Markets at work – by Top Gear

In buying a new brake calliper for his Porsche James May of Top Gear fame provides amusing but compelling evidence of markets at work (hat tip: Café Hayek). Here’s an excerpt: 

That something as complex as a car can be owned by ordinary people is, I think, one of the greatest achievements of humanity”

I love this stuff.

Working to limits and fits liberates the manufacturing process. Instead of one fitter having to make sets of rods and holes work together, a man in Shanghai can make all the rods while a bloke in Botswana drills all the holes, in the certain knowledge that any two will work together. This is the bed-rock of mass production as far as machines are concerned, if not chicken and mushroom pies.

It’s a pretty simple idea, but it took a long time to sort out. The origins of limits and fits are assigned to the clock-making and gunsmithing businesses, and you can see why they’d be interested, because both these things were required in huge numbers and would break readily – the hammers on guns would shear, and the pallets in the escapements of clockwork mechanisms would wear out.

Prior to the culture of interchangeability, a new hammer for your revolver would have to be made to fit, usually with a bit of filing. The mass-produced hammer would go straight on. Job done.

The earliest cars were made like flintlock pistols, and were machines with no true commonality, even if they looked the same. Each part had to be made to fit by a, well, ‘fitter’, who would remove bits of metal like the man in our original rod-and-hole example. These cars were hideously expensive to buy and hideously expensive to maintain.

It reminded me an article I wrote on productivity titled The Lever of Riches a couple of years ago for the ODT. Here’s an excerpt:

Improving worker training and knowledge, having better technology or more capital to work with, making best use of natural resources and inventing new ways to do things increase productivity. Henry Ford’s development of the assembly line in 1913 is a popular example of a spectacular productivity leap: it reduced the number of hours required to make a car from 17 to one and a half, dramatically cutting the cost of production and making the car affordable.

Ford’s invention effectively pushed his workers up the ‘hierarchy of human talent’. With the creation of machines and tools that can perform tasks better and cheaper than human muscle and basic brain power, people move to jobs that use other, more sophisticated human talents like creativity and people skills. At the same time, manual jobs like sewing machining, assembly line work and telephone operations shift to lower-wage countries where workers can perform them more cheaply. In this way the economy sheds ‘lower order’ jobs, and adds ‘higher order’ jobs like nurses, lawyers, chefs, recreation and hospitality workers, designers and architects, hair stylists and beauty therapists, financial advisors, tourism operators, and so on. 

Read James May’s full article here and mine here.

Donald J. Boudreaux at Café Hayek wonders if James ever read ‘I, Pencil’, a delightful essay by Leonard Read. ‘I, Pencil’ is an old favourite of mine which I highly recommend. The link above includes an introduction by Milton Friedman and an afterword by Boudreaux.

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