Only 5% of Americans actually make anything...

[Last Conformist]

The only bad thing I see here is that I won't be able to say I'm doing a "real" job on coming family gatherings.

[GePap]

I assume when its said the US produces more, that means the dollar value of the goods, as opposed to the amount of materials being used and turned into stuff, right?

Interestingly enough, doesn;t the US import large amounts of steel? So the Chinese make cheep steel and the US gets the value added part of making it into a car.

[Dr Strangelove]

IIRC less than 2% of the workforce is directly involved in food production.

[Whoha]

The US economy is not healthy. We are selling our position to pretend, and of late we are getting increasingly less return for increasingly more money being pumped into the system.

Deindustrialisation—the shrinkage of industrial jobs—is popularly perceived as a symptom of economic decline. On the contrary, it is a natural stage of economic development. As a country gets richer, it is inevitable that a smaller proportion of workers will be needed in manufacturing. The first reason is that households need only so many cars, fridges or microwaves, so as they become richer they tend to spend a bigger chunk of their income on services, such as holidays, health and education, rather than on goods.

Second, it is much easier to automate manufacturing than services, replacing men by machines. Faster productivity growth than in services means that manufacturing needs fewer workers. In turn, as workers move into more productive areas, this gives a boost to overall productivity and hence living standards.

Our current trade deficit belies this on both accounts. Demand for such goods is elastic, people want more stuff. stuff is good.

from this point of view, the fact that manufacturing is still such a high share of jobs and output in Germany and Italy could be a symptom of economic weakness.

as opposed to their socialism.

People always resist change, yet sustained growth relies on a continuous shift in resources to more efficient use. In 1820, for example, 70% of American workers were in agriculture; today 2% are. If all those workers had remained tilling the land, America would now be a lot poorer.

Food=inelastic demand. No one eats 10 meals a day, this is a specious comparison.

Vet Legion:

Relativize it all the way baby, but it's still truth. Services are immensely harder to export than goods. Compare India which exports almost only services with China, which doesn't export any at all. It is easy to see which exports more.

it may be tougher to export those, but we're going to give it the old college try anyway.

[chequita guevara]

Originally posted by mrmitchell
chegitz:

I thought wealth came from labor. Not necessarily exploitation of the Earth's resources to manufacture something- just any useful work.

Am I wrong?

The Ricardian theory of value, to which Marxists adhere, seems to indicate that services do not create new wealth. What services do is help realize the surplus value inherent in commodities. At least that's what the book I'm currently reading (A History of Marxian Economics: Volume 1, 1883 - 1929 by M.C. Howard and J.E. King, Princeton University Press, 1989) seems to say.

This means that what I've thought for a while may be incorrect (i.e., that services create value). Since I'm not well enough versed in Marxian economics, let alone classical political economy, I'm not in a position to say. I need to do more study.

Which is a long winded way of saying, I don't know.

[:) Smiley]

Usually increased productivity also leads to a shorter workweek and/or more vacation. This was true for the US as well, until recently. What happened?

[chequita guevara]

Originally posted by Smiley
Usually increased productivity also leads to a shorter workweek and/or more vacation.

Actually, increased productivity usually leads to less workers in the impacted company. It may lead to new jobs opening up elsewhere. What always led to shorter worker weeks, vacations, and the like, was militancy on the part of workers: strikes, commies, unions, etc.

What happened?

After the world historic defeat of the working class with the callapse of the USSR, all of these gains have come under increasing attack around the globe. It is only where workers are most combative that gains are still being made: Korea, France, etc. Regardless of how bad the USSR may have been to its own people and the peoples of Eastern Europe, it was a boon for the workers of the West. As long as we could point to it as an alternative, the bosses had to placate us to some extent. Without that threat, they have nothing to fear.

[Ted Striker]

You make a good point about the opposing systems Commie.

But what about the Eurocom Socialist Democratic model?

That's always touted as the counterexample? Though, both them and Australia are becoming more "Americanized."

[chequita guevara]

Social Democracy could only exist because of the USSR. That's why it's under such attack now. The working classes of Europe were able to wrest greater social benefits from the European bourgeoisie due to the communist threat, both external and internal. With us thoroughly discredited for the time being, Thatcher's TINA blooms into full flower. There is no alternative.

[Ted Striker]

Makes perfect sense.

I never thought about that before.

I've heard alot of Russian immigrants complain about our vacation time.

"2 weeuhks hoeliday whuzut ze fuhgk iss ziss???"

[Dinner]

Manufacturing is important when it comes to war fighting abilities. It would not be good to wake up one day and find we can't build enough ships or planes to win a war. Europe seems to understand that and has only sought free trade with countries with a similiar standard of living. Ultra low cost countries like China are forced to play fair or not play at all so the EU has saved much more of its manufacturing base then we have.

[Ell_man]

The trade "deficit" can be a highly misleading term. The trade deficit typically refers to a current account deficit. Traded goods are classified into 2 accounts-current and capital. The current account includes imports and exports of goods and services. The capital account includes mobility of capital. For example if foreigners buy stock in us business or help finance capital in America then we get a capital account surplus. If american's invest more in other countries than foreigners invest in our country then we run a capital account deficit.

Thinking simplistically about foreign trade, the goods and services you ship out of the country need to be payed for somehow and thus you'll need to import enough in order to be able to pay the foreigners. Thus money into the country=money out of the country.

The current account + capital account always equals zero(or approximately zero) because of this. Inflow must equal outflow. So whenever someone says we have a trade deficit they usually mean current account deficit. Yet that also means we have a capital account surplus. Foreigners are using the money we send them for goods and services to invest in the United States. There's also a rather simple reason for the current account deficits that have occured since the 1970s.

During the Bretton woods monetary system from ww2-1971 governments kept fixed exchange rates and one way they accomplished that was through restricting capital movement. This means you'd never run a capital account surplus or deficit. Thus you'd also never run a current account surplus or deficit. Since capital has been allowed to move freely across borders you see that foreigners really like to invest in the United States as you get higher rates of return here than most other countries.

The term deficit is highly misleading for another reason too. It implies that somehow we haven't payed for these goods that we're recieving from foreign nations. It simply means that foreigners like investing in this nation a whole lot more than we like investing in other nations. Our savings rate is also rather low compared to other nations so if we were to improve that I think you'd see a shift from current accout deficit to surplus.

Now, huge goverment debts could make a true "deficit" similar to credit card debt. I not debating that. I just want to point out to people that people have huge unwarrented fears about how we import more goods than we export. It's reminiscent of mercantilist policy in the 18th century that's long been refuted by economists.

So next time someone asks you about the trade deficit say, "Oh you mean the foreign investment surplus?"

[MikeH]

Originally posted by Ted Striker
Makes perfect sense.

I never thought about that before.

I've heard alot of Russian immigrants complain about our vacation time.

"2 weeuhks hoeliday whuzut ze fuhgk iss ziss???"

Us Euros have a statutory 4 week minimum. I don't know how you could survive on 2 weeks.

[Ted Striker]

I think our lack of vacation time is retarded and counterproductive.

[Az]

We have 3 weeks, and ****loads of holidays, but our working weeks are almost koreanesque in length.