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If as countries get richer they start to expand manufacturing & services, but then when (even) richer start to see a shift towards an emphasis on services, what does that mean for rich countries that currently still have large manufacturing sectors (like Germany for instance).
A structural account would suggest they will (too) pivot towards services, while those countries (held) in a poorer economic situation will continue to produce any goods we need....
1/2 (short thread)
But there is, of course an issue of productivity here.... the application of technology in both agriculture & in manufacturing can enhance the productivity of the workforce to allow maintenance or even expansion of output with the same or fewer workers.
But, increasing productivity in services is much more difficult.
This seems a simple story, but actually what happens is low productivity manufacturing & farm work is exported to poorer countries...
which leaves the case of UK to ponder?
2/2
A muscle, that is no longer used atrophies.
A country, that out sources too much production loses the ability to manage and improve that production as they are ever more dependant on the country they outsourced to.
There is also the problem of lacking R&D as all profits go to share buy backs to increase share valuations.
Yes, I'd say the UK was well down that road.....
@ChrisMayLA6
Increasing productivity in services is achieved in part by the early release of not-even-beta intangible products so that instead of having one major release of a software product, for example, each year we get one major release and a myriad minor releases each made up of fixes for the bugs introduced in the previous release plus a few entirely unnecessary cosmetic changes (like Android periodically changing the spacing between keys) so the user knows change has occurred.
@ChrisMayLA6
Thus productivity is increased both by the proliferation of software releases but also by the proliferation of customer support tickets, nearly all of which can be answered quickly because the issue is known (or the issue has been created deliberately by the designers, as in the case of Flickr hiding the metadata of uploaded photos unless you happen to know there's a pull-up at the bottom of the screen).
/Rant
@ChrisMayLA6 Much more worrying is when China hits that.It'll be a hell of a fast change there.
In the 1990s I used to joke that applying the ideas of disruptive technologies to countries implied that the ones at the top would eventually employ only lawyers and then collapse. It's looking slightly less funny at this point.
Yes, that's a really interesting point.... what comes after the domination of services.... I was going to add a third part of thread about how the rich countries actually still need physical goods, but its less clear poorer countries need the 'sophisticated' services of the richest....
@ChrisMayLA6 Not only do they not need them but they tend to evolve their own, more efficient and simpler replacement for those services. They can piggyback off the learnings of others and implement systems without all the stupid and historical baggage that the existing systems cannot now remove because it's tied into laws and vested interests that are near impossible to get back out.
UK house buying/selling system being a beautiful example that comes to mind.
> its less clear poorer countries need the 'sophisticated' services of the richest....
I was reading a thread only yesterday about the consequences of the West in the 1990s having providing 'sophisticated' financial services to post-Communist Russia (perhaps not "poor" in the same way but not financialised either) and how that is one of the factors that led to the dominance of Putin
yes, the construction of the kleptocapitalism that enriched first the oligarchs & then Putin, was pretty much imported from economics departments in the USA....