Myths Of Industrialization

Originally written on May 6, 2019, proofread by Claire Hilton.


Some argue that Industrialization is only a natural phase of global markets. They suggest that people should learn skills that are needed in the job market. Instead of learning how to make shoes, they should study law, so they can settle lawsuits against a shoe company. They should study finance, so they can handle a shoe corporation's portfolio. They should learn engineering so they can program the machines that produce shoes. They should learn marketing and management, so they can ensure their company alone satisfies the entire demand side. Is industrialization truly organic? Are industrially produced goods cheaper than manually produced goods?


The biggest cost incurred in production is labor. When we calculate the cost of industrial production, do we factor in the cost of education of all employees? Are most workers not college educated or at least high school educated (Graf, 2017)? Has their education (12+ years) not been financed by the public? Even if they went to private institutions, they incurred costs that are not included in the final product, besides their higher salaries, which have also been inorganically deflated by competition with their publicly educated peers. If we look closely, money spent on education by citizens and by governments has subsidized industrial production.


Consider what the shoe market would look like without public education. To make shoes requires no formal education. A shoemaker can start early in life. He faces competition only from other local shoemakers. The cost of a pair would only represent the cost of making them manually and marketing them. Since the enterprise requires very little capital, he would incur no significant financial cost. Without public education, a shoe corporation may fail to replace a local shoemaker.


A shoe corporation has to pay for lawyers, tax professionals, finance personals, engineers of different kinds, information systems people, managers, researchers, PR professionals, marketers, salespeople, etc. Imagine what it would cost a corporation to train employees in the above fields. What would it cost them to turn a barely literate employee into a computer genius or a lawyer? Even the equipment would cost more, because the developing company would have to train their employees, too. In a free economy, they would have to invest much more in human resources. Think of the true cost of automation. What is the real cost of instructing a group of individuals in human languages, logic, mathematics, computers, and computer languages? Without public education, it would be impossible for industries to automate. Engineers, managers, and computer scientists would be absurdly expensive to hire unless mass-produced.


To summarize, industrialization has not reduced production costs. It only appears so because the cost has been distributed among the entire society, while the profit, only among a few (this one inspired by Noam Chomsky). Therefore, when you buy a pair of industrially produced shoes for $60, know that the real price has been subsidized by your tax dollars that pay for public education and corporate tax deductions and credits (Jeffers, 2018; Knufken, 2010). The real cost is much more.


In addition, from a societal growth perspective, all educated non-shoemakers earning from the sales of shoes and paper are wasting their 16 years of education. In a free market, both shoes and paper can be produced without any education at all. The consumer wouldn't even notice the difference. Society can do much better if educated people use their knowledge of engineering and finance to do something innovative, instead of making shoes and paper.


References:


Graf, N. (2017, May 16). More young workers than ever are college grads in U.S. Retrieved from

https://www.pewresearch.org/fact-tank/2017/05/16/todays-young-workers-are-more-likely-

than-ever-to-have-a-bachelors-degree/


Jeffers, K. (2018, June 28). How corporate tax incentives work and why cities spend so much on

them. Retrieved from https://www.strongtowns.org/journal/2018/6/27/how-corporate-tax-

incentives-work-and-why-cities-spend-so-much-on-them


Knufken, D. (2010, November 9). 5 Tricks Corporations Use to Avoid Paying Taxes. Retrieved from

http://www.businesspundit.com/5-tricks-corporations-use-to-avoid-paying-taxes/

If you neither want to login nor want to hit the chat box, comment here.

C-95 Urja Nagar Gevra, Korba, Chhattisgarh 495452, India