I sincerely hope that Walter Russell Mead is right in his assessment of the direction of the American economy. After acknowledging that the transition from the old agrarian America of small farmers to the industrial America that took its place and which we have seen dwindle over the last several decades he continues:
A service economy resting on the high productivity agriculture, manufacturing and information processing will be a more affluent and a more human economy than what we have now. Human energy will be liberated from wringing the bare necessities from a reluctant nature; energy and talent will flow into making life more beautiful, more interesting, more entertaining and easier to use. By 1960 few American suburbanites really envied their hardscrabble, uneducated ancestors shivering through the winter in sod huts on the open prairie; one suspects that few Americans in 2060 will be pining for the glorious old days of 9 to 5 at GM.
I must say that I see things somewhat differently. I think that today’s growth industries (healthcare, education, and finance) are only growth industries by virtue of the privileges they’ve secured from government. There are really only two possible directions. Either they’ll retain their privileges which will be at the expense of just about every other sector or they’ll lose those privileges. Right now it looks like the former.
What I see on the horizon is movement towards a state capitalism simulacrum of Mexico with a relatively small, very affluent upper class. That upper class can either hold on to its prerogatives or it can relinqish them. It can’t do both.
I also think think that we’re about one steep recession from rioting in the streets.
Manufacturing (small manufacturers) guy here. What have I been saying for years here? It is simply not true that we cannot manufacture here. Just not true.
However, when the large govenment advocates elect people who allow the ginormous corporations to bend the rules, and allow the government to make it so difficult that you have to be ginormous to comply with what they want……………..you in a heap a trouble, boy.
The issue is not whether we can manufacture here. The issue is whether manufacturing will be a mass employer of low- or semi-skilled employees at high wages here as it was in 1960s and 1970s. I think it almost unquestionably won’t.
I’ve been thinking about this line all day and still haven’t decided whether I agree with it or not, though I do think it’s certainly a potential outcome.
Dave
If I may respectively disagree. You know who I am and my firm. We employ a lot of people, and pay well on the shop floor. Its naked self interest. Dolts and malcontents are unproductive. Can’t have that. So we pay for good people. We pay dearly for good people. Maybe we are enlightened, I don’t know. But in an extremely competitive world you better have the right people. Its all about the people.
I’m not saying that competitive pressures don’t exist and are not a reality. I am saying there is a balance.
I’m not clear on what part of what I’m saying in this post that you don’t agree with. Is it that healthcare, education, and finance are the growth industries in today’s economy? That seems impossible to deny.
Is it that healthcare, education, and finance have been subsidized enormously, particularly over the last half dozen years? Again, that seems impossible to deny.
Is it that those industries don’t enjoy other privileges? Just think about the barriers to entry in all three industries.
Is it that our economy is looking more like Mexico’s every day?
Dave
No, no, no. I comment on the fly and was not clear.
I absolutely agree that we have about 3-5 subsidized and priviledged industries. I think it is a shame.
But we can still manufacture here. Our firm does it for a living. And we can pay good wages. We do, despite Reynolds “niggras” idiotic comment. There are of course many facets to the organization you must put together to be successful. But perhaps 40% of the “shop floor” workforce is worth a damn these days. We find them….we pay them well. It can be done. The rest? Well…
You have made the point many times that we don’t need PhD astrophysicists all over the place. I agree. I think maybe the real issue is that the “tradesmen” have developed the same sense of entitlement that, say, doctors or investment bankers have. They just don’t, as a general proposition, have the same political clout. Its a mess. Wonder why I’m a small government guy?
But if we had well functioning markets that wouold all sort itself out.