Sunday, January 22, 2012

Service Economy Much?

"In an extreme version, it is asserted that this unfair competition will virtually eliminate US manufacturing, leaving only jobs that consist primarily of flipping hamburgers at fast food restaurants." This quote is from an article written in 1988 entitled "Protectionist Trade Policies: a Survey of Theory, Evidence, and Rationale." The authors assert that as more companies go overseas to find their labor forces, industry at home will suffer. People will lose their jobs at factories and be forced into taking the only jobs left. What is interesting is not this rather mundane statement by itself but what the authors assume about the jobs that will be left when the factories pull out. They assume it will be only jobs like flipping burgers and other types of menial labor that cannot be outsourced that will be left when industry is gone. What about the service economy? This article was written in 1988. That was before computers and all that came with them ruled our lives. Many of the jobs now available in the service economy were probably not even imagined back then. What does this mean about the ability of economists to predict what will happen in the future? These guys are probably like top dog in their fields and they didn't even see the predominance of the service economy --- the economy that really now dominates in the US (and will continue to grow in the coming years).  Just a reminder that predictions are only ever that --- predictions. 

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