Thursday, July 26, 2012

Operating Margin!

In 1903, when Ernest Pfenning, a Chicago dentist, paid $850 for the first Ford automobile ever sold, he probably thought he was buying a red, newfangled “horseless carriage,” with a two-cylinder engine, no roof, a seating capacity of just two persons and a top speed of 28 miles per hour. What he did not know was that he was singlehandedly rescuing the struggling Ford Motor Car Company from going “belly-up.” When Henry Ford and his fellow investors started their business, they garnered a treasure chest of $28,000 – a good-sized fund for the time, especially when one considers that these monies were all devoted to such an untested notion as a gasoline-powered, private automobile. What Pfenning did not know was that by the time he “ponied up” for that first car, Henry and his investors had spent all of their venture capital except $224!

I wonder how things might have turned out differently if Dr. Pfenning had decided that day not to spring for the car, but to go home, think about it some more and talk with his wife about the idea. What if, when Ernie reached the house, his wife reported to him that the kids needed braces and that he should hold off on spending money for a while. Well, okay, since Ernie was a dentist, maybe it wouldn’t have been braces. Maybe his wife’s mother was soon to move in with the family and they would need to spend money remodeling the place. But, you get the idea. What if, in the family council, Dr. and Mrs. Pfenning had decided that “the time was not right” for investing their hard-earned money in some fantastic contraption like an automobile? Not only would Ernest Pfenning have lost his “place” in history and been forced to walk to his office, but it is at least possible that there would have been no more Ford Motor Company!

My point in all of this is that we often do not know how significant our “individual” decisions may be for ourselves and for others, in the “long run.” Neither do we know how close to the edge other individuals or companies may be at any given moment in time. While some think sociologists somewhat na├»ve by their basic notion of the “social contract,” the truth is that every one of us is intricately interrelated to many others persons and our ultimate fate and fortunes are tied together in powerful and unacknowledged ways.

This topic interests me, especially at the moment, since I live in Athens, Greece, where the economic stability which one often takes for granted is routinely up for grabs, what with the economic crisis, Greece’s dysfunctional way of doing things, the visit of “The Troika,” talk of Greece’s return to the drachma and other items of concern. It helps me to understand why my landlord recently agreed to lower my rent, in deference to these perilous times. Now I understand why my barber has lowered his price for a basic cut by 2 Euro.

The truth is, from time to time, every culture and every person is somewhere perilously close to the end of his/her resources, financial and otherwise. But, we rarely acknowledge it. And the lives of every one of us are intricately related to those of others, but our pride and stubborn and misplaced sense of independence often blinds us.

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