From: cbbrowne@csi.uottawa.ca (Christopher Browne)
Subject: Re: Comparative Advantage
Organization: Dept. of Computer Science, University of Ottawa
Distribution: na
Date: Fri, 21 Aug 92 03:45:15 GMT

In article <1992Aug20.155251.13201@gasco.com> fpf@taurus.gasco.com (Frank Ferguson x3584) writes:
>As an aside, I've always thought that our satisfaction with our drift
>toward service industries was curious.  After all, when we've earned
>enough from our law practice, for example, what do we want?
>Why, a Lexus, a great 
>stereo, a camera, a camcorder, projection tv with surround sound, and
>a cruise on a ship of Bahamian registry.  Mostly manufactured, you note,
>and mostly imported.  Services by an large vanish once performed.  They
>do not make the things that fill the pot, cover the back or warm our
>materialist hearts.  

Yes, it's curious.  It certainly shows how the economy is a mysterious
thing.  "Services" seem pretty worthless, if you blink fast enough...
or are they?

Two questions, bringing us ahead through looking at the past (when
everybody was a peasant^H^H^H^H^H^H^Hfarmer, or was a
robber^H^H^H^H^H^Hking).

(1) Is it important what the PERCENTAGE of the economy is made up by
manufacturing, or is it more important that the per-capita value be
high?

It is disturbing when only 20% of the population is involved with
manufacturing.

Look back at the last two sentences, and substitute the word "farming"
for "manufacturing".  North America has LARGE agricultural surpluses,
in spite of the fact that only a small percentage (10-15% rings a
mental bell, or it could possibly be even less).

If we compare our economy of today with that of 200 years ago, in the
agricultural perspective, it is SHOCKING how few people are involved
in agriculture today.  A clear sign that the economy is messed up :-).

Possible conclusion:  If we do ENOUGH manufacture, things will work
out.  So long as the domestic factories produce sufficiently, the
economy WILL work favorably.

What would happen if we got some more extensive automation, and had NO
employees in the factories?  We could DOUBLE the production, and guess
what?  NOBODY is employed in manufacturing...  and changing production
levels doesn't change the level of employment...

(2) Remember the famine in Ethiopia?  Have you noticed the
difficulties in Somalia?  And the other difficulties with famines
around Africa?

It's easy to ship in a load of grain from some other country...
Whether it be American, Canadian, European, or Russian grain, you can
send in a ship full of wheat.

Isn't it interesting how PRODUCTION really has little to do with the
problem of starving people?  There can be a mountain of wheat, and if
there isn't the distribution infrastructure <Service Industries,
anyone?>, the people will starve, even with plentiful food available.
Granted, there are political issues getting in between, whether it be
civil war, political favoritism, or corruption of distributors.  And
certainly the "gift" status of food aid obscures the operation of the
system.  But that certainly shows us that it is crucial to have a
well-functioning service industry.

-- 
Christopher Browne
cbbrowne@csi.uottawa.ca
University of Ottawa
Master of System Science Program
Newsgroups: sci.econ