Thursday, April 26, 2007

Manufacturing vs. Services as % of GDP

Give it another 50 years and the US will be a pure service economy while everything will actually be made in China and Mexico and when the producers of the world realize they have the means of production, hooooo! Look out!
I'm sure, however, all those sociology degrees will come to vital use at that point.

5 comments:

Anonymous said...

What we need to do to make it profitable to produce goods in America again is abolish the IRS and implement the "fair tax" system. Promote the economic policies of “multi-capitalism that make it harder for huge companies to operate and easier for small companies to prosper in order to level the playing field. De-emphasize and stop promoting college curriculum and classes that don't have any practical or tangible application and instead promote curriculum and trade skills and apprenticeships that do. This includes teaching our children that intelligence and happiness is not measured by your degree, how much money you make or how many things you accumulate, but how you use the gifts God gave you. I know geniuses in physics and I know genius electricians, both are amazing in their own right, neither can do what each other does, so we shouldn't promote a culture of snobbishness towards the blue collar workforce and we shouldn’t overemphasize white collar importance in society as both are needed for it to flourish.

Ryan Fuller said...

There's a lot more to the service sector than sociology degrees. I believe economists fall into that same category.

I'm disappointed in you for this one, Captain. While manufacturing as a percentage of GDP and total employment has been declining for decades as your chart shows, manufacturing output has not. Your fears that the rest of the world will make everything while the US just sits around churning out sociology majors are unfounded.

Ryan Fuller said...

Anonymous said, "Promote the economic policies of “multi-capitalism that make it harder for huge companies to operate and easier for small companies to prosper in order to level the playing field."

Quite frankly, I don't see why that is a desirable thing. In a market system, companies grow by being efficient. Favoring smaller companies over larger ones will tend to punish the successful companies to reward the less efficient ones. Of course not every large company is efficient and not every small one is not efficient, but since growth and efficiency go together, there will be a correlation between a company's efficiency and its size.

The current regulatory environment imposes relatively smaller costs on large companies, who are in a better position to comply with regulation. Getting rid of regulation will remove that obstacle to smaller companies and allow the market to function unhindered. Still, that's not the same as promoting policies that favor smaller companies at the expense of larger ones.

Anonymous said...

To Ryan Fuller:

"Getting rid of regulation will remove that obstacle to smaller companies and allow the market to function unhindered."

Thank you. I didn’t do a good job of explaining myself. My point included your assertion that removing obstacles for small companies and private businesses makes it easier for them to compete with larger ones.

Other factors could include geographical limitations for large companies as well as tighter regulations and progressive tariffs for interstate commerce based on what is produced, company size and how many states they operate in.

This regulation could be analogous to a mountain & climber...it should be relatively easy at the base and get more difficult and harder to breath the closer you get to the top...therefore assuring that only the most efficient and dynamic companies make it there as well as assuring there is room left at the bottom for small and private business to compete locally without being crushed or driven away by the behemoths.

This assures that more Americans are able to partake in the American dream instead of merely having an insecure job being a corporate serf as well as spur on the kind of private innovation, creativity and invention that made America great.

Ryan Fuller said...

"Other factors could include geographical limitations for large companies as well as tighter regulations and progressive tariffs for interstate commerce based on what is produced, company size and how many states they operate in."

This is something I strongly disagree with. It is a serious mistake to give the government that kind of power. Tariffs are a big red flag anyway; barriers to trade hurt everyone in the long run.

"it should be relatively easy at the base and get more difficult and harder to breath the closer you get to the top...therefore assuring that only the most efficient and dynamic companies make it there"

The government doesn't need to step in and provide obstacles. Beating the other companies is the only test of efficiency that is needed. Government restrictions favor the politically connected or those who are good at getting around regulation; not necessarily the people who are actually good at doing something productive.

"assuring there is room left at the bottom for small and private business to compete locally without being crushed or driven away by the behemoths."

A company that can't compete shouldn't exist. Period. They're wasting resources that could be better used by someone else.

"This assures that more Americans are able to partake in the American dream"

The "American dream" of opportunity and prosperity exists because of the private sector, not government support and regulation. Less regulation means more social mobility, not less. France, for example, has a ton of pro-labour legislation, and the "French dream" is just finding a job in the first place. There is a connection there.

"as well as spur on the kind of private innovation, creativity and invention that made America great."

One of the most ridiculous beliefs I've ever come across is that the US government is somehow responsible for the success of the private sector. The US is prosperous despite the government, not because of it.