going on with the car; but unless you were a master diagnostician (like me), odds were 50/50 at best you’d figure out what was wrong without throwing unnecessary parts at the car. So, corporations managed to drive more smaller shops out of business, and retake much of the business they lost to OBD-II.
And who pays the price for this? We do, naturally. Both in terms of outright cost, and in jobs lost to corporate displacement.
Of course, I’m using cars because I’m a mechanic, and automotive is my primary wheelhouse. But the same could be said for all kinds of industries, from washing machines to televisions to computers. Basically everything you come into contact with on a daily basis has become overpriced, disposable garbage because of lack of standardization. And every repair industry that once existed exists no more, at least in part for that reason.
We pay the price for that, and big business benefits from it. We could easily standardize input/output factors and mounting applications for 90 percent of components used in consumer products today. As well as the tools used to service them. This would have immeasurable benefits both on the front and back end of the value proposition.
- Component Production — Standardizing components and tooling would vastly increase the number of competitors producing those things within a given market. Especially on the low end, since small-volume manufacturers would now have access to global markets. As sure as competition reduces cost, this would reduce the price of all standardized components from manufacture to sales. The sheer economy of scale guarantees that. But since the beneficiaries of capitalism typically despise the things that make it work, most obviously aren’t too keen on creating more competition. Bad for them, but good for us.
- Unit Production — By this, we mean the finished product or major subassemblies thereof. Reducing cost on the component end reduces cost on the assembly end, which ultimately cuts the bottom line cost for manufacturers. This is especially critical for smaller volume Coachbuilder type manufacturers, who need both broad availability and low cost to keep the lines moving. No, Ford doesn’t care if its control arm bushings only fit three cars, because they make a billion of each model. However, smaller outfits like Superformance or Roush need broader application to create more models at lower cost.
- Maintenance and Repair — All machines break. Nothing, no matter how well we build it, lasts forever. So, the lifetime of any device or machine is ultimately measured not in the components used, but how easy and cheap they are to replace. This aspect of Industrial Reform dips its toe into all four virtues of product value: standardization, modularity, repair and upgradability. But since Standardization lands first in this article, we’re talking about it here. You can extrapolate from the examples above why this is important, and exactly how they’re affected by standardization. Both in terms of the components themselves, and the tools required to replace them.
Again, much remains to be said on this subject; though you will see echoes of it in other proposals of mine, like the EPIC protocols for electric vehicle phase-in. But, you get the idea. The more things we can standardize in terms of input, output and mounting, the more industry we’ll produce. Simple as that. This concept applies to practically everything anyone can think of; and if anyone (still) has the economic power to institute global standardization initiatives, it’s the United States.
So, with standardization, we’ve got the hook and the scoot. We’re dug in, and turning power into movement. All that’s left now is to cross the line win. Going very, very fast.
Raw Horsepower — Modularity Initiatives
Modularity is, essentially, Futureproofing products. Metaphorically, modularity gives us the juice to power through resistance, and freight train through the finish line. Economically, this happens by breaking the cycle of consumerism, increasing value proposition and increasing both repairability and upgradability. Modularity is the opposite of integration; it’s separating components into easily replaceable parts, rather than joining them together into a single unit.
Though we could just as well turn to circuit boards or cell phones, the clearest example I can think of today involves car chassis.
Until fairly recently, cars were largely two-piece affairs; you had a rolling chassis (frame) containing all of the functional mechanical bits, and a body that bolted on top to keep the rain off. This design had its upsides and downsides; but the biggest downside, in terms of manufacture, was the cost of producing a separate frame.
This approach (drawn from carriage manufacture of the 19th century) started to go away after WWII. Many aircraft designers returning from the war had gained experience in producing monocoque or “unibody” chassis. Some of the first, frankly, were awful; but over 80 years or so, they’ve gotten pretty good at producing immensely stiff chassis that completely lack a frame.
This was great from a weight, production and safety standpoint, since computer design allowed engineers to design cars that deformed to absorb impact. However, this very quality meant that even minor traffic accidents could turn an entire car into scrap metal.
This isn’t necessarily a bad thing, if you happen to be a manufacturer running on the consumerist model of building disposable crap. In fact, the adoption of easily destroyed unibody chassis could prove incredibly profitable, if you’re upselling replacements at a slightly higher cost every time. Unfortunately, as usual, this cost was absorbed by consumers. Either in terms of outright purchase, or in exorbitant insurance premiums and deductibles. So, the value proposition of unibody cars ends up greatly favoring manufacturers in terms of ever escalating retail costs, and hurting customers over the long term.
But, that’s the paradigm of consumerism; produce disposable crap, and charge a little more each time to replace it.
Now, imagine an alternate reality where people actually cared about value proposition for the customer. Gaining the true economy of repairability and upgradability, instead of the false economy of consumerism.
I think of it this way, as an example: Imagine a car that bolted together in five pieces: a two-piece frame (front and rear), and three-piece body on top. Pretty simple, right? This arrangement would give a few advantages over current integrated designs.
- Repair — If you get his from behind at 10 mph, you can replace just the rear sections of body and frame affected rather than buying an entirely new car. Selling those sections as complete modules would also reduce the tools, time and labor required to do so. So, we get a double benefit in terms of both component costs and labor. Much of which may, incidentally, go to private shops instead of corporate dealerships.
- Modification and Upgrades — Imagine you’re 25 years old; no kids, a tech job and you just want something fun. So, you buy a 2+2 sports car like a Corvette. Time goes on, rugrats happen, and now you need a station wagon. Rather than trading your awesome sports car in for some soul-sucking soccermom-mobile…now, you can just unbolt the rear two-thirds of the car, buy a new module from a local coachbuilder, and turn your Vette into four-door sportback. Eventually, you land an upstairs office job, so want something a little more dignified. Dump the front clip, and give the car a weekend nosejob. Time goes on, kid gets the car…he wants a pickup truck. No problem. (Reluctantly) hand him the keys, and replace the hind end with a bed. Ten years later, your kid still loves the truck…but he wants to go mudding in the submerged remains of Houston. Also, there’s a new cold-fusion powerplant out that gets 600 miles to the raccoon. No problem. There’s a mod for that.
Ultimately, through modularity alone, the gas-powered sports car you purchased in 2025 becomes your grandkids’ fusion-powered luxury mud truck by 2125. All along the way, adapting and changing to the needs of the moment, at no point requiring the wholesale purchase of a new car. This is the ultimate in staying power. Technically, it’s not even the same vehicle anymore; but at no point was it off the road, and at no point did it ever cost more than was required to meet the needs of the time.
Down the Track
Now, imagine if you will all of these components working together, from holeshot to trap. Purchasing Unions, plus standardization plus Modularity.
In our above scenario, not only could you swap out body and chassis components at will…you didn’t even necessarily have to buy them from GM. They don’t even need to be built for GM cars. Because all of these modules (from chassis to powertrain to body) use standardized mounting points, you could get new or custom parts designed by Nissan, Daewoo or Saleen. The end product, a hundred years down the line, could end up a total Frankenstein of factory and custom parts from manufacturers large and small. All capable of bolting together and working together, fully plug and play.
xtend that further to powertrains and couplers; imagine today’s gas engines used the exact same mounts, bellhousing patters and flanges as electric motors, or raccoon-fusion powerplants a hundred years later. Imagine they all used the same sized bolts, the same electrical connectors and programming language. Imagine if all of this could be changed out in a weekend with nothing more than a 172-piece tool set available from any hardware store.
Imagine the possibilities.
Now, take it a step further, and imagine this: Your futureproof car uses the same circuit boards and universal serial connectors as the blender in your kitchen. Or your washing machine, and the software to re-purpose them is fully open-source and available online. You could literally plug-and-play the same parts from your TV, to your microwave to your car. And they’d be pennies on the dollar to today, because everybody makes them.
THIS is the power of Industrial Reform.
You want to talk about returning value to customers? About reducing the environmental impact, of producing more cheap crap to replace the last bit that broke? Of excising the cancer of America’s consumerist economy, and getting us out of the Cheap Crap Game we’re destined to lose? This is how we do it. This is the answer.
Industrial Reform is the answer. From holeshot to trap, this is the approach, the only approach, that can save us.
All else is just a Band-Aid on cancer.
Every candidate…every would-be political power, has their signature issue. For some it’s guns, for others its healthcare. For me, it’s Industrial Reform. Because if you want to excise a cancer, to save a dying patient, the only useful approach involves attacking to root of the problem. In America, our problem is consumerism, and the Cheap Crap Game into which we’ve become embroiled.
Somebody has to say it: America’s economy is in a death spiral. We can try to disguise it, and we can lie to ourselves about life extension measures. But that’s all it is. A temporary extension. A Band-Aid on cancer.
Industrial Reform is the cure.
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