Rise of a Global Services Economy: Dependency on ‘Services’ as The Nation’s Growth Engine– Is Rooted In Global Market Reality…

What does it mean to create, or co-create– value? How, when, where… is value created? Are there differences between ascribing value to– ‘goods’ and to ‘services’? According to Douglas B. Cleveland; during the last hundred years the economy has transitioned from–agriculture to industrial to services… and now the services sector is the largest and fastest growing component of the economy.

Fifty years ago, the services sector accounted for about 60% of output and employment. Today, the services sector share of the economy has risen to about 80%… But then the questions; does a ‘services economy’, over the long-term, create sufficient ‘value’ for a country to sustain itself… is it the ‘growth’ engine… does it create large numbers of ‘good jobs’… can it ‘compete’ effectively in global markets…

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According to Richard B. McKenzie; the emergence of services economy has given birth to the public policy worry that the U. S. is being reduced to a nation of– orderlies, fast-food workers, bus boys… The expansion of the services sector has been perceived as a symptom of economic malaise because it has coincided with surpluses of labor in the traditionally high-paying heavy industries and a long-term increase in the nation’s unemployment rate… In addition, the expansion of the services sector has been thought to mirror decline in international competitiveness of U.S. due to its inability to adjust its structures in response to the accelerating changes of globalization…

Another perception of the nation’s shift from– industrial to services economy is frequently summarized by the claim that given emergence of the services economy, we may eventually end-up doing each other’s laundry… According to Felix Rohatyn; we cannot become a nation of– short-order cooks, salespeople, copy-machine operators, messengers… These jobs are weak basis for the economy… To let other countries make things while we concentrate on services is debilitating both in its substance and in its symbolism…

In the article Services Dominate the Economy by Johathan Peterson writes: Under-way for a century, the transition to services economy has reached the point where most employed persons are classified as working in the services sector… a potpourri of jobs that include; dishwashers, store clerks, nursing home attendants… but also; doctors, lawyers, bankers, computer programmers, even government bureaucrats…

Essentially, everyone who is not working in– manufacturing, agriculture, construction or mining is a services worker… However the services economy phenomenon has hardly met with universal approval: Some economists and political leaders warn that the nation’s future will be in jeopardy if employment in the great manufacturing industries that helped make the nation rich is replaced by services jobs that are low on wages and low on dignity... Others, however, insist the services boom offers superb opportunities of its own…

Whatever the view, the trend toward a services economy appears complete even as manufacturing becomes more efficient and more sophisticated requiring fewer employees but ever more services… While the debate rages on, there are several points that can be made, e.g.; services and manufacturing will continue to rely on each other, and according to Stephen S. Cohen and John Zysman; services are complements– not substitutes or successors– to manufacturing… and education plays a critical role: Those with ‘good’ one can do better than ever before, and those with ‘poor’ one are likely to do worse…

One thing is clear: The services economy is not sheltered from foreign competition… In many cases, services workers are no more secure than factory workers, unless they have skills that justifies their positions… And, whatever the task in today’s competitive global economy, employers look harder than ever at– how, where… to accomplish tasks as cheaply as possible… According to William Johnston; workers who do not have basic technological skills and literacy to be competitive are going to find that the economy is less forgiving than ever: The haves and have-nots are going to be defined by their skills… It’s the technologically able, versus the technologically unable…

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In the article Services Economy by Dustin Ensinger writes: High-paying manufacturing jobs have all but disappeared, only to be replaced by lower-paying and often menial services sector jobs that produce absolutely nothing of value… According to Labor Department’s Occupational Employment and Wages Report; retail sales, cashiers, general office clerks, food preparation, services workers, nurses… are the occupations with the highest levels of employment… In fact, nine of top 10 jobs in the survey pay such low wages that they put a worker supporting a family of four in near poverty… The findings are symptomatic of globalization and trade policy, which has allowed the nation’s manufacturing base to be gradually– off-shored to low-wage nations, leaving only low paying services sector jobs in their wake…

The rationalization is that with more open economy and trade policy, many manufactured ‘goods’ are produced overseas where labor is cheaper, and consumers benefit… According to ‘The Post Gazette’; comparing the same research to 10 years earlier the results were unsettling, i.e.; while millions of manufacturing jobs were disappearing– fast food workers increased by 43%, child care employment increased 68% over the decade as the number of one-income households dwindle due to the lack of jobs that pay well enough to support a family… At the same time, education promoted as the cure-all for the changing economy is not paying-off for many… The health care sector may be growing rapidly, but most of the jobs created are the lower paying jobs in the field…

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In the article Services Economy by Umair Haque writes: The services economy is creating ‘jobs’; yes, but only of the lowest kind– low-end, unskilled, dead-end, go-nowhere jobs … jobs  that don’t only– crush the soul, damage the psyche, break the spirit–  but waste people’s potential… The simple fact is the services economy is barely worth anything, because it doesn’t enhance human potential, it doesn’t create much ‘real’ value for people, let alone– society, future generations, communities…

Services is a great and noble ideal; it implies a higher purpose, common goal, shared benefit, joint concern… but it’s a great tragedy, because instead of challenging people to create and invest in what is truly innovative, earth-shaking, groundbreaking… the ‘bullshit’ services economy settles for what is– easy, marginal, incremental…

And truth be told, it’s a titanic squandering of resources – money, time, effort, imagination – to spend so much on so little of ‘real’ value… The services economy is creating armies of servants that can– walk dogs, paint nails, drive cars…  instead of finding solutions to the very real, urgent problems of– education, healthcare, climate change, finance … Instead of solving the world’s glaring problems, you are simply finding more efficient ways to– crack the same old whips and tie the same old leashes…

Unfortunately, much of the contemporary commentary on the rise of the services economy is a throwback to– Adam Smith, who asserted that– labor of manufacturing generally ‘adds to value’, whereas the labor of the menial servant (services providers), on the contrary– ‘adds to the value of nothing’… a person [or country] grows rich by employing multitude of manufacturers, and they grows poor by maintaining a multitude of menial servants (services providers)…

Smith differentiated between ‘productive’ workers (who generally seem to fit description of ‘goods’ workers) and ‘unproductive’ workers (who generally seem to fit description of ‘services’ workers)… he maintained that  services workers represented a net drain on a country’s productive capacity, and the expansion of the services sector was therefore, part and parcel to a ‘negative-sum’ game… According to some experts; Smith failed to recognize that ‘services’ are as valuable to consumers as the ‘goods’ they buy… services are often just as much ‘goods’ as ‘manufactured goods’, and services facilitate the production of both ‘goods’ and ‘other services’…

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Some experts suggest that the growth of the services economy is a direct consequence of globalization and trade policy, i.e.; lower labor cost nations are better able to compete for manufacture economy… hence, nations are forced to specialize in what they do best and acquire things they have difficulty in producing.

But in final analysis, government policy, programs that promote– entrepreneurship, innovation, technology, job creation… must be rooted in market reality… Building-on and sustaining economic momentum remains key means of responding to challenges of fostering growth in an increasingly competitive global economy… Question; Is an economy based primarily on ‘services’ sustainable, long-term?