The Human Story

by James C. Davis

  Planners had to deal with a dilemma. Should India concentrate on “durables”? That is, should it use the country’s scarce resources to build factories, steel mills, power plants, and dams? That’s what Russia had done two decades earlier. Nehru saw such mega-projects as the foundation of development, and he called them India’s “new temples.” In the long run, he was sure, they would wipe out poverty by creating wealth and jobs. (In fact, however, the state-owned companies proved to be corrupt and inefficient. India’s public-sector steel mills employed ten times as many people to produce half as much steel as did the private mills of rival South Korea.)

  Or should the planners concentrate on immediate human needs? Nehru and his planners knew they had to deal with India’s widespread poverty not only by building mills and dams but also by improving the social infrastructure. Nehru often would remind the country that for many millions life was wretched. So India had to spend money directly on human needs: telephones and schools, roads and health.

  The planners compromised. In their Five Year Plans they spent what they could both on big projects and on infrastructure. And India did make some progress in building industries and raising food production. But it scarcely touched its age-old poverty.

  As Nehru reached his seventies in the early 1960s, his daughter, Indira Gandhi, started on her rise to power. (Gandhi was her married name; she was not related to Mohandas Gandhi.) As a child, Gandhi later would reveal, she dreamed of being Joan of Arc, a savior of her country. Because her father was a widower, she served as his official hostess and traveled with him everywhere. When asked, she would deny that she could ever take his place, and when he died in 1964 she took the modest post of minister of information and broadcasting. But only a year and a half after her father’s death, she won the Congress Party’s vote and became prime minister.

  Gandhi has a special place in Indian history for this reason: she would gravely threaten Indian democracy. For the best part of a decade, she worked within that system, but she didn’t find it easy. As is often said, her problem was deciding whether she was a socialist democrat, like her father, or an aristocratic dictator.

  In governing, and in foreign affairs, Gandhi had her wins and losses. Among the successes were India’s gains in agriculture. These were largely due to the so-called Green Revolution, the growing of high-yield wheat and rice plants, which American scientists had developed. (“Miracle rice,” for example, has short and sturdy stalks that hold up many grains of rice.) The average Indian now had somewhat more to eat, although an estimated 400 million lived on the brink of starvation, spending less than twenty cents a day on food.

  Gandhi got in trouble in 1975 when a court declared her guilty of campaign abuses. The court barred her from running for or holding an elective office for six years. Protestors staged a giant “sit-down” to get rid of her, and editors and politicians demanded that she resign from office.

  Far from quitting, she declared a state of “national emergency.” She explained, “When there is an atmosphere of violence and of indiscipline and one can visibly see the nation going down, then the time has come to stop this process.” She banned political parties, “suspended” civil rights, muzzled the press, and put some armored units on alert. She jailed “subversives” by the thousands.

  As a former minister of information, Gandhi knew how to justify repression. A ban on picketing and strikes was called “the fight against Fascism” (although the bans were just what Hitler and Mussolini would have done). The government’s new monopoly of news and comment was “restructuring the entire newspaper industry so as to make it accountable to the people.”

  She chose this moment to announce a Twenty-Point Program of economic reforms, which included something to please nearly everyone. Meanwhile, good things happened: Industrial production rose. The cost of rice and barley fell. Black markets disappeared. Nervous bureaucrats showed up for work by nine.

  Many Indians liked the Emergency. The parliament voted to extend it “indefinitely,” and the supreme court overruled the lower court’s verdict against her. This cringing to what really was a tyrant’s coup was not a great surprise. Democracy was not an Indian production but a western import. In a crisis many thought it best to have a kindly tyrant solving India’s problems.

  What wasn’t popular at all was Gandhi’s shocking way of halting population growth. The population now was rising by some 13 million every year. Naturally the question rose: would that growth not cancel any gains in feeding India’s millions? Believing this was true, the government began a drive to sterilize men who had two children or more. (As we saw, China soon would introduce its one-child-per-family program.) In the north of India, among the poor, officials carried out the sterilization campaign harshly, even thuggishly. They swept through neighborhoods, rounding up the men with families and requiring immediate vasectomies. The campaign frightened millions of men who feared the loss of two things that they valued highly: potency and progeny.

  Gandhi once more swiftly changed her course. As abruptly as she had started the Emergency, she ended it. She freed her enemies from jail and called for elections. Why she did this isn’t clear. Did some democratic-leaning generals “advise” her that she had better take her platform to the people? Was she sure that she was popular and would win another election? Or was she tired of tyrannizing?

  The opposition parties joined together, promising the voters “freedom and bread.” And they won, ending the Congress Party’s thirty years of rule, and with it Gandhi’s prime ministership. The voters clearly had rejected her quasi-despotic rule. The sterilization program, in particular, had cost her many votes.

  Gandhi’s day was over, so it seemed. But surprisingly she soon came back. In 1980 she ran again, using the slogan “Elect a Government That Works.” And she won. She owed her victory partly to the weakness of her opposition, but also to her shrewdness and the people’s fondness for the Nehru family.

  In 1984, Gandhi ordered an attack on violent Sikh extremists in northwestern India. Indian soldiers violated a Sikh temple, burned a sacred tower, and killed and wounded many Sikhs. So the Sikh extremists planned revenge. One morning as Gandhi walked inside a guarded compound, two of her own Sikh bodyguards confronted her. They shot and killed her with some thirty bullets.

  But the Nehru/Gandhi family hadn’t lost its great mystique. Indira’s son Rajiv, a former airline pilot, was now elected prime minister. He ruled five years, until the Congress Party lost in national elections. Two years later, it looked as if he might return to power, but a woman killed him with a bomb.

  In the early 1990s, India, as had China, started on the path of economic change. The country dropped a good deal of its socialist system, as well as the belief that India could prosper solely by its own efforts. It encouraged foreign companies to invest in India. Economic globalization, which we will say more about in the next chapter, helped.

  At the outset of the twenty-first century, India, more slowly than the other giant, China, was just beginning to prosper. In places, Indians were making fortunes in the computer software industry. It was said that everybody but the poorest peasants now had watches, bicycles, and portable radios. But the country still was very poor. The quickening economy made the gap between the rich and poor all the harsher and more glaring. India produced abundant grain, but due to politics and corruption more than half its children under five were poorly nourished. Only one-half to two-thirds of Indians could read and write, and most of them were men. Three-quarters of the people lived in the countryside, far from where they could make more money.

  Despite its many problems — corruption, the Emergency, assassinations, lingering socialism, the castes, poverty and illiteracy, and religious hatreds — India remained faithful to its democratic system. Elections took place routinely. Democracy gave a voice, at least, to Hindu, Sikh, and Muslim; men and women; north and south; rich and poor. By doing so it gave the country a resilience that may have helped it not to break apart in crises. But the sys
tem often functioned badly, like an elephant that tries to waltz. Government corruption was endemic. At one point during 1996 the presidents of all three leading political parties were under indictment for alleged wrongdoing.

  DEMOCRACY MAY NOT always be the fastest road from poverty. As the twenty-first century began, semiautocratic China was doing better than democratic India. Its economy was far more vibrant. The average Chinese earned twice as much as the average Indian. Only a third as many children in China were poorly nourished. The Chinese had three times as many computers per 1,000 people as the Indians, and three times as many telephones. Literacy was far higher than in India, and not just boys but girls as well were now in school.

  Chapter 22

  Some of us do well.

  HISTORIES, INCLUDING THIS one, often dwell on what is sudden, bad, and bloody — on revolutions, for example, and wars and falling empires. But these are not the matters in our lives that count the most. In the past two hundred years, the most important revolution in the life of humans was the rise in our well-being. In chapter 14 we looked at the beginnings of that rise, and here we take up the story again.

  In the latter 1900s, ways of making money changed, and fast. To illustrate these changes we will focus on the story of a single firm, one that’s known to nearly everyone on earth.1

  1For the McDonald’s story I have relied on John F. Love, McDonald’s: Behind the Arches (rev. ed., 1996).

  During the Depression of the 1930s the foreman in a New England shoe factory lost his job. His teenaged sons, Dick and Mac, who had recently finished high school, realized they would not find work near home. They moved across the country, and in California they found sunshine, other new arrivals like themselves, little towns, clunky cars on narrow roads, and Hollywood. For a while they made their living shifting sets for moviemakers. Then they ran a movie theater, but they barely made a living.

  At this time, in spite of the Depression, a novel kind of enterprise was taking shape. To fill the bellies of a mobile people, carhop drive-in restaurants were born. These were popular with Californians, who, if they owned them, went everywhere in cars. By 1937 Dick and Mac ran a hot dog stand outside Los Angeles. Three years later they opened a bigger place, farther inland, on the edge of the Mojave Desert. It had lots of stainless steel, and roof-to-counter windows that permitted patrons to observe the kitchen. Teenaged carhop girls brought customers their food. On the front the brothers put their name: McDONALD’S.

  Although their business prospered, the brothers weren’t content. They were certain they could organize it better. In a small way, they could do for serving food what Henry Ford had done for making cars. In 1948 they shut their doors, and when they opened them again, three months later, they introduced a “Speedee Service System.”

  They had shrunk their menu down to little more than hamburgers, potato chips, milkshakes, and pie. With such a simple menu, they could use a food assembly line. This called for no employee skills and reduced their labor costs. In a break with custom, the McDonalds served their burgers — every one — with ketchup, mustard, onions, and two pickles. This uniformity made it possible to prepare the burgers in advance, and that meant Speedee service, which their patrons liked. Wrappers, bags, and paper cups and plates replaced the china, leaving nothing to be washed. And even though their carhop girls had drawn teenagers, the McDonalds fired them, saving wages. Their patrons placed their orders at a service window.

  Because of all the savings, Dick and Mac could now afford to chop their hamburger price in half. Customers began to crowd the place. Other food purveyors heard of its success, and came to see it, and the brothers started, in a small way, to franchise the right to run an eatery like theirs. For the first of these, in Arizona, Dick McDonald had a bright idea. Across its shining front he set two yellow arches, visible from blocks away.

  In 1954 McDonald’s was still, you might say, small potatoes, but that changed after an energetic businessman named Kroc came out to see it. Ray Kroc had always been enterprising. In World War I he quit school and briefly drove an ambulance at the age of fifteen. Since then he’d been a jazz pianist, realtor, and distributor of a mixer that made five milkshakes at a time. It was when he learned that a drive-in was so busy that it had purchased eight of his mixers that he went to California to see it.

  Kroc observed McDonald’s at its lunch-hour rush. Much impressed, he decided to launch a chain of drive-ins, using the Speedee Service System. He bought the rights, agreeing to pay the brothers a half percent of all his earnings. Soon he was setting up his own drive-ins in some places, and selling franchises in others. He kept the name “McDonald’s.” It had a better ring than “Kroc’s.”

  KROC BROUGHT THE McDonald brothers’ system to all America. He introduced it to a thriving people who were ready now to buy not only goods, like clothes and cars, but also services that met their needs. They wanted speed and ease, and were happy to receive them at a bargain price. On their radios they heard McDonald’s jingles: “Forty-five cents for a three-course meal / Sounds to me like that’s a steal.”

  Kroc was fond of pithy maxims, which he posted where his workers saw them. One of them was “KISS,” the acronym for “Keep it simple, stupid.” Keeping food and service simple let McDonald’s concentrate on (another maxim) “QSC,” or “Quality, Service, Cost.” To accomplish QSC, McDonald’s used technology and a fussy focus on details.

  Take the lowly burger. Kroc’s engineers found ways of cutting every shred of beef from bones. Then, using liquid nitrogen, they froze the chopped beef patties very hard. This meant that patty packers could box them without paper, and cooks could handle them like poker chips. A way was found to grill the patties from both sides at once, saving customers some waiting time.

  Or take potatoes. At one time workers in each McDonald’s franchise peeled and sliced potatoes for their French fries. But this was slow and costly, and the fries were not the same in every store. McDonald’s made arrangements with a giant grower in America’s northwest, the perfect place to raise the right potatoes. Machines in factories scrubbed the spuds, blew their skins off, and shot them at high speed through slicing grills. Then they were frozen hard and shipped throughout the country.

  Naturally, McDonald’s found a thousand uses for computers, the marvels of the age. Computers gauged the moisture in each shipment of potatoes, and prescribed the frying time. Computers tested beef and set the mix of lean and fat. In the stores, employees worked with automated mixers that had stabilizers to control the quantity of ice. They turned out milkshakes faster than a barkeep draws a beer. (Later, when the company turned international, PCs and web technologies kept central management informed of every sale in every McDonald’s restaurant in the world.)

  Anyone who ran a franchise had to learn McDonald’s methods. So Kroc set up a school called Hamburger University, with handsome buildings on a lake. After fourteen days of classes, students earned degrees in Hamburgerology.

  Kroc soon quarreled with the McDonald brothers, and he purchased back their right to a half percent of sales. If they hadn’t sold this right, for $2.7 million, they would have become two of the richest people in America. When the sale was done, Kroc built a new McDonald’s just a block away from the brothers’ original one. The new store hurt the old one’s sales, and the owners closed the birthplace of McDonaldism.

  Seven years from when Kroc met the McDonald brothers, 228 McDonald’s stores were in business. They generated colorful, if dubious, statistics. As early as 1973, Time magazine reported that the flour used to bake McDonald’s buns would fill the Grand Canyon, and the ketchup would fill Lake Michigan. The hamburgers McDonald’s had sold could “form a pyramid 783 times the size of the one erected by [Egyptian pharaoh] Snefru.”

  Now McDonald’s made more money than it could well invest in selling fast food in America. Kroc and colleagues thought of starting different lines, or “diversifying,” as so many other firms were doing. Should they run hotels, a chain of flower stores, a footb
all team, a huge amusement park? They decided they should stick to what they knew the best. Their wisest course was spreading overseas, selling hamburgers in huge new markets.

  Many other firms, across the world, were also reaching out. The world was moving toward a single global market. It’s true that since antiquity the continents had traded with each other in the goods one had and others hadn’t. But that was not the same as what was now going on. Now, thanks to computers and the Internet, money, skills, and orders moved as fast as light around the world, and little firms and big ones were doing business everywhere. In many places companies would join to make a product. One firm made an integrated circuit with a label saying, “Made in one or more of the following countries: Korea, Hong Kong, Malaysia, Singapore, Taiwan, Mauritius, Thailand, Indonesia, Mexico, Philippines.”

  McDonald’s thought Japan was promising. Its 100 million thriving people ought to be a splendid market. But would a people bred on fish and rice buy burgers, fries, and shakes? McDonald’s found a partner in Japan who thought they would, provided he could get attention. He won it from the Japanese press with shocking, tongue-in-cheek remarks. “The reason Japanese are short, with yellow skins,” he told reporters, “is that for 2,000 years they’ve eaten only fish and rice. If we eat McDonald’s hamburgers and potatoes for a thousand years, we will become taller, our skin will turn white, and our hair blond.”