Proponents of a service economy for America sometimes compare the recent decline in manufacturing jobs to the earlier decline in agriculture jobs. In what way are these two declines different? How might this affect the argument that a shift to a service economy will not reduce our standard of living?

Short Answer

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Answer: The decline in agriculture jobs was mainly driven by technological advancements, which increased productivity and reduced the need for labor. In contrast, the decline in manufacturing jobs resulted from a combination of globalization, outsourcing, and technological advancements. The transition from agriculture to manufacturing provided many job opportunities, whereas the shift from manufacturing to services might not offer the same level of job replacement for those with specific skills or lower education levels. This could lead to unemployment, underemployment, and potential reduction in the standard of living if the new service industry jobs do not provide similar levels of pay, job security, and benefits as the lost manufacturing jobs.

Step by step solution

01

Discuss the decline in agriculture jobs

The decline in agriculture jobs in America was mainly due to advances in technology and automation, which led to increased productivity and a reduced need for labor in farming. This shift eventually allowed fewer people to produce enough food to feed the growing population, and those who lost agriculture jobs moved into other industries, such as manufacturing.
02

Discuss the decline in manufacturing jobs

The decline in manufacturing jobs has been driven by several factors, including globalization, outsourcing, and advances in technology and automation. As companies sought to lower their production costs and access new markets, they moved their manufacturing operations to countries with cheaper labor. Technological advancements also led to increased automation in manufacturing, resulting in reduced demand for human labor.
03

Compare the differences between the two declines

The decline in agriculture jobs was mainly driven by technological advancements that led to an increase in productivity and a reduced need for labor, while the decline in manufacturing jobs has been driven by a combination of globalization, outsourcing, and technological advancements. Furthermore, the transition from agriculture to manufacturing provided many job opportunities, whereas the shift from manufacturing to services might not offer the same level of job replacement, especially for those with specific skills or lower education levels.
04

Analyze the impact on the standard of living

The argument that a shift to a service economy will not reduce the standard of living is based on the idea that new jobs in the service sector can replace the lost jobs in manufacturing, maintaining overall employment levels and income. However, the differences between the declines in agriculture and manufacturing jobs suggest that the transition to a service economy might not be as smooth as proponents might claim. Service sector jobs might require different skills or education levels, which could lead to unemployment and underemployment for those who struggle to adapt. Additionally, many service jobs may not offer the same level of pay, benefits, or job security as manufacturing jobs, potentially affecting the standard of living for those transitioning to these jobs.
05

Conclusion

While there are similarities between the decline in agriculture jobs and the decline in manufacturing jobs, the transition from manufacturing to a service economy may not have the same positive outcomes as the transition from agriculture to manufacturing. This raises concerns about whether a shift to a service economy will indeed maintain or improve the standard of living for Americans, as there may be challenges in replacing the lost manufacturing jobs and ensuring that the new service industry jobs provide similar levels of pay, job security, and benefits.

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In very rough terms, one could attribute the success of American manufacturing to cffective competition on the cost dimension (i.e., via economies of scale due to mass production), the success of German manufacturing to effective competition on the quality dimension (i.e., via a reputation for superior product design and conformance with performance specifications), and the success of Japanese manufacturing to effective competition on the time dimension (i.e., via short manufacturing cycle times and rapid introduction of new products). Of course, cach newly ascendant manufacturing power had to compete on the dimensions of its predecessors as well, so Germany had to be cost-competitive and Japan used cost and quality in addition to time. Thinking in terms of this simple model, that represents global competition as a succession of new competitive dimensions, give some suggestions for what might be the next important dimension of competition.

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