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The chart in this article shows just how dramatic the decline in manufacturing and the growth of the FIRE industries (finance, insurance, real estate,) have become.
Is the replacement of industries that actually produce usable products, by industries that do not, a benefit to the country overall?
Do FIRE industries provide real benefit consumers, or do they provide minimal consumer benefit at huge corpaorate profits?
The chart in this article shows just how dramatic the decline in manufacturing and the growth of the FIRE industries (finance, insurance, real estate,) have become.
Is the replacement of industries that actually produce usable products, by industries that do not, a benefit to the country overall?
Do FIRE industries provide real benefit consumers, or do they provide minimal consumer benefit at huge corpaorate profits?
The higher the percentage of the economy is based on F.I.R.E the greater the income inequality there will be in this country. Simply put there aren't enough high paying jobs in these industries to sustain an economy with 310 million people. Also these industries are highly suseptable to job loss due to automation, technical innovation and outsourcing. Also the residential real estate market in this country in state of depression and it has long term growth issue based on the fact that populations of Generations X and Y are not big enough buy the houses occupied by the Baby Boom generation.
How do you make manufacturing grow? The US has a big competitive edge in the FIRE industries due to strong laws, a reserve currency, and good education in these particular areas. Why throw away competitive advantage and orient the economy on something any other country could? That's just stupid.
Maybe you don't like the FIRE industries but they provide a service this country needs. Just try and go without insurance and see how you feel when your house burns down. Have fun trying to buy a house with no regulation and no professional realtors. Go read some stories about the horrors of buying houses in some unregulated countries where title insurance doesn't exist because there is no way to figure out who ever was the correct title holder in the first place. Imagine saving up for a decade to buy your dream house there and find out your so-called realtor could have been any salesman from the street and as a result got you into a faulty contract and your house is gone. And try to buy a house in the first place in a country like Argentina where prices are cheap, but you have to come up with the whole purchase in cash. Yep you have to walk from your bank to the realtor's office hoping you don't get robbed because you have tens or hundreds of thousands of dollars on you.
Its about time to realize services ARE products and just because something isn't some tangible piece of metal or plastic doesn't mean it doesn't have value. The average American probably doesn't stay up at night wondering if his car is going to still be in one piece in the morning, but he might stay up at night wondering if his investment plan is. He might not worry much about his computer turning on the next day, but he might worry about the safety of his data on it an awful lot more. People need to stop being nostalgic about building stuff, that era is long gone and we moved onto something better. Isn't that what the American Dream is about? It sure doesn't seem to me the dream is about having your kids do the same things you do for a living and getting the same level of pay and lifestyle for it.
How do you make manufacturing grow? The US has a big competitive edge in the FIRE industries due to strong laws, a reserve currency, and good education in these particular areas. Why throw away competitive advantage and orient the economy on something any other country could? That's just stupid.
I do not mean to be harsh, but of your above list (law, reserve currency, and education) the only one that points to why we have been able to pull off this international con-job is the reserve currency status. Once that is gone, so is all the rest.
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Maybe you don't like the FIRE industries but they provide a service this country needs. Just try and go without insurance and see how you feel when your house burns down. Have fun trying to buy a house with no regulation and no professional realtors. Go read some stories about the horrors of buying houses in some unregulated countries where title insurance doesn't exist because there is no way to figure out who ever was the correct title holder in the first place.
This sounds like what the FIRE industry did to some country . . . where was it, now? . . . (recall a recent banking crisis where the clear titles and mortgage liens have been sliced, diced, and destroyed . . . ) on wait! That is what the FIRE industry has done HERE!
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Imagine saving up for a decade to buy your dream house there and find out your so-called realtor could have been any salesman from the street and as a result got you into a faulty contract and your house is gone. And try to buy a house in the first place in a country like Argentina where prices are cheap, but you have to come up with the whole purchase in cash. Yep you have to walk from your bank to the realtor's office hoping you don't get robbed because you have tens or hundreds of thousands of dollars on you.
Argentina is a mess BECAUSE of the FIRE industry. They were productive, became debtors, and now cannot pay their bills in their own currency. Their assets have been shipped out and their people are starving. Great example of why to run the bankers out.
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Its about time to realize services ARE products and just because something isn't some tangible piece of metal or plastic doesn't mean it doesn't have value. The average American probably doesn't stay up at night wondering if his car is going to still be in one piece in the morning, but he might stay up at night wondering if his investment plan is. [rightly so] He might not worry much about his computer turning on the next day, but he might worry about the safety of his data on it an awful lot more. People need to stop being nostalgic about building stuff, that era is long gone and we moved onto something better. Isn't that what the American Dream is about? It sure doesn't seem to me the dream is about having your kids do the same things you do for a living and getting the same level of pay and lifestyle for it.
Right.
And we shall all grow rich selling Amway and Insurance to each other.
It's a Lifestyle Thing.
Like I say, I do not mean to be harsh, but most of the folks here do have a clue.
Not another "we need to make stuff" thread. The decline in manufacturing is related to technology, its odd that some people thing that the economy would be better off if people were making widgets in some factory. The same thing happened to farming, today a single farmer can generate an amazing amount of raw food.
The use of robots in manufacturing reduces costs and hence reduces its contribution to aggregate GDP. This myopic focus on manufacturing needs to end, the IT industry already existed in the 1940's and today it is huge. Technology will continue to change the economy, one day one of these may help you at your local grocery store:
I think it is not really a question of being able to replace one industry with another, both are necessary for a strong economy. The question is what is the proper balance? From the chart in the article, what bothers me is the drastic divergence.
Not another "we need to make stuff" thread. The decline in manufacturing is related to technology, its odd that some people thing that the economy would be better off if people were making widgets in some factory. The same thing happened to farming, today a single farmer can generate an amazing amount of raw food.
The use of robots in manufacturing reduces costs and hence reduces its contribution to aggregate GDP. This myopic focus on manufacturing needs to end, the IT industry already existed in the 1940's and today it is huge. Technology will continue to change the economy, one day one of these may help you at your local grocery store:
Then people will complain about the decline of the service sector.
In terms of the FIRE economy, how does one determine whether the FIRE economy is too large or not? Showing growth doesn't mean its not legitimate.
I agree with you on this 100%, we tend to focus way too much on the past.
We need to focus on what kind of lifestyle we want, do we want a life of hard work in a factory making gadgets, or do we want a life based around learning, creativity, customization, leisure, entertainment, etc.?
Outsourcing, automation and robotics will all be benefits in the long run. Having our day-to- day mundane tasks performed by robotics will free up our time to pursue other areas of life. More people will be able to make a living off creative and entertainment based services. I am not saying they will be rich but I am sure many of us would love to do something creative for a living as long as it brings in enough to take care of the family needs. This is the next shift from the service economy to the experience economy.
This will also bring a rise to customization and craftsmanship. People will pay a premium to a craftsman who can make a good that is not mass produced.
Basically its the reality of mnaufacturing competitiveness i the USA and mnay nations in the west. It reflect more the value of labor to do what former peasants can do now. It alos reflects the need to be more high tech i these areas in this country and move o from the 20th century screwdriver manufacturing.
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