To flesh out what I was talking about yesterday a bit and to make clearer what it is that I’d actually like to see happen let’s take a quick look at the general contours of the economy as presented in the Economic Census for 2007 from the Census Department (the 2012 Economic Census isn’t available yet):
You can click on the image for a larger version. The first thing that you might notice is that the total down at the bottom of the second column doesn’t equal the GDP figure that’s usually quoted. That’s because of the way GDP is calculated: imports are subtracted. In preparing this table I haven’t attempted to break out the production less imports by sector. That’s beyond the scope of a blog post and, besides, it’s what God created economists for.
The personal consumption expenditures (PCE) that you’ve probably seen cited as being about 70% of the economy are comprised of retail sales and the last six items in the table, e.g. education, healthcare, etc.
The short version of what has changed since 2007 is that construction is down, retail is down, and healthcare and education are up.
Let’s go back to what I think should happen. I think that finance should contract, healthcare and education should become more productive (i.e. produce the same or greater services at lower cost), retail sales should stay the same or contract. Agriculture, manufacturing, mining and extraction, and energy production need to expand.
How do we accomplish those things? The structures of healthcare and education need to change. We can’t get to where we need to go with the current structures in place. We should stop subsidizing finance and retail and penalizing agriculture, manufacturing, etc. The emphasis in foreign policy should be in persuading large exporting countries to abandon their import subsidies, quotas, and so on. That would be a start.
I think that there’s plenty of potential for future job growth but not as long as continue propping up sectors where there’s really no room for expansion or expansion comes at the cost of more jobs from other sectors.
I’m curious. How are we penalizing agriculture (aand by ‘we’, I’m excluding Alabama and Georgia….). Isn’t agriculture the object of the largest non-Eloi welfare program on the books?
In agriculture government at all levels gives with one hand and takes away with the other. The subsidies don’t necessarily go to the same people who are being increasingly regulated.
Nearly every year fewer people are actually engaged in farming and the amount of land under cultivation declines. I don’t think that’s the right direction.
You’ve raised the issue of immigration so let’s run with it. We need to issue substantially more work visas to Mexican nationals than we do. Failing to do so is a penalty to agriculture. Giving subsidies while putting penalties in place gives advantages to one group over another, in particular the most highly mechanized areas of agriculture and those areas are most dominated by large corporations.
…We need to issue substantially more work visas to Mexican nationals than we do. Failing to do so is a penalty to agriculture.
I would argue that it would be a boon to agriculture. It would force greater mechanization. This technology will eventually spread into other industries. The future applications of these advances cannot be fathomed until they occur, and as usual, a posteriori knowledge will be assumed to be a priori knowledge.
Of course, this brings us back to robots, unemployable zombies, and starvation.
It also somewhat explains the problem with future predictions from your Whatever Happened to Dystopia? post.
“For the Snark was a Boojum, you see.”
Wow, talk about taking on some pretty powerful vested interests….
There are not enough workers for semi-skilled jobs in manufacturing. I think there has been a regrettable overreaction from the early 80s in viewing white collar jobs as the only reliable future, which has reduced the investment in vocational schools, resulted in excessive borrowing and encouraged politicians to stigmatize the non-college paths. The model is more likely to be smaller plants and the regulatory regime needs to be smarter and quicker.
Anecdotally, it seems to me like agriculture is doing well here in the corn belt. John Deere looks like a bright spot in manufacturing. Farm retail stores keep getting built. Grain storage silos and drying equipment are selling. I don’t know if agriculture can be much of a direct jobs producer, but the money raised is dispersed through retail and manufacturing.
A quote from my link: ” The American Chamber of Commerce in Beijing expects China’s “low-wage advantage†to be all but gone within five years.”
The emphasis in foreign policy should be in persuading large exporting countries to abandon their import subsidies, quotas, and so on.
Import subsidies or export subsidies?
And you’ll never get a rebalancing of the country’s economy with the current yahoos in charge (both parties) – their entire existence is predicated on pushing the stuff you think should be de-emphasised.
Nearly every year fewer people are actually engaged in farming and the amount of land under cultivation declines. I don’t think that’s the right direction.
The amount of land under cultivation doesn’t necessarily have to increase for agriculural production to increase. Less land being set aside for agriculture is a net plus for the environment as long as we’re not starving as a consequence. (There are other bad potential outcomes, but I’ll ignore those for this point.)
PD Shaw wrote: There are not enough workers for semi-skilled jobs in manufacturing.
I hear and see this all the time, and occassionally even get into it with people who have companies that want such workers. Invariably they all want skilled AND EXPERIENCED workers. A lot of the jobs for machinists are only for people with 20 years or more experience. They do not want to train anyone, nor do they even want to hire someone that took on the expense of acquiring the training themselves, if that person doesn’t have experience. They’re only looking to scavenge workers from other companies as those companies ship their work overseas or go out of business entirely. What percentage of manufacturing jobs have been lost since 2000?
You’d have to be crazy AND stupid to want to go into manufacturing in the US given that the employers are all fighting a rear-guard action as they look to ship their jobs elsewhere. When we see hundreds of thousands of ENTRY LEVEL positions start to appear in manufacturing I’ll believe that the manufacturers themselves actually want more US workers. As long as they ONLY want very experienced workers, I know that they don’t really have any intention of staying in business here long-term.