This is heartening news. Ford Motor Company (F) is the only major US-based automaker to skip taxpayer-funded federa bailout money. But Ford has a tougher road ahead. Ford, like other major corporations and state government agencies, used the former higher rates of return to declare its pensions “overfunded” several years ago. That allowed some organizations to skimp on contributions or even to pull back the overages. When the economic environment changed, those pension funds were left upside down. I cannot be certain, but I believe I read something about GM and Chrysler being able to slough those obligations off onto their “old” (that is bankrupt) corporations, leaving the “new” (that is, partially taxpayer-supported) corporations without as much debt.

A few years ago, when a Ford descendant ran the company, I started saying that Ford needed to get rid of their executive dining rooms and many of the other perquisites of management. I said that there was a rough road ahead, and that survival would take everyone being fully committed to make things work. In particular, I believed (and still do) that Ford needs to flatten its pay scale. No matter who the CEO is, he is not worth more than ten of the lowest-paid factory workers, so compensation should be capped accordingly. When I read about the cost differential between US-based automakers and their foreign-based, non-unionized competitors, even in domestic factories, it seemed to me (and still does) that a prime part of getting UAW to agree to staff, pay, and benefits cuts and the elimination of unneeded job categories, is making those cuts reach all the way to the executive suite.

And so, as much as I am pulling for Ford to prosper, I’m not seeing anything in the news (I don’t work in the auto industry) that would indicate that management is indeed getting rid of their now-superfluous privileges and bonuses.

It may seem weird to hear a pro-capitalism writer state this, but the bulk of the benefit (e.g., money) that comes from selling one’s products or services should be divided among those who do the work of producing and selling said products and services. Yes, that includes management. Secondarily, a certain fraction of that benefit (money) should be returned to the owners–in this case stockholders–and then non-owner capital providers (bondholders and lenders of all kinds) should be paid. This is something I read in Adam Smith’s “The Wealth of Nations”. Upon further thought, I agree fully, even if most people that read Smith’s work seem to ignore such concepts. (Disclosure: That’s an Amazon affiliate link. If you buy the book from clicking that link, I’ll potentially earn some money to help pay for hosting costs.)

The industrial revolution eventually brought a lot of good to our nation, but it took many years of hardships, unrest, and finally, laws and regulations. We do not yet know what lies around the corner for our economy, but we know that we must discard the idea that top managers are more important than the people who do the work, or those who do the work will eventually stop. If we start now, looking to rein in the power of large, out-of-area corporations (LOOACs) and their management, and to ensure that smaller, locally-owned businesses (SLOBs) have a level playing field to compete upon, I believe we can make sure that whatever comes is better for us all.