Service Economy
Update:
I've added a follow up to this entry under the Read
More link below.
You don't have to look too hard at the news to find stories on the acceleration of jobs moving overseas as corporations attempt to improve their bottom lines. Optimistic economists indicate, 'That's ok! We've got a service economy!'
I wonder... is the service economy sustainable?
The argument FOR the service economy goes like this--if a company sends its jobs out of the country, it can afford to produce a good at a lower price. Therefore, consumers will pay for that good at a lower price, have extra money in their pocket, and demand additional services--services that a market economy will create (you know, like landscaping, tax-planning, dog-walking, hair-grooming, adventure-writing, home-renovation, etc.).
I think one place this argument faces some possibility of being incorrect is that consumers are the very ones being laid off as their jobs get passed overseas. Without an income, consumers won't be buying any goods, either the original 'cheaper' good or the extra service they might consider buying with the money saved from buying that original cheaper good.
A slow loss of jobs would allow the newly jobless to transition to their new service career in a such a way that the transition would be smoother--you know, Ray loses his manufacturing job, takes a few years, finally sets up his burger catering business. Now, instead of selling his burgers to the guys outside the rubber plant, he's selling them to the fiscal advisors outside the tax planning agency.
Above is the best case scenario--if too many lose their jobs at once, Ray won't have anyone to whom to sell his burgers. That's when the economy wobbles.
Of course, another place this argument seems worrisome is that question as to whether a country can stand to erode its industrial and manufacturing capacity to near zero?
For good or ill, we are shedding jobs at an alarming rate. I hope the service economy idea has some merit behind it.
You don't have to look too hard at the news to find stories on the acceleration of jobs moving overseas as corporations attempt to improve their bottom lines. Optimistic economists indicate, 'That's ok! We've got a service economy!'
I wonder... is the service economy sustainable?
The argument FOR the service economy goes like this--if a company sends its jobs out of the country, it can afford to produce a good at a lower price. Therefore, consumers will pay for that good at a lower price, have extra money in their pocket, and demand additional services--services that a market economy will create (you know, like landscaping, tax-planning, dog-walking, hair-grooming, adventure-writing, home-renovation, etc.).
I think one place this argument faces some possibility of being incorrect is that consumers are the very ones being laid off as their jobs get passed overseas. Without an income, consumers won't be buying any goods, either the original 'cheaper' good or the extra service they might consider buying with the money saved from buying that original cheaper good.
A slow loss of jobs would allow the newly jobless to transition to their new service career in a such a way that the transition would be smoother--you know, Ray loses his manufacturing job, takes a few years, finally sets up his burger catering business. Now, instead of selling his burgers to the guys outside the rubber plant, he's selling them to the fiscal advisors outside the tax planning agency.
Above is the best case scenario--if too many lose their jobs at once, Ray won't have anyone to whom to sell his burgers. That's when the economy wobbles.
Of course, another place this argument seems worrisome is that question as to whether a country can stand to erode its industrial and manufacturing capacity to near zero?
For good or ill, we are shedding jobs at an alarming rate. I hope the service economy idea has some merit behind it.
Follow-Up:
My friend (and brother-in-law) Doug Wilcoxon, an engineer but now the part owner
of the Grace House, has
this to say about the loss of manufacturing jobs in
particular:
I have thought about the loss of manufacturing a lot over the last ten years as I moved from manufacturing plant to manufacturing plant. They were shutting down like dominos. Non ferrous metals fell to NIMBY.
One example, one sector....
After a metals plant is gone it will be impossible to start another in this country because of regulation. I worked with zinc oxide, lead, cadmium, etc. I don't believe there will be too many lead refineries starting up in the future. I understand the need for human and environmental safety, but an attitude of zero risk is unrealistic (in my humble opinion). It appears easier to shut out a sector instead of working to solve the issues they are facing.
Metals mining, smelting and refining is a dirty industry. Many arguments abound regarding cleanup and responsibility. I have read in the past that most of the superfund money was going to litigation and not cleanup. I know of one sector that is making money off these issues, but they don't create jobs unless you want to file papers.
Its not the environmental issues that bother me, but it doesn't seem that there is any concern about overcoming these problems or even any attempts being made to approach these problems as solvable. It is easier to sue and walk away, let the courts deal with it.
What will be the progress of nuclear power generation startup in the next few years?I understand that there have been three submittals to investigate new reactors in the US. I don't remember what they were called, but heard it on NPR.
My Manufacturing History:
Hillsboro Zinc Oxide Plant: Still open about 20 employees, about to shut down
Omaha Lead Refinery: Closed and Demolished, now a riverfront park
Hillsboro Glass Plant: Closed, Bottle making is done in Canada
Boeing St Louis: Quit after the announcement of 7000 layoffs. When I started there were about 25000 employees in St Louis, now it is around 15,000. They have also sold off many of their fabrication shops and are shutting down some buildings. This place has been on the government payroll too long and needs to clean house of all the layers of managers. Nothing moved faster than a snail's pace.
When I started working in manufacturing I loved it. I quit because I was tired of the uncertainty.
I have thought about the loss of manufacturing a lot over the last ten years as I moved from manufacturing plant to manufacturing plant. They were shutting down like dominos. Non ferrous metals fell to NIMBY.
One example, one sector....
After a metals plant is gone it will be impossible to start another in this country because of regulation. I worked with zinc oxide, lead, cadmium, etc. I don't believe there will be too many lead refineries starting up in the future. I understand the need for human and environmental safety, but an attitude of zero risk is unrealistic (in my humble opinion). It appears easier to shut out a sector instead of working to solve the issues they are facing.
Metals mining, smelting and refining is a dirty industry. Many arguments abound regarding cleanup and responsibility. I have read in the past that most of the superfund money was going to litigation and not cleanup. I know of one sector that is making money off these issues, but they don't create jobs unless you want to file papers.
Its not the environmental issues that bother me, but it doesn't seem that there is any concern about overcoming these problems or even any attempts being made to approach these problems as solvable. It is easier to sue and walk away, let the courts deal with it.
What will be the progress of nuclear power generation startup in the next few years?I understand that there have been three submittals to investigate new reactors in the US. I don't remember what they were called, but heard it on NPR.
My Manufacturing History:
Hillsboro Zinc Oxide Plant: Still open about 20 employees, about to shut down
Omaha Lead Refinery: Closed and Demolished, now a riverfront park
Hillsboro Glass Plant: Closed, Bottle making is done in Canada
Boeing St Louis: Quit after the announcement of 7000 layoffs. When I started there were about 25000 employees in St Louis, now it is around 15,000. They have also sold off many of their fabrication shops and are shutting down some buildings. This place has been on the government payroll too long and needs to clean house of all the layers of managers. Nothing moved faster than a snail's pace.
When I started working in manufacturing I loved it. I quit because I was tired of the uncertainty.
Posted: Tue - September 30, 2003 at 10:06 AM
Quick Links
Bruce Cordell
RSS via via Feedburner
Search Brucecordell.com
Categories
Adoption Videos
I make a new animal adoption video every so often to help the Humane Society for Seattle / King County. If interested in any animal you see here, visit seattlehumane.org
Links
Recent & Upcomming
Psionics
<
What Does It Cost?
Cost of the War in Iraq
(JavaScript Error)
Extreme Tracking Web Counter
XML/RSS Feed
Calendar
| Sun | Mon | Tue | Wed | Thu | Fri | Sat |
Archives
Statistics
Total entries in this blog:
Total entries in this category: 95
Published On: May 24, 2006 01:22 PM
Total entries in this category: 95
Published On: May 24, 2006 01:22 PM