Making Things or Making Money

The events of the last few weeks have me constantly reminded of a cartoon I saw many years ago.

In the cartoon, a professor is standing in front of a group of students in what looks like a business school class. The professor starts off the class by saying “Today we are not going to learn about making money. Rather, today we’re going to learn about making things.” The next frame shows a look of shock on the students in the back of the room. One student says to the other, “But I didn’t come here to learn about making things, I came here to learn about making money.” The other student replies, “I know, we can sue the school, we can make some money that way.”

The reason I’m reminded of this cartoon is the current discussion regarding a bailout of America’s automobile industry.

That seems to be the fight today. Are we interested in making things, or are we only interested in making money?

The one hand, there seems to be lots of money to be given to those who need it to help us make money. As I write this, hundreds of billions of dollars have been given to the likes of Citicorp, Bank of America, AIG, and Fannie Mae and Freddie Mac. These institutions are said to be too big to fail, and are said to be the key to keeping the credit flowing that keeps the housing market moving and facilitates business and consumer spending.

On the other hand, there seems to be a shortage of money available for those who make things. While you can argue the merits of lending money to GM and Chrysler because of a perception that the products are not competitive, or that they are too overleveraged, or too indebted to their pension funds, you cannot argue with the profound impact that these companies, and companies like them, have had on America’s prosperity.

These companies historically have taken raw materials and transformed these materials into valuable consumer products that have altered the lifestyle of the entire continent. These companies made their mark not by the manipulation of financial assumptions, but by engineering and process know how.

They have also done this while paying a decent wage to their workers, a wage that allowed those workers to buy homes and move into the middle class.

America developed into an advanced society not through financial wizardry, but through the ingenuity of a few and the hard work of many. If we are going to continue to be an advanced society, it seems that we will also need to focus on making things rather than just on making money.