A Service Economy?  

December 12, 2011

Many government officials and the news media have been saying that the US is  becoming a “service economy,” instead of an industrial economy based upon manufacturing jobs and factories.

We have been told that in this new service economy, we don’t need manufacturing jobs.  American workers can work in the retail industry, restuarant industry, financial services industry, etc.

The problem is that a large economy, such as ours, cannot survive as a “service” economy. A small nation, such as the Cayman Islands, may be able to provide jobs for its citizens from banking and tourism, but not a country with 300 million people.

Even if we became a nation of only service employees, someone has to make the things that give us a high standard of living. We need factories to make desks, stoves, cars, trains,  jets, pots, clothes, shoes, light bulbs, computers, chairs, tables, paper, radios, cell phones, televisions, x-ray machines, dental equipment, beds, forks, spoons, watches, etc.

Are we going to be totally dependent upon foreign countries to supply us with these items that we use on a daily basis? If so, how are we going to pay for them, if we become a country with 140 million workers employed in low-paying service jobs?

Industrialization and factories created our middle class, and de-industrialization will destroy our middle class.  Countries without factories are called “third-world countries.”

One Response to A Service Economy?

  1. TaxiDriver on December 28, 2011 at 7:54 am

    I never really understood precisely who the middle class was. What are the boundaries that separate the middle class from the other classes, and what are the other classes in the USA? Is the middle class whatever lies between the poor and the rich?

    Europe has a caste system with well defined castes which they call classes but are really castes. But do any of those European castes really compare to the American middle class?

    What we really mean by middle class in America is a strong consumer cohort among all income levels. The idea that it’s *profitable* to live and work in the USA, profitable enough to be able to afford extravagances such as movie tickets, travel, jewelry, as well as the more mundane contrivances such as refrigerators, dishwashers, and yes, even personal automobiles, are what have separated the US economy from the rest of the world.

    An interesting question to ask is whether, in an alternate history where the US would have lost the Revolutionary War, would the common folk of Europe enjoy a standard of living at anywhere near the level that they now enjoy? Or was it the presence of the American standard of living that forced Europe’s hand in that regard in order to avoid a complete exodus of its working population to the US in the 18th, 19th, and even 20th centuries? If so, then what is the fate of the Europeans if the American economy should collapse? Shall they be reduced to the standard of living of the average Chinese worker, as the American “middle class” is destined to be?

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