Since the US is primarily a service oriented nation — 80% of GNP — did you ever wonder how the base economy of production can support all this? Of course, 20% is still a thriving, tidy sum, and apparently insufficient to carry the massive services on its shoulders — or is it? The spin-off effect is geometrical progression. Just as the efficient farmer needs to market his produce and therefore requires an initial service of packing and trucking, which in turn requires outlets for retail, so, too, all pockets of manufacturing require enormous service variables to thrive. The key in modernity is that no man/woman is an island unto shimself: interdependence is the stuff that makes civilization. The early Homo sapiens understood this by acknowledging the advantages of family and tribe.
To illustrate this, roll back the clock to, say, the early pioneers who were blest with land either by grant or for the taking, which immediately meant they possessed assets and giving them [hard capital] on which to labor in order to enhance their rudimentary capital. As I had indicated in an earlier blog, capital is nothing but the fruits of previous labor and the judicious use of the results which cannot be furthered without investment in future labor. In the high echelon of a service economy this is hard to understand. After all, in the paper economy of Wall Street, a broker hardly thinks of his trades as exchange of labor, nor does he think of his own time as labor but rather an interlude of profit-making and commissions. This is known as the alienation of labor which lends to a hierarchy of work time so that the labor time to trade — and generating greater tangible results — brings more value than cleaning toilets, even though the very trade might very well generate more toilet cleaning by perhaps further investment in a new building.
A quarter of the service industry is in government services that regulate, or rather, coordinate protection and the flow of revenue and correspondence. The defense department, for instance, through purchases generates high quality labor for giants such as GE, GM, and Boeing, all of whom require the services of thousands of sub-contractors, which in turn require the services of the shipping industry. The state department and its vast embassies open up investments overseas for multinational industries to further the relentless buck globally. Thousands of publications rely on the Postal Service to keep them alive and well. Even Air Force I spins thousands of labor hours in its maintenance and flying time. In spite of all the angst over big government, it still perpetrates an essential facet of the economy — not to mention that its costs flow back into the economy.
Is there a breaking point at which time the bubble will burst? Is there no end to exporting jobs of substantive labor, which now underpins all of the thriving services? Should we not be concerned over the trend to diminish our treasure of bedrock industries? To all these, apparently not; for we are confident that we can service the globe.
Copyright © 2004 Richard R. Kennedy All rights reserved. Revised: January 1, 2004.