Exportable Services

| Saturday, March 19, 2011
BBC has what appear to be entirely random opinion pieces, which are usually pretty interesting, even if they don't have much relation to the headlines (not to suggest that they aren't relevant to the news, just not the single topic of the day chosen by the media). Recently there was one arguing that the decline of American manufacturing and its replacement with the service sector is fine, because a dollar of value is a dollar of value, whether from services or manufacturing.

That is true, but potentially deceptive. If we import a dollar of products, can we export a dollar of services? Yes, no, depends on the service. I won't pretend that all physical products are equally able to be exported. Mandarin books won't have a huge market in the US and regionalized DVDs have a different 'language' problem. But similarly, pizzas and software are not universally useful. We won't be doing delivery to China. Similarly, not all software (which I consider a form of manufacturing anyway) will be able to be exported. Can we export our restaurants? Geek Squad? Local journalism? No.

These are necessary, or at least in-demand services, and of course we should not ignore the importance of the internal economy, but we should remember that if we want to import, we still need something to export, so if we're going to surrender manufacturing, then we need exportable services.


Stabs said...

The danger is what happened to manufacturing could happen to services.

Manufacturing was undercut by people willing to work cheaper.

Services often require more infrastructure but once that is up then there's no reason your graphic design company can't be based in Hong Kong rather than New York.

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