Guardian Almost Makes Sense

I would normally hit the 'next' button when someone links to a Guardian article, but as you say, they're right for once with this one. Lots of countries in the West were sold the same lie about swapping manufacturing for services. Mrs Thatcher told the British that the old 'smoke stack' industries would have to go abroad and be replaced by smart services. Those peasants in the Far East, they were told, would take over all the s***ty, manual jobs whilst the British would get cracking with the clever stuff like manufacturing silicon chips. Problem was, the peasants in China and Taiwan didn't get the memo. The British lost a huge amount of manufacturing alright, but the service economy which replaced it was - for the most part - low paid and low skill. Some economists who could see the issues with this said at the time: "we can't as a country make a living from shining each other's shoes" - and that's the prediction which *should* have been listened to.

I was still in high school in the early 70's when my economy teacher tried to sell us the merits of a service economy. I was puzzled: How can an economy that doen't *produce* anything material survive in the long run? A little over half a century later, here we are: It can't.

It's surprising it took that long, is true.

Jeroen Belleman

With cheap PCs and terabit fiber links, we can export our services to India and China too.

About the only US "service" that the world wants to buy is superhero movies, and they aren't so good lately either.

We are designing, but not fabbing, ICs, but other people can design ICs now.

The US still produces a lot of stuff, we're e.g. 4th in the world in steel production.

It doesn't require a lot of workers to be 4th in the world in steel production these days.

A modern multi-billion dollar fab in e.g. Taiwan probably operates with fewer full-time employees on the payroll than your local Macy's. Not much more than 50 people on site per shift.

I have a relative who works at a business college, count the number of BMWs, Mercedes, and Ferraris in the parking lot vs the number of them at the average steel mill circa 1985 you'll see how the "service economy" sold itself.

You're there grinding your life and health away for a lower middle class salary while your buddy in sales at the local car dealership just made $47,000 in commission alone in 1985 dollars that year and you're like "huh that's interesting"

"Export or Die" Anyone remember that? More to the point, how many people forgot it!

If a Guardian article almost makes sense to John Larkin, it has to have been dumbed down to an unusual extent.

It leaves out one point that is usually made - successful industrialisation depends on investing a lot of capital in making each industrial worker as productive as possible.

In England in the 1980's, Margaret Thatcher complained that English workers were less productive than their German counter-parts. Economists were able to demonstrate that if you controlled for capital investment per worker, English workers were actually more productive than their German counterparts where capital investment per head was the same.

This didn't make the English workers better - it just reflected the fact that UK employers only invested capital where it paid off particularly generously.

In America that capital investment was directed overseas, where the workers were cheaper.