I keep hearing that America needs to produce more" stuff" instead of providing services. Could someone please provide a brief explanation as to why a robust manufacturing sector is important to the overall health of an economy? To put it another way, why would a service based economy be worse off than an economy that is either focused on manufacturing or balanced between manufacturing and services? Can anyone provide some recommended reading to further explain why manufacturing is so important?
Byzantine: A nation of bankers, lawyers and accountants can do just fine trading services for food, clothes, etc. from China. The problem as I see it is that a lot of these service jobs are parasitic externalities. Accountants are engaged largely in tax preparation, lawyers in litigation over government laws, and bankers moving piles of fiat money around. The books aren't balancing, and that's the problematic part of the trade deficit.
A nation of bankers, lawyers and accountants can do just fine trading services for food, clothes, etc. from China. The problem as I see it is that a lot of these service jobs are parasitic externalities. Accountants are engaged largely in tax preparation, lawyers in litigation over government laws, and bankers moving piles of fiat money around. The books aren't balancing, and that's the problematic part of the trade deficit.
All true. What's wrong with having a large service sector if it results in a robust economy? The division between manufacturing and service sectors is arbitrary anyways. Does fixing he assembly line count as a service sector job, or programming the robots? What about the people working on the line? Are they manufacturing or just providing a service? (their labor)
dsmith:America needs to produce more" stuff" instead of providing services
The value of a produced "stuff" is derived from the service it renders. The distinction between "goods" and "services" is superficial. It bears no economic significance.
dsmith:I keep hearing that...
And you will keep hearing this nonsense, as well as a million other fallacies that just never seem to go away.
dsmith: I keep hearing that America needs to produce more" stuff" instead of providing services. Could someone please provide a brief explanation as to why a robust manufacturing sector is important to the overall health of an economy? To put it another way, why would a service based economy be worse off than an economy that is either focused on manufacturing or balanced between manufacturing and services? Can anyone provide some recommended reading to further explain why manufacturing is so important?
The idea, as I grasp it from Peter Schiff, is that services cannot be exported. Proof of that is that we keep importing billions more per month than we export. So we are not trading our goods and services for Chinese things, but taking their things and giving them paper money.
Which is fine, as long as they are willing to keep on being suckers. But one day soon they will say "Keep your paper and we will keep our everything and sell it to our 1.2 billion people instead of to you." At that point we will try to buy things, but the shelves in the stores will be empty. We will try to make things in the USA and find that there are no factories, and that mad regulations and taxes make it impossible to make a buck producing tangible things [which is why we stopped doing it in the first place].
That's why we need to produce more stuff, because one day soon the Chinese will stop doing it for us.
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