Lord knows, I've tried to gain some understanding of basic economics...

[Adsos Letter]

and the denizens of the Economic Forum have both helped and confused me, a result I blame on my difficulty in comprehending how all of the factors that influence an economy work to produce given results, either positive or negative.

My question is this:

What are the major elements that prohibit America from becoming an engine fueled by production rather than service based industries.
Is it possible to create a domestic economy where a mix of industrial production and service sector combine to produce a viable domestic economy?

What are the roadblocks?

The need for foreign capital to fund development?

The competition from cheap overseas manufactures?

The outsourcing of labor, and a concurrent importation of H1B visa-type labor?

I understand that this question demonstrates my already confessed ignorance on this topic, but I am very much interested in understanding the issues.

Perhaps these questions are too laborious to be answered in the forum format, so perhaps someone could direct me to books or articles that would help me understand these issues better.

All I (think) I know is that Henry Ford manufactured his product in the US, and priced it, and labor, so that the workers that produced it would also be able to afford it. In this way he guaranteed a market for his production.

My last question: Is it possible for a nation to be essentially self-sustaining in those aspects of an economy aimed at keeping body and soul together; housing, food production, medical technology, defense,etc, without devolving to something like the failed/horrific Soviet plan, or something akin to Mao's totalitarian/horrific "Great Leap Forward" models?

Take as long as you need to groan, curse my stupidity, cry, or laugh at these questions... :D

[jwirr]

1. Also want to know....

[elleng]

2. No reason to laugh or cry;

lets use our common sense, and rely on our own good judgment. I've never studied economics.

We've done what you've asked, in the past. The questions of the day are, I think, can these things be done in today's world, where commerce can be so free flowing? Greater challenges, and less room for all the B.S. that's been permitted to grow during the past ? years.

[Adsos Letter]

3. "The questions of the day are, I think, can these things be done in today's world,.."

Yes, that goes right to the crux of the matter.

[economicgeography]

4. Re:

"What are the major elements that prohibit America from becoming an engine fueled by production rather than service based industries.

Comparative advantage. While the US could certainly produce alot of its stuff, it's more efficient to undertake other ventures and import manufactured stuff. It comes down to the opportunity cost of production.

In addition there is the concept of specialization reducing overall costs.


Is it possible to create a domestic economy where a mix of industrial production and service sector combine to produce a viable domestic economy?

It's generally hard to create any fixed % of service/manufacturing without considerable intervention. Viable is such a subjective term that 50 different politicians will give you 50 different answers.

[Hannah Bell]

43. ?

>>Comparative advantage.<<

Explain, e.g., China's comparative advantage.

Then explain how the current "global free trade" differs from Ricardo's formulation.


>>it's more efficient to undertake other ventures<<

Which "other ventures" are those? More efficient - for who?


>>In addition there is the concept of specialization reducing overall costs.<<

Elaborate, please. What specialization do you refer to, & do these "reduced costs" come in dollars/money, or in some other sense?

[stillcool]

5. I wish I knew...

how it works. The relationship between our global corporations and our global military. It seems to me that both are squeezing us out, so that they can continue to grow...gobbling up everything in their way.
edit to add this site..because it seems to have some interesting stuff ...
http://www.industryweek.com/

[economicgeography]

6. Something else to remember

When we say "country X has a manufacturing economy" or "country Y has a services economy", that's the aggregate of all the firms, not the result of some edict, i.e. it works it's way from the bottom-up.

What you produce is rather irrelevant. (Unless you subscribe to the Labor Theory of Value which I do not).

Mercantilism was an economic school of thought in the 17 and 18th centuries which was a state-centered philosophy that the way to increase wealth was to have exports exceed imports and to stockpile the gold acquired from the balance of payments.

[Hannah Bell]

44. Mercantilism is very much alive; simply, the center has shifted from the state to private actors.

& your post is incoherent.

"Works its way from the bottom up?"

What?

[sandnsea]

7. We have an investor class economy

And they make more money when production is done at 50 cents an hour. They call it a service economy because they are brainwashing us into believing the economy has something to do with us. It doesn't, it's all about the investors. They can't outsource hands-on-service and they aren't going to go without being waited on hand and foot.

The question is whether we will ever wrest the economy out of the hands of the investor class like we did for a few decades last centruy.

[economicgeography]

8. re:

It's their money, why can't they use it how they want?

[elleng]

9. 'They' can,

unless/until what they want to do is not in the public interest, that is to say, is against PUBLIC POLICY.

like, A can merge with B, unless policy determines that A-B would in some way endanger the well-being of the public, like being TOO BIG TO FAIL.

[economicgeography]

11. re:

Public Interest is such a vague concept. Public interest usually magically somehow becomes biased to whoever's most recently been elected.

Not allowing mergers is a violation of the right to freely engage in contract, essentially a slap in the face to Locke. But I can understand the justification of the regulations and will tolerate them.

And besides, let's face company A and B want to merge and the DOJ says no-no. Do the firms magically suddenly agree to abandon their intentions? Or does it become a fruitless game of cat and mouse between regulators and firms?

Mergers happen for a reason. If you see large merges as a problem, then it's more like they're symptoms of a disease. What is spurring the merger? Greed? Sure but everyone's greedy. Most likely too many firms in the industry which means that preventing the merger would in the long run actually make the market more inefficient.

[Citizen Number 9]

32. Clean, logical posting

Damn.

Welcome to DU. :)

[economicgeography]

33. Looks like I have a fellow freedom lover

The original liberals!

[Odin2005]

35. Freedom lover? more like "patsy of the Corporate elites" n/t,

[Citizen Number 9]

39. EG's posts appear to be rational and solidly based

What, in particular, leads you to identify him as a "patsy of the Corporate elites"?

[Odin2005]

41. He's a libertarian. Whcih makes him a sucker for corporatist ideology.

AKA, "useful idiot".

[Citizen Number 9]

42. Whatever.

I'm responding to the actual content in the posts, not your fantasy of what you think he is.

[Odin2005]

34. Libertarian BS.

Nothing more needs to be said.

[Hannah Bell]

45. "Public interest" isn't a vague concept at all; only for apologists for thieves is it "vague".

Everyone's not greedy.

Who gives a damn about Locke?

Yes, oligopoly is very "efficient". Monopoly is even more "efficient".

Not a very consistent "libertarian," are you?

[sandnsea]

10. No it's not. It's the workers' money.

The ones who work to produce the goods or deliver the services. When the workers get that through their head again, then we'll turn this economy around.

[economicgeography]

12. re: Not it's not. It's the worker's money.

lolwut?

The money is owned by the shareholders. That's how corporations work.

[sandnsea]

14. And the workers need to take their share

They haven't been lately. They're about to see where 20 years of concessions has gotten them.

[economicgeography]

16. re: And the workers need to take their share

I believe in personal freedom. If workers wish to organize and use collective bargaining, that is their right; so is the owner's to hire organized or non-organized labor.

That said, whatever the results of that are, both parties have to be willing to accept that. If collective bargaining makes domestic labor too expensive...

[sandnsea]

18. Labor isn't too expensive

Shareholders have taken too much money and got greedy wanting even more and threw it all into the mortgage derivative game - and lost it all and everybody's well-being along with it. Workers have a right to protect their economic stability because the rich sure aren't going to do it.

[economicgeography]

20. re:greed

Ah yes greed. The ultimate debate stopper. It's always the other guy who's greedy, right?

How much is "too much"? Why shouldn't they want even more? Who doesn't want more? Again, it's their money. If they wanna make crappy investments, that's their problem.

Do you think they employ people to be socially charitable? No, they employ them to help themselves turn a profit. The fact that people are employed in the process is a social benefit in and of itself.

Workers are not forced to work for any company, so they are not forced to work for companies that they think are self-destructive. I would support public subsidaztion of transaction costs (such a finding info on a new job and moving there) if it meant people could find a job suitable to their demands.

[sandnsea]

22. Do you think workers work to be socially charitable?

No. And none of those investors can do anything without the worker. Leave them alone with a pile of money and look what they do with it. There is absolutely no more reason for the investor to be put before the worker than the worker before the investor. It's all in a matter of where We The People decide our priorities are. Corporations used to be chartered for the public good. There's no reason we can't go back to that principle and stop being screwed over time and again. It's not right a corporation can file bankruptcy, merge with another corporation, and get a multi-billion dollar government contract, all nearly in the same year. We The People can't do that. Is this our country, or not?

[economicgeography]

24. re:

And none of those investors can do anything without the worker.

Thus wages are offered in return for labor.

There is absolutely no more reason for the investor to be put before the worker than the worker before the investor.

Who pays for the factory, training and equipment up front? Salaries for that matter?

Corporations used to be chartered for the public good.

Not really. The public good is to provide goods and services as efficiently as possible. Profits are the incentive for that to happen.

It's not right a corporation can file bankruptcy, merge with another corporation, and get a multi-billion dollar government contract, all nearly in the same year.

Why not? Why should your opinion of 'fair' and 'right' trump mine?

We The People can't do that.

Ah now you're on to something. Regulations designed to help the smallest firms usually are perversely used to help only the biggest ones.

Is this our country, or not?
Yes but not at the expense of property rights. That was one of the cornerstones of the Enlightenment..."life liberty and property"

[sandnsea]

26. There's more of me

that's why our opinion will trump yours. And when there is no money, the laborers will make out just fine then too. You're just interested in your talking points and I've got more important things to do. Enjoy your visit.

[economicgeography]

27. Ah yes the good old tyranny of the majority

Maybe Tocqueville was on to something.

I'm fine with the fact you're conceding the debate to me, but talking points? Hah. The only talking point I offer is freedom. Yes, freedom even over economic equality. You won't find that on any major party anytime soon. I consider myself a classical liberal going back to Locke who supports "Life, Liberty and Property"

The only equality I believe in is that every person is equally entitled to those three tenets as I am.

[sandnsea]

28. If you don't believe in laborers

you don't believe in America. It's that simple. The Declaration of Independence says nothing of property. If it's more important to you, fine. It isn't the most important thing to the rest of us. I bet you call yourself a Christian too. The "right" kind of Christian as well.

[economicgeography]

31. Declaration of Independence?

I made 0 references to that. I was referring to Locke's original tenents.

If you don't believe in laborers, you don't believe in America

I'd be rather curious how you came to that conclusion.

I bet you call yourself a Christian too. The "right" kind of Christian as well.

Ah yes the ad hominen attacks. I don't really care too much religion. Too many superstitions and fantasy stories. Charity is nice though. I try to make it a point to donate to food banks and volunteer. Is that the 'right' kind of Christian?

[sandnsea]

38. Here

This is who you're slaving away for. They have no inate right to the money that billions of people live in poverty to provide them. It's stupid.

http://www.vanityfair.com/magazine/2009/01/wall_street200901?printable=true¤tPage=all

[Hannah Bell]

49. Conceding the debate to you? He's done nothing of the sort, don't flatter yourself

that the puerile boilerplate you're serving up even meets the level of "debate".

"Freedom". What a load.

"Property". 2/3 of US workers rely on social security for more than half of their retirement income. Whose "property" are you defending?

[Hannah Bell]

47. ?

>>wages are offered in return for labor.<<

Doesn't respond to the question. Labor without money is potent. Money without labor is toilet paper. Pretty much demonstrates which has primacy.


>>Who pays for the factory, training and equipment up front? Salaries for that matter?<<

So what?


>>Not really.<<

The "libertarian" doesn't know corporate history, either. No surprise.



>>Why not? Why should your opinion of 'fair' and 'right' trump mine?<<

Um, because his IS fair, since workers foot the bill for the scam?


>>Yes but not at the expense of property rights.<<

What a goon you are. And when there's one overarching "Globocorp," will you still be so considerate of its "property rights," though YOU no longer have any?


>>That was one of the cornerstones of the Enlightenment"<<

Again, who gives a rip? You mouth irrelevant platitudes like any religious nut.

[Citizen Number 9]

29. I'd recommend

Getting a skill that will always be in demand.

[economicgeography]

30. Amen Brother

It's all about adapting and staying ahead of the curve.

[Hannah Bell]

48. sucking up to power never goes out of style.

[Hannah Bell]

46. "too expensive...." by whose measure?

[economicgeography]

13. Labor is not a component of value

If you make me a toy and I pay you 20 dollars for it, it's exactly the same as if I gave you 20 dollars for cleaning my house and is the same as even if I gave you 20 dollars for telling me a funny joke that made my day.

The product itself is irrelevant because utility is ultimately decided by the consumer.

By that logic, workers should be half as inefficient because they will work double the time to make the same good meaning that it's twice as valuable.

[sandnsea]

15. Labor is a component of value

when the laborer strikes and the garbage piles up on the corner and the kids cry because Santa didn't come.

[economicgeography]

17. re:Labor is a component of value

No, the value is the absence of garbage. The consumer of sanitation doesn't care how it was attained.

Do cars made by robots have less value because there is no labor involved?

[sandnsea]

19. Who is maintaining the robot?

Yes, the labor matters. The belief that it doesn't is why everything is deteriorating around us. You can't have quality goods, customer service, journalists, - quality anything - if you don't believe there is value in labor.

[economicgeography]

21. re:Who is maintaining the robot?

For all I know another robot. The point is that as a consumer I don't care about how it produced because I am only consuming the finished good or service.

I'm not saying labor isn't important. Not by any means.

But value is determined by the consumer. Labor is just an input.

[sandnsea]

23. You should care

And if the poison toys and baby formula doesn't get that notion through your head, well then at least don't have children so they won't be put in jeopardy with your careless attitude.

[economicgeography]

25. re:

I'm not gonna stay up late if you resort to ad hominem attacks.

Let me rephrase. I consume posion-free baby food. I could care less if the poison-free baby food was made in Vermont by robots or by Chinese sweatshop laborers or by whatever as long as it is what I want (poison-free baby food) at a price acceptable to me.

[ironrooster]

37. You will care if the baby food company leaves the town

you are living in, damaging the tax base. Of course, you can't restrict where the baby food company relocates to. I'm enough
of an economic libertarian to renounce that.

However, saying you don't care whether (a product) is produced in a Chinese sweatshop or in Vermont is hyperbolic don't you think?

You don't live in a vacuum.

When people are existentially threatened by the so-called free market (what I term the kleptocracy), how are they to fight back

or even cope?

I desire a free and fair market inasmuch as the duality is attainable.

[Hannah Bell]

52. But it's more "efficient" to make poison baby food - you've already conceded

that point. It's your job as "consumer" to avoid it. The free market in action.

Incoherent.

[Hannah Bell]

51. I'd like to see you try to define what you mean by "value" in that sentence.

Price?

[Hannah Bell]

50. Actually, in monetary terms, they do. As you'll discover when you try to sell them in your

workerless economy.


Libertarians are wont to confuse the various aspects of "value" - use value v. exchange value.

That's why their arguments are incoherent.

[Odin2005]

36. It's not thweir money, it's the workers money which they stole.

The investor class are parasites that must be eliminated.

[Citizen Number 9]

40. In our culture

Workers appear to get everything that was agreed on when they signed on. That's protected by law, I believe.

[Hannah Bell]

53. I'll take a stab, since the previous respondent only offered religious jargon:

<<What are the major elements that prohibit America from becoming an engine fueled by production rather than service based industries.<<

Theoretically, it's because "investors" who might put their money into producing goods here can make better profits by producing with cheaper labor elsewhere.

And even if they wanted to produce here (maybe because they were patriotic), the lower profit margins would make their business vulnerable to financial attack - & also destroy the relative position of their capital with respect to other capitals. I.e. they'the company would lose relative position on the totem pole, lose power.

There are other more detailed answers possible, but that's the basics.


>>Is it possible to create a domestic economy where a mix of industrial production and service sector combine to produce a viable domestic economy?>>

Yes, of course - depending.


<<What are the roadblocks?>>

The roadblock is the capitalist system itself.

The present destruction, layoffs, etc. is "what's supposed to happen" under capitalism.

The leading edge of manufacturing in the US historically moved from New England, to New York, the rust belt, west, then lastly to the South - & now it's moving overseas.

The dislocation & suffering it causes is supposedly a reasonable price for you to pay to ensure the property rights of "investors".

Your property values, however, will be destroyed when industry pulls out. And when you lose your job, you may lose your home, car, spouse, friends, etc.

Meanwhile, failed businesses means production has been taken out of the market; the surviving businesses take that market share - which equals more profit.

Industry is now more concentrated, which equals more price control, which also equals higher profit.

More profit equals more money that has to be "invested" somewhere to hold its value, which equals increased pressure to cut costs (e.g. by off-shoring or increasing immigration) & increase profit.

This squirrel wheel is supposedly the best of all possible worlds.



<<I understand that this question demonstrates my already confessed ignorance on this topic, but I am very much interested in understanding the issues.>>

Not at all. The standard explanations SEEM to make sense when things are going well, but when things go poorly, people start to noticing discrepancies - & they learn the standard storyline doesn't have good answers for their questions.

Standard economics doesn't have good answers because job one is keeping certain inconvenient facts hidden.


<<My last question: Is it possible for a nation to be essentially self-sustaining in those aspects of an economy aimed at keeping body and soul together; housing, food production, medical technology, defense,etc, without devolving to something like the failed/horrific Soviet plan, or something akin to Mao's totalitarian/horrific "Great Leap Forward" models?<<

Maybe.