Services Industries Key to Future American Jobs

danielpalos · Apr 22, 2018

Lafayette said:
I am always surprised by fellow Yanks who think time is linear. That what was in the past is a reflection of what must be in the future.

Neither time nor the way the world evolves is linear. In fact, the world can easily regress - which is a lesson we should have learned from WW1 where its aftermath actually created the seeds of WW2.

Manufacturing has evolved and, indeed, a lot of base manufacturing has left the US for good. Some will come back as soon as engineers learn how apply robotic manufacturing to produce any given product.

But the lesson we Yanks have to learn, and it seems we are having great difficulty in assimilating, is that Manufacturing is NOT the key economic factor anymore. Not in the US, and not in Europe either.

That which is key in any advancing economy is the Services Industries. And services require both intuition and intelligence in order to be sold to customers who understand their inherent added-value. Which means that we have a great challenge ahead of us.

What kind of challenge? We are a country where only tertiary-level education will allow one to obtain a decent living. What do the numbers say?
Here they are from the NCES (National Center for Education Statistics), and I quote:

Whilst the above is highly promising in terms of eventual outcomes, what is not obvious is the fact that the higher numbers of those graduating with a post-secondary degree are only about 46% of the total number of students graduating from High School. That is, less than half.

Which means that less than half of our young adults graduating from high-school today do not attain the level where job-opportunities are most lucrative.

The statistics show that nearly-half who go on to a postsecondary degree do in fact become members of a select group who earn most in the country. A national objective thus becomes easily apparent.

Conclusion

We must have a post-secondary state-schooling that is free or nearly free to assure that the highest number possible of our youth continue their cycle of education as far as they can get in the post-secondary ladder of degrees.

From Pew Research: The difference in annual earnings between those who obtain a Bachelor’s degree and those only a High School degree is 1.6 to 1 - that is, almost double - as seen here:

A fifteen dollar an hour minimum wage!

Xelor · Apr 22, 2018

Lafayette said:
Only a post-secondary diploma will teach most children "how to think" and not simply "how to do".

Well, that's a point on which you and I disagree, and because we do, this conversation isn't going to go anywhere. Teaching kids how to think is the primary purpose of high school:

Formal reasoning skills
- Math class: Operationally speaking, almost nobody needs more applied math ability than what's taught up to and including the first half of Algebra I and the first half of statistics. After that, but for a few, math's only real value is for developing structured thinking/analytical skills. The math itself that we're taught is just a foil for developing a certain kind of thinking skill that really has nothing to do with math. It's about taking abstractions and applying them to the "real world."
  - Proofs --> There is literally no point to having kids prove various theorems and equations other than to build their deductive reasoning skills. After all, they aren't proving anything that hasn't already been proven. The whole point is to teach them how to take a bunch of extant facts and use them to make a case for a given conclusion's truth or falsehood.
  - Problem/equation solving --> Same purpose, different application. From algebra to precalculus, the concepts are those of increase, decrease, cyclical behavior, and static relationships within a system.
  - Word problems --> Teaches attention to detail and how to, using a structured approach, break a "real world" matter/situation into its essential parts and use those data to solve a problem, or to identify what's missing so that one can, in turn, develop a means for obtaining the missing bit(s) and then solve the problem.
  - Everything else in math --> Teaches one concepts that one can use to understand the world in which they live by applying mathematical concepts to them and thereby "eyeball" things to make quick decisions about how to proceed in a given situation. Calculus is probably the most important of these, but not so one can take derivatives and integrate, but so one obtains a mathematical understanding of limits, change and rates of change.
- Sciences: Natural sciences are much like math, but rather than teaching kids to go from abstract to tangible, science teaches the same skill by going from the tangible to the abstract. In science, one observes tangible events and then uses mathematical abstractions to understand their place, nature, extent and timing. That's why math is the language of the sciences.
- English:
  - Human condition --> While the stories are entertaining, the point of English is to teach kids about the human condition. that is, after all, what literature writers write about.
  - Communication skills --> Teaching kids to recognize themes, patterns, what's important and what's not, etc. and then expound on it. Communication is about consuming information -- main bits and nuances -- and delivering it.
  - Thought organization --> This is another skill developed via composition. It's the whole reason for learning to write dialectical arguments.
  - Inductive reasoning --> This is what's being taught when kids are asked to write essays in response to questions such as "In 5000 words or less, choose one of the main characters in King Lear and analyse how the physical, cultural, or geographical context of the play affect the character's moral and/or psychological traits as well as illuminate the meaning of the play as a whole. Do not use more than four sentences to summarize the plot." One's score on the essay will have everything to do with the strength/cogency of one's inferences and conclusions, not with whether one is "right or wrong" because there won't be a "right or wrong."
- History: History differs from English in that the context is the "real world," albeit the real world that can be analyzed with the benefit of hindsight, which, in English, one lacks. Thus the burden of cogency is increased and there is potentially a right and wrong interpretation.

You'll recall that in my post I specifically noted AP classes. I did because that's where one's core thinking skills are most keenly honed. All that really need be done, and these days, there's really no excuse for students not taking at least five AP classes before completing high school.

Xelor · Apr 22, 2018

Lafayette said:
That is an apparent contradiction in terms. Unless explained. So please do so.

Otherwise, very good post. And no, not because it coincides somewhat with my own sentiments.

But because it is factually correct in key aspects ...

Xelor said:
Manufacturing will always be a key economic factor. What it won't always be, particularly in mature economies, is a key provider of jobs. Those are two very different things.

GDP = C + I + G + (X – M).

Because advances in technology are making possible the manufacture of goods with increasingly less human labor, manufacturing can and will happen, but it'll employ increasingly fewer workers. Manufacturers will make all sorts of stuff using few to no humans.
Of the elements that comprise GDP, which of them are materially affected by manufacturing?
- Directly: C, G and X.
- Indirectly: I and M.
For a discussion of manufacturing's qualitative and quantitative role see: The Manufacturing Footprint and the Importance of U.S. Manufacturing Jobs (I only have 5000 characters, not words, so I'm not even going to attempt to write my own essay to address this aspect of the matter.)
- Manufacturing comprises at least 35% of the U.S. economy. I don't about you, but that strikes me as being a material share of GDP and it's certainly a factor in the economy. I don't at all see how that can disappear or nearly so and be replaced entirely by services.

Hopefully, the above is enough clarification for you to understand what I meant in my earlier post. If it's not, I'll respond to detailed questions, but I'm going to have to point you to linked content if you ask general economic environment, trend and and capacity/capability questions.

Xelor · Apr 22, 2018

Lafayette said:
...very good post. ...because it is factually correct in key aspects ...

Thank you.

Lafayette said:
...very good post. ...because it is factually correct in key aspects ...

Well, being factually accurate on key aspects is essential in expressing just about any idea. At the very least, one can't expect to be taken seriously if one elides key factors. Thoughtful individuals may differ on the weighting of key factors, but they definitely don't disagree on extant trends, statuses, etc. LOL

Lafayette · Apr 22, 2018

Xelor said:
Well, being factually accurate on key aspects is essential in expressing just about any idea. At the very least, one can't expect to be taken seriously if one elides key factors. Thoughtful individuals may differ on the weighting of key factors, but they definitely don't disagree on extant trends, statuses, etc. LOL

I live in France. And if there are great differences between the two countries (France and the US) there is also a Great Similarity. When it comes to the Minimum Wage, TopManagement in both keep harping about the necessity to keep down costs in order to compete effectively.

And, in the US particularly, the rush for "buyouts" over the past half-century has meant ipso-facto the oligarchization of most major markets. Where the top three/four companies do not really compete, but charge about the same prices and work hard to keep out any further competition ...

Lafayette · Apr 22, 2018

I happen to think, for all the reasons that you gave in the last post, you have described the essence of True Education.

Some are more articulate than others, some more personally ambitious, others just more lucky. Which describes the reason why salaries even amongst the educated are so vastly different.

Top Salaries in the US are ridiculously high. They should be severely taxed above a certain threshold. Nobody but nobody needs that kind of money to have a very decent existence in absolute luxury. So what do they do with all the rest?

In America, "bump it with a trumpet" by having a memorial building on some campus in their name - and the rest goes to the kids who never worked a day in their lives to earn it ...

Lafayette · Apr 22, 2018

Xelor said:
Manufacturers will make all sorts of stuff using few to no humans.

But that's just fine!

Cheaper product-production costs only mean expansion of market-size and therefore more total sales-value. More people buy products/services - which is the definition of "happiness" in a modern market-economy, isn't it? (That and a portfolio of booming stock prices!)

That's an ethical question, which I prefer to avoid. The real consequence about education is that our children will not have to sweat in a factory to make the present minimum-wage salary because they have educational credentials.

They can have decent lives, and for a large percentage of the American population presently below the poverty-threshold that would be a Godsend ...

I'm Supposn · Apr 23, 2018

Lafayette said:
SORRY TO INSIST ... I'm not convinced that trade matters all that much. NAFTA has been a good thing. It developed jobs in all three countries involved, and furthered trade.

An example of how "good trade" works:
*Production-cost intensive car-parts are made in Mexico. They are imported into the US and employed in the construction of a car, that Americans can afford. If all the parts were made in the US, the market for cars could possibly be far, far thinner than it is today.
*Isn't that goodness for the American automotive manufacturers and the people they employ? ...

Lafayette, annual trade deficits are always detrimental to their nation's GDP.
That is a fact based upon the formula used to calculate GDP. A positive balance of trade, (i.e. a trade surplus) contributes, and a negative balances reduces the calculation of the nation's GDP.
I don't believe a creditable economist would deny that lesser GDP drags upon their nation's numbers of jobs.

I don't post regarding USA's “good” or “bad” individual or net aggregate global trade transactions. I post regarding USA' annual trade deficits.
In 2017, our trade deficit with only NAFTA nations reduced our GDP by more than 200 million U.S. Dollars.
But that' only the apparent detriment to our economy because domestic production supporting goods and services not reflected within the prices of globaly traded goods, are not attributed to the nation's global trade. Trade balances actual effect upon their nation's GDPs well exceed their nation's net balances of global trade. Thus, in 2017 USA's trade deficit wthin NAFTA substantially exceeded a detriment of approximately 205 Billion U.S. dollars.

Respectfully, Supposn

Refer to https://www.census.gov/foreign-trade/balance/c0005.html
and to https://www.census.gov/foreign-trade/balance/c0006.html

USA's 2017 trade deficit of goods with Mexico was $182.7625 Billion.
USA's 2017 trade deficit of goods with Canada was $ 22.1327 Billion.
USA's 2017 total NAFTA trade deficit of goods was $204.8952 Billion

I'm Supposn · Apr 23, 2018

Lafayette said:
...What IS a central-issue is the lack of competent skills-at-home. It is stoopid to go looking for programmers from India when we could be employing our own IF WE HAD EDUCATED THEM FOR FAR, FAR LESS THAN THAN THE AVERAGE $10K IT COSTS IN A STATE SCHOOL IN THE USA....

Lafayette, I agree with you. Any improvement of USA's educational and training industries' products, would be no less reflected by improvement of our economic and social conditions.

I'm a proponent of the trade policy described by Wikipedia's “Import Certificates” article. The entire direct net costs of that trade policy is passed on to USA purchasers of imported goods. The policy does not divert funds from any other federal, state, or local government entity. But thus far we've throw money upon the problems of education and training, but have failed to achieve any significant progress toward some remedy.

Import Certificate policy would be of benefit to any nation that would otherwise experience annual trade deficits of goods. The policy which is justified by its ability to increase our GDP and numbers of jobs more than otherwise, would be of benefit to even a more educated national population.

Respectfully, Supposn

I'm Supposn · Apr 26, 2018

Xelor said:
GDP = C + I + G + (X – M).

Because advances in technology are making possible the manufacture of goods with increasingly less human labor, manufacturing can and will happen, but it'll employ increasingly fewer workers. Manufacturers will make all sorts of stuff using few to no humans.

The Transformation of Manufacturing and the Declinein U.S. Employment

Automation and Jobs

The Impact of Automation on Employment - Part I

The Case for ERP

Of the elements that comprise GDP, which of them are materially affected by manufacturing?

Directly: C, G and X.

Indirectly: I and M.

For a discussion of manufacturing's qualitative and quantitative role see: The Manufacturing Footprint and the Importance of U.S. Manufacturing Jobs (I only have 5000 characters, not words, so I'm not even going to attempt to write my own essay to address this aspect of the matter.)

Manufacturing comprises at least 35% of the U.S. economy. I don't about you, but that strikes me as being a material share of GDP and it's certainly a factor in the economy. I don't at all see how that can disappear or nearly so and be replaced entirely by services.

...

GDP = C + I + G + (X – M) = (national spending for products) + (net global balance of trade)

Gross domestic product, (“GDP”) is the sum of the nations goods and service products and it is of some economic importance per capita.
National spendings for goods and service products = Consumers' + Investors' + Governments' spendings.
Annual GDP is increased by exports, (“X”), and decreased by imports, (“M”).
(X – M) = the nation's net balance of international trade.

Xelor, it's a fact, rather than an opinion that annual surpluses always contribute, and trade deficits are always detrimental to their nation's GDP.

I'm among those contending it's logicallyconcluded the extent of trade balances' affects upon their nation's GDP are much greater that their nation's net balance of trade.
I think you and I agree that production of goods, (and manufacturing enterprises are just some among many goods producing enterprises), are not lesser important contributors to our nation's GDP. Those conclusions are opinions subject to argument.

The policy described within Wikipedia's “Import Certificates” article would significantly reduce, if not entirely eliminate its nations annual trade deficit of goods in a manner that increases its nation's GDP and numbers of jobs more than otherwise.

Import Certificate policy is substantially more market rather than government driven. The policy is not applicable to service products and does not discriminate among farming, ranching, manufacturing or lumbering enterprises, or among foreign nations. It does indirectly but effectively promote its own nation's exported goods.

Respectfully, Supposn

Xelor · Apr 26, 2018

I'm Supposn said:
GDP = C + I + G + (X – M) = (national spending for products) + (net global balance of trade)

Gross domestic product, (“GDP”) is
[rest of OP deleted due to character constraint]

TY for the reply. Just so I'm certain, are your remarks offered to entreat for a new line of discussion, one differing from that which catalyzed my post to which you replied -- that manufacturing is a key factor in the U.S. economy -- or are you of the mind that your remarks address the very basic notion that I was explaining in my post? I think you intend the former, but I want to make sure that's so.

A few thoughts I can offer at this point:

I'm Supposn said:
GDP = C + I + G + (X – M) = (national spending for products) + (net global balance of trade)

I think I know what you mean; thus I believe I'm remarking just for the sake of precision. "Global" should be replaced with "domestic." Balances of trade pertain to individual nations/economies, making trade imbalances pertain to a given nation, not to all or multiple nations, even though every nation has a trade balance/imbalance. There is currently no "net global" balance of trade. If we had another planet with which we conducted trade, then, sure, there'd be a net global balance of trade, and one planet would likely have a net trade deficit and the other would have a net trade surplus.

I'm Supposn said:
Xelor, it's a fact, rather than an opinion that annual surpluses always contribute, and trade deficits are always detrimental to their nation's GDP.

Assuming that a higher GDP is better than a lower one, yes, that's so. I happen to ascribe to the noted normative stance; I think most folks do.

I'm Supposn said:
The policy described within Wikipedia's “Import Certificates” article would significantly reduce, if not entirely eliminate its nations annual trade deficit of goods.

I don't believe anyone would assert otherwise; Buffett's proposal forcibly matches imports to exports, so it'd absolutely eliminate the goods-related U.S. trade deficit. It'd also ensure one of two outcomes:

[*=1]Trade surplus outcome: U.S. consumers are forced to buy proportionately more U.S. made goods. This would happen whenever importers purchase fewer certificates than are available.
[*=1]Equilibrium outcome: The U.S. will have no surplus or deficit and GDP growth would be artificially limited by the value of goods (other than oil) U.S. producers export, i.e., the value of goods foreign consumers are of a mind to purchase from U.S. producers. Sellers can't control from whom buyers purchase goods.

The Buffett plan results in services being the prime driver to growing GDP. Based on analysis of it using the Levy model, it would likely produce price increases of about 10% and in the long-run produce less GDP than our current terms of trade.

I have to admit, I'm a staunch laissez faire guy; I oppose tariffs, subsidies and quotas. Insofar as Buffett's plan is an import quota, I'm not keen on it. To see why, watch either of the videos below. (Tariffs and quotas are merely different means to same end; one does it by via prices and the other does it by via supply.)

Serious presentation:

Entertaining presentation, delivered at a staccato pace (the discussion here directly addresses the IC idea Buffett offered (at ~3:40 mark)):

Economic Impact of Import Quotas

Without quotas

[*=2]The market price is P world
[*=2]Quantity of imports is Q4-Q1
[*=2]World exporters make revenue of areas A+B+C

Imposing quotas of (Q3-Q2)

[*=2]This leads to a fall in imports to just Q3-Q2
[*=2]Domestic suppliers gain more revenue.
[*=2]The price rises to P quota and domestic suppliers, supply more Q1 to Q2.
[*=2]It can create domestic jobs.
[*=2]Consumers pay a higher price and also total quantity falls from Q4 to Q3.
[*=2]Governments are not affected directly, as there is no income.
[*=2]There is a net welfare loss to society because the increase in producer surplus is outweighed by the decline in consumer surplus.
[*=2]World exporters will make less revenue – unless demand is very inelastic, meaning increase in price is greater than fall in quantity.

I'm Supposn · Apr 26, 2018

Xelor said:
... Just so I'm certain, are your remarks offered to entreat for a new line of discussion, one differing from that which catalyzed my post to which you replied -- that manufacturing is a key factor in the U.S. economy -- or are you of the mind that your remarks address the very basic notion that I was explaining in my post? I think you intend the former, but I want to make sure that's so.

I'm Supposn said:
I'm among those contending it's logically concluded the extent of trade balances' affects upon their nation's GDP are much greater that their nation's net balance of trade.
I think you and I agree that production of goods, (and manufacturing enterprises are just some among many goods producing enterprises), are not lesser important contributors to our nation's GDP. Those conclusions are opinions subject to argument.

/////////////////////////

Xelor said:
... I think I know what you mean; thus I believe I'm remarking just for the sake of precision.* "Global" should be replaced with "domestic”.
Balances of trade pertain to individual nations/economies, making trade imbalances pertain to a given nation, not to all or multiple nations, even though every nation has a trade balance/imbalance.

Exelor, no, to ALL foreign nations within the world.
In common English vernacular, USA's “global trade” is our total trade with ALL foreign nations and EXCLUDES our domestic trade within our borders. USA Global trade's only relationship to our trade with individual foreign nations is those individual trades in AGGREGATE compose our ENTIRE international trade which effects the calulation of our gross domestic production, (i.e. GDP) of goods and service products we produced.

Xelor said:
... There is currently no "net global" balance of trade.

USA's “net balance of trade” in the common vernacular, refers to our net balance of trade with all of the world's foreign nations. The term “foreign” refers to foreign relative to us.

You correctly commented “even though every nation has a trade balance/imbalance”. The term “balance of trade” refers to “net balance of trade” and does not imply that balance to be necessarily equitable.

Respectfully, Supposn

Xelor · Apr 26, 2018

I'm Supposn said:
/////////////////////////

Exelor, no, to ALL foreign nations within the world.
In common English vernacular, USA's “global trade” is our total trade with ALL foreign nations and EXCLUDES our domestic trade within our borders. USA Global trade's only relationship to our trade with individual foreign nations is those individual trades in AGGREGATE compose our ENTIRE international trade which effects the calulation of our gross domestic production, (i.e. GDP) of goods and service products we produced.

USA's “net balance of trade” in the common vernacular, refers to our net balance of trade with all of the world's foreign nations. The term “foreign” refers to foreign relative to us.

You correctly commented “even though every nation has a trade balance/imbalance”. The term “balance of trade” refers to “net balance of trade” and does not imply that balance to be necessarily equitable.

Respectfully, Supposn

Seriously?

I'm Supposn · Apr 26, 2018

Xelor said:
... Buffett's proposal forcibly matches imports to exports, so it'd absolutely eliminate the goods-related U.S. trade deficit. It'd also ensure one of two outcomes:[/INDENT]

[*=1]Trade surplus outcome: U.S. consumers are forced to buy proportionately more U.S. made goods. This would happen whenever importers purchase fewer certificates than are available.
[*=1]Equilibrium outcome: The U.S. will have no surplus or deficit and GDP growth would be artificially limited by the value of goods (other than oil) U.S. producers export, i.e., the value of goods foreign consumers are of a mind to purchase from U.S. producers. Sellers can't control from whom buyers purchase goods.

The Buffett plan results in services being the prime driver to growing GDP. Based on analysis of it using the Levy model, it would likely produce price increases of about 10% and in the long-run produce less GDP than our current terms of trade. ...

Xelor, many, if not most of your statements I've quoted above are fully or substantially incorrect. You are partially correct that within the Import Certificate, (IC) policy, U.S. consumers will have more items of U.S. goods available to them and they will purchase more of such goods.

The IC policy is substantially market rather than government driven. If there's effective demand for any foreign product, The IC policy could not prevent that item from being imported into the USA. Within IC policy, normal market behaviors also reduce prices paid for USA's exports which hopefully will promotes our export volumes.
Regardless of other nations' reactions to a USA import Certificate policy, our GDP and numbers of jobs will increase more than otherwise. Your analysis of Import Certificate policy is faulty.

I appreciate your desire to keep this thread on topic. If you wish, I'd be please to continue discussing the pro's and cons of “Import Certificates” comparison to tariffs or to pure free trade policies within the threads,
https://www.debatepolitics.com/econ...ariffs-and-import-certificate-policies-3.html
or
https://www.debatepolitics.com/econ...under-priced-products-low-wage-nations-2.html

Respectfully, Supposn

Xelor · Apr 26, 2018

I'm Supposn said:
Xelor, many, if not most of your statements I've quoted above are fully or substantially incorrect. You are partially correct that within the Import Certificate, (IC) policy, U.S. consumers will have more items of U.S. goods available to them and they will purchase more of such goods.

The IC policy is substantially market rather than government driven. If there's effective demand for any foreign product, The IC policy could not prevent that item from being imported into the USA. Within IC policy, normal market behaviors also reduce prices paid for USA's exports which hopefully will promotes our export volumes.
Regardless of other nations' reactions to a USA import Certificate policy, our GDP and numbers of jobs will increase more than otherwise. Your analysis of Import Certificate policy is faulty.

I appreciate your desire to keep this thread on topic. If you wish, I'd be please to continue discussing the pro's and cons of “Import Certificates” comparison to tariffs or to pure free trade policies within the threads,
https://www.debatepolitics.com/econ...ariffs-and-import-certificate-policies-3.html
or
https://www.debatepolitics.com/econ...under-priced-products-low-wage-nations-2.html

Respectfully, Supposn

I'm Supposn said:
I appreciate your desire to keep this thread on topic. If you wish, I'd be please to continue discussing the pro's and cons of “Import Certificates” comparison to tariffs or to pure free trade policies within the threads,
https://www.debatepolitics.com/econ...ariffs-and-import-certificate-policies-3.html
or
https://www.debatepolitics.com/econ...under-priced-products-low-wage-nations-2.html

Respectfully, Supposn

I don't wish to continue discussing IC's with you. Why would I ?

You don't read the content I reference to support my remarks: Buffett proposed his IC idea in 2003. In about 2008/-9 Papadimitriou and Zezza performed a full-on analysis of Buffett's idea, yesterday, I paraphrased some points from their analysis, and provided a link to that analysis, and your response to it, is to baldly declare their analysis (not mine, I merely summarized it) " fully or substantially incorrect"
You misrepresent my remarks: I wrote "buy proportionately more U.S. made goods" which you decided to convert into simply "will purchase more [U.S.] goods."

Given both those disingenuous behaviors, no, I haven't a desire to continue with you a conversation on a technical economics topic .