During political discussions, from the past few years, many have talked about the middle class in the USA. Some comments are about the decline of the middle class. Some about entrepreneurs and small businesses owners building the middle class. Some about higher education providing career options that bring people into the middle class. Three hundred years ago, the colonial economy roughly divided between the landed gentry, shop owners, and laborers (e.g. indentured servants and slaves). Our Civil War, Industrial Revolution, and immigrations from various part of Europe shifted labor from mostly agricultural regions to urban and factory towns. From the turn of the century to the post WWII years, many whose grandparents had worked the land or factories had become the middle class, populating the suburbs. I propose that Henry Ford’s Model T has something to do with it.
Ford took out his patent for the Model T on October 1, 1908. Over the next couple of decades, his factory went from being one of 30 in the USA to setting the standard for production methods. His Model T went from being a stripped down version of the motor cars shipped over from Europe to being the family car in the USA. How did the Model T help promote the middle class?
In the dynamic of private and public synergy, Ford’s vehicles and state roads encouraged the development of each other. These vehicles and roads allowed farmers and factories to move their products more quickly and directly to towns and customers. Cars and roads also allowed workers to live away from factories and to seek alternate jobs. Geographic mobility allowed work mobility, which allowed workers with skills to compete for higher wages, which provided more income for their families. Commuting allowed development of housing separate from company houses and apartments, as well as ownership of houses in suburbs.
Of course, none of these synergies could happen if people could not afford the cars. At the turn of the century, vehicles cost $2,000 – $3,000, well out of the reach of the average workers. Ford built and sold his cars for $850, counting on volume profits. He also doubled the wages of his factory works to $5 per day, and trained them to work on many parts of the assembly line, to increase worker retention. His higher paid workers could afford his cars. Ford’s investment in his product, factories, and employees changed the USA from farm-shop-railroad-barons to a middle-class-suburban culture. His patent gave him the credit for his idea and the financial reward of his investment.
Ford’s patent differed from most patents today. First, his patent was for the whole product. Most patents today are for specific parts that go into the assembly of something. Automobiles, appliances, electronic gizmos probably use dozens to hundreds of parts, each with a separate patent. This might represent how much more complicated our widgets are these days, but I suspect that it represents something different about how we invent stuff now.
Inventors and tinkerers are always experimenting, researching, developing and improving stuff. Ford built custom racing cars before developing his Model T. However, these days there will probably be few guys in garages who will dream up something that will change society. More likely, those creative researchers work for corporations, universities, and government agencies (e.g. Department of Defense, Energy, Science and Aviation, Institute of Health). Their inventions are most likely to be from the process of making something larger. Depending on their employment contracts, they may not take out personal patents, but file for patents through the agency.
A second difference with patents now, is that these have become commodities for sale. Global corporations buy up portfolios of patents. Sometimes this is to gain control of patents related to their products to secure their production process and to prevent competitors from using those widgets. Sometime this is to suppress a product that might cut into their market share with a better mouse-trap. This creates an economy of invention-to-generate-patents, not so much to bring something useful to the market place, but to own the patent so that some bigger company will want to buy and control it.
This begs the question of whether all the talk about the creativity and entrepreneurial spirit of the US economy is really about building companies or to get bought out. A hundred years ago, we made stuff and sold it to generate wealth. Now we buy and sell shares in companies and buy patents. If Ford were around today, would he be able to invent a product that would change our society over the next 100 years?