Austerity measures have they ever saved an economy?

You'll have to elaborate - where does that "profit" come from? The only outfit in an economy that can defy the Law of Conservation of Money is the government, because they print it. Profit isn't creative; profit is the deadweight loss between the market-clearing price and the marginal cost of production. Profit is the inefficiency that disappears in a completely competitive market. (Ask a retailer competing with Amazon and Wal-Mart about his profit margins these days.) I think part of the problem here is that you're making up your own language for economics, but all you're attempting to do here is conceal the fact that your viewpoint has no actual content. A government system can just as easily add value as a private system, and because it does so generally without profit, it's more efficient.

Phat, I think you have a certain mental blind spot that I notice in a lot of people your age, and that blind spot is that unless it's a manufacturing job, you don't seem to consider it a "real" job. I'm not saying that you look down on those who do other types of work, but you seem to have a notion that those jobs should be temporary stepping stones on the way to 50's-style manufacturing employment.But the thing is - there's no "global competition" for service jobs, and there's no reason that manufacturing a toaster should be considered more permanent or more stable than "manufacturing" a meal at a restaurant. Bagging groceries and delivering pizzas and teaching Yoga isn't something you can outsource to China, they have to be done here in the US. And as productivity per hour worked increases thanks to technology and network effects (i.e. creating a city like Shenzhen, China) its only reasonable that, as Jon suggests, some people will want to capture those productivity gains in the form of additional leisure hours. Why not? There's more to life than work.Now, certainly competition from people who don't object to 12-hour shifts 7 days a week is a problem for anybody who wants to convince their employer to let them have a 30-hour workweek. And you're right to point to global competition as the means by which the 30-hour guys are getting their lunch eaten by the 84-hour guys. But that's primarily a difference in prevailing wage rates that will disappear as increasing globalization puts everybody in the same economy. As Chinese workers begin to demand the same quality of life as Americans- and believe me, they are - their prevailing wage rates will be forced to increase, and they'll eventually want to take those wage gains in the form of shorter workdays, too. Unions will help. China's where we were about the time of the Triangle Shirtwaist fire. There's no reason not to think they'll eventually be where we are today.

I'm certainly thinking of jobs like waitressing/waitering, bagging groceries, cutting hair, performing a service to someone right there with you. Can't be outsourced because you have to do it where the customers are, you can't put it in a box and ship it in from China. But those, properly understood, are manufacturing jobs. Manufacturing legal papers, manufacturing software, manufacturing advice, manufacturing sales contracts, manufacturing advertising materials. Just because you don't do it in a factory - but what is a law office, besides a factory for legal papers? - doesn't mean it's not really manufacturing. It means that it's not considered manufacturing by the Department of Labor, but so what? Teaching Yoga to Americans? How do you do that in China to Americans who are in America? How do you correct someone's posture by touch from a thousand miles away?

Being "productive" doesn't have to mean "doing something for money", then.

Do you have any example of that? The West is overwhelmingly a society where people are cashing in productivity gains in the form of additional leisure hours - either during the workweek or in the form of early retirement - especially in Europe. But the US and Europe overwhelmingly seem to be the center for innovation. 12-hour-a-day workweek China is certainly productive, but they're nowhere near as productive as we are in the United States, pert capita or even in aggregate. China isn't even a third as productive as the US.The US is overwhelmingly where electronics are designed and innovations are created; China is overwhelmingly where they're manufactured in the sort of high-competition sweatshops you seem to think create a robust, adaptable society. Their society is certainly undergoing incredible change, at least parts of it are; but ours is not stagnant and, for the most part, our innovations often extend to our poorest. It's more common now for Americans in the bottom fifth to own a smartphone (and therefore have internet access) than a computer; the bottom fifth Chinese are extremely lucky to have ever even seen such a device.I'm not saying that we can't do more for our poorest, of course. But the poorest Americans still, generally, have access to electricity, sewage disposal, and potable, disease-free water. Not so, in China. And given the dependence of their economy, now, on manufacturing goods for Western consumers and the importation of cheap oil, I would say their economy is in a far more precarious place than ours.

Some parts of medicine are manufacturing and some parts are service.I don't understand the issue you're having. Clearly some jobs are offshorable and some are not, and the specific difference is that if you can put it in a box and ship it in from China, it's likely that your job making it in the US is not long for this world. On the other hand, if you have to do your job right where your customers are, it's likely that your job is offshoring-proof. And clearly, over time our economy will shift to un-offshorable jobs because those will be the only ones left. If you can stand in China and defend a client inside a courtroom in the United States, then probably your job as a lawyer can be offshored to Chinese lawyers. Of course, the question is whether Chinese lawyers will charge any less to practice American law. Why would they? In that case they're competing with American lawyers, not with Chinese lawyers practicing law or Indian lawyers practicing Indian law. Who said it wasn't? I certainly consider it manufacturing, that was the entire point of my post to Phat. There's no reason to consider manufacturing a hamburger to be "temporary" or "service employment", with all the negative connotations "service jobs" carry with people over 50, and it's likely that such a job has quite a bit of stability to it given that you're not competing with the zero marginal cost of Chinese labor. Ok, I'm sorry that I overlooked non-existent telepresence robot systems.

I never took such a position, Nukes, and I'm at a loss to figure out why you think I did. My point had nothing to do with whether or not service jobs were offshorable (though it's obvious that they tend not to be), it was about the fact that people like Phat tend to consider "manufacturing" jobs "respectable" and "service" jobs "menial", and that this is an obstacle in an economy where employment is largely moving to "service" jobs because those tend not to be able to be done in China.I'm simply telling Phat that, if he likes, a lot of nominally "service" jobs can actually be considered manufacturing. Like "manufacturing" food in a restaurant. Why you think the manufacturing of a hamburger somehow disproves my point, when that's almost exactly the example I already gave Phat, is a mystery to me. If anything is unclear, it's why you're attributing to me a position that I don't hold and have not articulated.

No, I didn't. That's neither in message 90 nor in any other.

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But the thing is - there's no "global competition" for service jobs

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I'm wondering why you're choosing to represent my entire supposed position by a sentence fragment. The full context, of course, is this:

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I'm not saying that you look down on those who do other types of work, but you seem to have a notion that those jobs should be temporary stepping stones on the way to 50's-style manufacturing employment.

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But the thing is - there's no "global competition" for service jobs, and there's no reason that manufacturing a toaster should be considered more permanent or more stable than "manufacturing" a meal at a restaurant. Bagging groceries and delivering pizzas and teaching Yoga isn't something you can outsource to China, they have to be done here in the US.

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In context it's abundantly clear that I'm talking about Phat's possible perception of the kinds of jobs that can't be outsourced to China, not making a sweeping claim that any and all jobs which the Department of Labor classifies as "services" are eternally proof against competition by cheap Chinese labor. If I had gone so far as to assert that any and all jobs classified as "services" could not be outsourced to Chinese labor, you would have a point.But I didn't say that, did I?Can you explain why you insist on arguing against a single sentence fragment completely taken out of context?

That's a lie, but people can read my post and judge for themselves. I don't, though. A medical opinion and a legal opinion might both be manufacturing, but that doesn't mean that doctors and lawyers don't also provide services. As I said, when a lawyer can stand in China and defend a man in an American courtroom, that'll be when we can offshore lawyering to China. But legal (and medical) opinions are certainly something that can be produced in China and put into a box - or an email - and shipped to China.Does that make them manufacturing, or service? The point you continue to completely miss is that it's very difficult to definitely classify them as either. And, indeed, simply because it's possible to produce legal and medical opinions in China, it'll probably be the case that performing medical/legal services and producing medical/legal opinions will probably become two separate jobs, one done in China and the other done here. That's a complete lie. There's no point in any of these posts where I've defined a service job as being "non-exportable." Because I didn't, and you lack the honesty to admit it.

I can certainly envision a "mass-production" scenario for both legal and medical advice, in the same way that tech support, which is basically technology advice, has become mass-produced.Again, my point is that the distinction between "manufacturing" and "services" is fairly porous, and many jobs have aspects of both. And in the future, those aspects may become increasingly disentangled. Surgeons in the US may operate on live two-way audio and video feed with a team of ten Chinese doctors looking over his virtual shoulder. American lawyers may recite courtroom defenses emailed that morning by a team of Indian barristers trained in that specific area of the law.I suspect you have the exact problem I (perhaps injustly) ascribed to Phat - you consider manufacturing jobs legitimate and service jobs menial. Why else would you be so obsessed about my opinion on which is which?

Well, possibly, but only if Chinese society advances to the point where there is a significant number of people with the training and knowledge to perform those roles. And it's highly likely that, by the time China has such a population of skilled, highly-trained knowledge workers, living standards and the GDP of China will have risen to the point where it's not actually much cheaper to hire them.

I don't see any place where I've attempted to make any classification of what is a service job and what is a manufacturing job. How are you not getting this? You're the one trying to find the bright line between manufacturing and service. I'm the one telling you that there's no such line in a world where mass-producing an iPhone and mass-producing a taco are almost the same job.You're simply lying about my position, Nukes, in the best tradition of the practice of law.

You can take your "irked" and eat a bowl of salty dicks with it.

Matt Yglesias has been my go-to econoblogger for some time now, and I've been struck by how this thread has paralleled much of what he has to say. Today:

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Via Guan Yang, comes the point that an iPhone assembly job isn't really a job you'd want to have and that the high-value elements of the iPhone process are firmly housed here in the United States. This is true, but it's one reason I think it's interesting to ask what happens if you move the workers along with the factory. Even if precisely zero native-born Americans were employed in the iPhone assembly plant, this would have other implications along the supply chain. Consider, for example, the case of Corning's Gorilla Glass. This is something the company invented decades ago, but there was little demand for until Steve Jobs decided he wanted it for iPhones. Since that time, global demand for Gorilla Glass has expanded enormously thanks to the popularity of touchscreen glass and there are currently more Americans employed producing it than ever before. But even though some Gorilla Glass is made in America, most of it is made in Asia, primarily because that saves on transportation costs. If the assembly is done in Sheboygan rather than Shenzhen, then this is more glass-making for the USA and apparently conditions and pay in Corning's factories are such that Americans do in fact want those jobs.

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Now there are a lot of points you can make about this ranging from China's lack of labor law protections to their exchange rate manipulation and all the rest. But if you take the long view of world history you'll see that the question that needs explaining isn't "why is so much stuff happening in Asia" but rather "why is so little stuff happening in Asia." For most of human history, Asia is where all the action is since Asian is where all the people are. For stuff to happen you need people to do the stuff. And once stuff starts happening, there are all kinds of spillovers and agglomeration effects and more and more stuff is happening. Various sad occurences in Asian (and especially Chinese) history in the 19th and 20th century created a temporally localized situation in which Asia became a bit of a backwater despite everyone living there. But for decades now, dating back to long before smartphones or the personal computer, the hub of human existence has been catching up. That was post-war Japan and then South Korea. It was the "Asian Tigers" of the 1990s. The biggest city in the world has been Tokyo for a long time now. The GDP per capita of Singapore now exceeds that of San Francisco. This is more or less the natural fallout of Asia, where all the people live, not being conqured by foreigners or attempting to implement Maoist economics.

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There's no getting around the fact that in the long term most of the good new ideas will be thought up where most of the people are or that there will be an advantage to locating production where most of the customers are. You can buck these trends with better public policy, but "better" public policy is a relative concept and you can't guarantee that other countries will implement terrible policies simply because it's convenient for you. Now this can be fine. New Zealand is, by all accounts, an extremely pleasant place to live. You don't exactly "win the future" with an economy oriented around the export of dairy products, meat, wood, and fish but New Zealand's population is really rich. Much richer than China's. And as long as New Zealand stays well-governed, New Zealand will stay pleasant and prosperous. But over the whole long arc of the past 100 years it's never been possible for New Zealand to "out-compete" the United States as a center of innovation for the simple reason that nobody lives in New Zealand.

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http://www.slate.com/...you_might_want_your_neighbor_to.htmlInteresting stuff. To roll it into the discussion, I guess I'd ask: why do Americans think that they deserve to be the manufacturing center of the world? To get to Jon's point, why do we think that Americans deserve not to have a trade deficit? Isn't that just a natural consequence of being a rich country of only 375 million people in a world of 7 billion?

Why? The vast majority of human beings live outside the borders of the United States, so just as a matter of statistics and all other things being equal, most things that Americans are going to want to buy are going to be located in the hands of people who don't live here. It's just been a matter of chance that the West in general and America in particular was so far ahead of everyone else that there was nobody else to make the things Americans wanted. But as Yglesias suggests, that's largely coming to an end not because of bad policy on our part, but because the vastly-more-populated nations of Asia have stopped shooting themselves in the foot (or being shot, by us.) China has billions of people to do labor. Just as a matter of statistics, it means that if you hire something that has to be produced by labor the odds are that a Chinese person will have done most of it even if the Chinese didn't work for so much less.I'm never quite clear what problem trade protectionism is meant to solve. I guess I'm a "conservative" in that sense. If the problem is that a lack of a specific kind of manufacturing job is impoverishing people who have no practical likelihood of learning to do something else, then we need to just give those people money, not spend far, far more in aggregate on unsustainable distortions of the market to provide a kind of inefficient welfare system for steelworkers and auto assemblers. It hardly takes China to put people out of work. You don't see too many buggy-whip manufacturers or typists these days and its not because everybody in America is getting their buggy whips from China.We're always going to have the problem where people will have invested, very expensively in some cases, in skill sets that become completely obviated by technologies. The problem is a society where our very survival is contingent on getting a job. That's the problem.