America on its way down. Is it?

[August]

Originally Posted by mookiemookie

That I have no answer for. In the midst of a major systemic economic shift such as moving from an agrarian to manufacturing economy, or a manufacturing economy to a service or high tech economy, there's always going to be people left behind. Those with skills that are obsolete or not in demand anymore will have a tougher time of it than new workers who have been trained in specialized fields entering the workforce.

It's not skills that I'm talking about but rather the availability of positions. We have way more people than we have service jobs for regardless of skill level.

[Aramike]

I'd have to hear more of your theory. While I generally agree with you on the importance of a healthy manufacturing sector, it seems to me that services like a professional installation, or a proper repair, or a thorough cleaning for example have real lasting value while manufactured goods often become obsolete and nearly worthless in a relatively short time.

I think we've discussed this before in another thread where I had posited that, at some point a quasi-socialist economy may be necessary, and you alluded to my point with this:

It's not skills that I'm talking about but rather the availability of positions. We have way more people than we have service jobs for regardless of skill level.

And I agree that the service industry has value, but my point is that such value expires at the completion of the service.

For example, let's say you build cars. That car is an economic asset for however many years it is capable of being sold. Now, compare that to installing satellite dishes. That installation which was purchased is now worthless to any other user wishing to install something.

My point is that the service industry provides no real sustainable commodity other than the industry itself. The problem with that is ultimately that the service industry is in essence an artificial construct built around catering to convieniences, and in general works the opposite of commodities - the value of service tends to decrease in proportion to the value of actual commodities.

Think computers - as software companies develop more user friendly and stable products, the currently moderately high demand for PC technicians will invariably fall (consider: do you know of any TV repairmen still around?). Also, as the efficiency of manufacturing computer products continues to rise, their cost decreases, working towards making the PC service industry less and less valuable.

Ultimately, technology is determined to meet all of our demands both industrial and services. However, when you produce something through industry, you have an actual THING of value. The service industry does not provide that. Commodities ebb and flow. The ability to produce commodities are always in demand. Services, on the other hand, can be completely outgunned by technology.

Therefore, in a nutshell, ownership becomes the key - if you own the ability to produce products and evolve to produce other products, you have a leg up on the service industry in that it cannot truly own anything other than access to labor (which both industries can have).

I'm trying to simplify this in order to not write out 100 pages of economic theory, so please forgive me if I'm being unclear or ambiguous, but I imagine you get my point.

[Aramike]

Or when you see a spike in wage inflation. Wage inflation always precedes CPI inflation.

Agreed. But I think that becomes a chicken/egg scenario, ultimately.

This is the natural progression of an economy and a country as it becomes more affluent and educated. As people gain wealth, they have the discretionary income to spend on services - housecleaning, lawnmowing, accountants, plumbers, etc - that you would not otherwise have the money to spend on if you were just scraping by. More wealth = more demand for services = more services.

You're exactly right. But try to understand my point - I cannot name a single national economy which has ever survived this evolution long term.

Can you?

Think about it: now those providing services are enriched, requiring more service. And so on. Ultimately your economy is based upon service and production is impacted. And now you have nothing with which to trade for commodities.

And as for manufacturing, the real value is in the front and back ends of the product design. Think about it - you're designing ipods. Your engineers come up with the design and function of the device. You send the schematics to China for manufacture. The products are made and shipped over here for sale. Your sales force sells them, as well as the accessories for the ipod. Your service technicians fix them when they break. Where's the value here? Who is contributing most to an economy? Is it the design engineers earning $150,000 a year? Or is it the Chinese assembly line worker earing $1.50 a day? Is it the $1.50 a day assembly line worker or is it the service tech earning $75,000 a year? Who's going to contribute more to an economy through consumption? The higher paid worker or the lower paid one? Is specialized knowledge more valuable than manual labor? Of course it is.

I must give credit where it's due, and I agree completely. In fact, I base my entire understanding upon economic theory on the very principle of impact value.

[August]

Originally Posted by Aramike

I think we've discussed this before in another thread where I had posited that, at some point a quasi-socialist economy may be necessary, and you alluded to my point with this:And I agree that the service industry has value, but my point is that such value expires at the completion of the service.

For example, let's say you build cars. That car is an economic asset for however many years it is capable of being sold. Now, compare that to installing satellite dishes. That installation which was purchased is now worthless to any other user wishing to install something.

My point is that the service industry provides no real sustainable commodity other than the industry itself. The problem with that is ultimately that the service industry is in essence an artificial construct built around catering to convieniences, and in general works the opposite of commodities - the value of service tends to decrease in proportion to the value of actual commodities.

Think computers - as software companies develop more user friendly and stable products, the currently moderately high demand for PC technicians will invariably fall (consider: do you know of any TV repairmen still around?). Also, as the efficiency of manufacturing computer products continues to rise, their cost decreases, working towards making the PC service industry less and less valuable.

Ultimately, technology is determined to meet all of our demands both industrial and services. However, when you produce something through industry, you have an actual THING of value. The service industry does not provide that. Commodities ebb and flow. The ability to produce commodities are always in demand. Services, on the other hand, can be completely outgunned by technology.

Therefore, in a nutshell, ownership becomes the key - if you own the ability to produce products and evolve to produce other products, you have a leg up on the service industry in that it cannot truly own anything other than access to labor (which both industries can have).

I'm trying to simplify this in order to not write out 100 pages of economic theory, so please forgive me if I'm being unclear or ambiguous, but I imagine you get my point.

I get your point but think you underestimate the value of service. Take the satellite dish example that you mentioned. Once the dish is mounted it is there for the use of the next tenant or owner. "Satellite equipped" is a sale point. It goes beyond that though. The professional satellite installation tends not to create the leaks and associated damage often found in homeowner installations.

You call it paying for convenience but I call it paying to have the job done right so it doesn't cost you more down the line.

[gimpy117]

Originally Posted by Aramike

Agreed. But I think that becomes a chicken/egg scenario, ultimately.

the trick might be getting the chicken and the egg to appear at the same time

[Aramike]

Originally Posted by August

I get your point but think you underestimate the value of service. Take the satellite dish example that you mentioned. Once the dish is mounted it is there for the use of the next tenant or owner. "Satellite equipped" is a sale point. It goes beyond that though. The professional satellite installation tends not to create the leaks and associated damage often found in homeowner installations.

You call it paying for convenience but I call it paying to have the job done right so it doesn't cost you more down the line.

I don't think I'm underestimating the value of the service - I'm not really focused on that. I'm more concerned with the long term economic impact on an economy heavily reliant upon service.

In a world economy, service isn't a good with which we can trade. So, the more and more service-based our economy becomes, the less focused we will be on creating products which can then be traded to acquire other goods. I think that's dangerous because now we've raised the mean income without proportionately raising the nation's buying power.

[mookiemookie]

Originally Posted by Aramike

In a world economy, service isn't a good with which we can trade.

Of course it is. Accounting, consulting, engineering...those are all examples of services that aren't constrained by borders. Think bigger than Otto the electrician or Eduardo the landscaper.

[Aramike]

Originally Posted by mookiemookie

Of course it is. Accounting, consulting, engineering...those are all examples of services that aren't constrained by borders. Think bigger than Otto the electrician or Eduardo the landscaper.

I am thinking larger than simple tradecraft - as I said, I was using simplified examples. None of those will ever be a large, sustainable industry like, say, grain exports.

In any case, those are not the services of the context of this discussion anyway. We were discussing the increase of demand in services caused by the enrichment of the general populace, and surely that generally precludes engineers in favor of waitresses...

Again, where's a SINGLE example of a long term, large economy sustained primarily by the service industry? The only time it would be possible for that to occur is if the demand for one nation's service output can account for a substantial enough amount of commodity import.

In other words, a nation would have to be supported almost wholly by outside nations by virtue of it's services being considered THAT vital...

Can you imagine how at the mercy any such nation would be to those who actually HAVE the commodities?

Hence my fear...

[Happy Times]

Im personally getting out of this wheel of fortune, i should be without debt by next summer.

Reading alot lately and this one fits here.

Systemic Crisis of the World Economy: Global Geopolitical Dislocation
http://www.globalresearch.ca/index.p...t=va&aid=19814

Im also recently started to like Ron Paul
Ron Paul Calls for Audit of US Gold Reserves
http://www.infowars.com/ron-paul-cal...gold-reserves/