US & Canada

Factories in decline? It's OK, services will do nicely

Boeing factory
Image caption Good job: The US still makes most of the world's aircraft

The Worrying Class in developed countries laments: "We don't make anything any more."

They fear that, as more people find employment in services, their nation loses the ability to provide for itself and gives up the "good jobs" which sustain the middle class.

They obsess about exports and trade imbalances while making a fetish of manufacturing and the blessings it brings to their country. But a quick look at the data shows that the developed world actually makes a great deal of stuff.

The United States alone produces roughly 20% of all the world's manufactured goods. We may not make many toys or cell phones any more, but we do make most of the world's artificial knees and hips, medical scanners and jet aircraft. Those sound like good jobs to me.

Manufacturing fetishists also ignore the fact that many factory jobs were actually not very good jobs at all.

Greater opportunity

Those jobs may have offered a fairly good wage for a low-skilled position, but they were dull, dirty, sometimes dangerous and had very little chance for advancement.

The service jobs the worriers dismiss as "hamburger flipping" actually offer better wages, better working conditions and much greater opportunity than assembly line work.

I wonder how many of the worriers want their children to grow up to tighten bolts in a factory instead of going to university and getting a job in the service sector?

The worrier's core error is the idea that manufacturing makes "real wealth" while service jobs only move things around.

This is simply wrong. There's nothing less real about service jobs.

Doctors, accountants and personal trainers create value for their customers just like auto workers do.

To quote George Mason University economist Donald Boudreaux: "The value of a dollar's worth of cloth is exactly the same as a dollar's worth of web design. One dollar."

Cave economists

Image caption Worriers also worried about the Industrial Revolution

If service jobs are more plentiful, higher paying, less dangerous and better opportunities overall, why shouldn't we embrace the move to services?

Maybe the real core of the problem is that people don't like change, especially when it is not clear where the change will lead. Manufacturing was the key sector of the economy for 100 years and many people are reluctant to give that up.

This isn't the first time people have made a fetish of one particular industry and tried to stop the economy from evolving in strange new ways. At the beginning of the Industrial Revolution a group of proto-economists known as the Physiocrats took agriculture as their fetish.

They claimed that real wealth only came from working the land and that the new rage for making things was diverting people from the one true economic activity.

I'm sure that if we could go back in time 10,000 years we would find a group of prehistoric economists convinced that real wealth only comes from harvesting food that has grown by itself and that all these people planting seeds are reducing the wealth of the tribe.

And if we could go 50 years ahead in time, I'm sure we'd find a group of future economists worried about people leaving their service jobs - which everyone knows are the only way to create real wealth - and moving into whatever is going to replace the service sector.

The Physiocrats, the cave economists and today's manufacturing fetishists have it wrong.

Any job which creates value for someone is a good job. We should worry less about where people are finding jobs and spend more time enjoying the ever-increasing fruits of our labour.

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