There are some notions in here that I’m sure I will muddle, even though the Midwesterner has simplified them for me, but Spence apparently argues that the economy consists of tradable and nontradable goods. (Somewhat confusingly to me, services are a subset of goods in these definitions). Tradable goods appear to hold their value across space (e.g. most manufactured goods). The value of nontradable goods appears to be dependent on proximity between provider and consumer (taxis, haircuts, and healthcare).
Automation and competition against cheap foreign labor has diminished the number of Midwesterners who can be employed producing tradable goods. Focus has been made on nontradable goods.
Many Midwestern cities see their post-industrial future in a combination of health care, education and high-end manufacturing. They may be chasing an impossible dream.
This is a conclusion drawn from recent studies that argue that manufacturing — high-end or not — isn’t coming back, at least as a major source of jobs, while growth in jobs in health care and education is going to slow down or stop, mostly because the governments that fund it are deeply in debt.
For many Midwestern cities, this is like telling them there’s no Santa Claus.
The problem may be that Luddite fears could be coming to pass. Technology is killing jobs. We’re still producing as much as ever – more even. The economy is working just fine. It just doesn’t include as many people.
This has me noodling about the nature of wealth, the nature of money, and the nature of work. I think there is an underlying premise that we can’t sustain a middle class society if we all just go around giving each other haircuts or whatever? The government can’t just give away money. Sounds reasonable, but why not? Because we have to eat and have shelter; we need someone to make the stuff. Who is going to do the hard work to farm and make stuff when they can just get free money from the government? People will stop working, you’ll have more demand than supply, money will be worthless.
But, I wonder. Automation suggests to me that these goods are easier to make. What happens if government is essentially printing money to pay for these non-tradable goods (healthcare and education, for example) and the money supply enters the economy that way instead of through the Federal Reserve?
I think of money as a way of storing value, like a battery stores energy. Instead of trading this service for that product directly, you use money so that you can get more people in on the game at once. Maybe you cut hair and you don’t know a widget producer who needs a haircut. But, if you give a haircut to a lawyer who writes a contract for a boat maker who sells a pontoon to a widget maker, the potential for agreeable exchanges expands exponentially. The key is to make sure that people trust that the money they receive in exchange for their service holds value long enough that they get a fair trade when they’re ready to spend their money.
Seems like if people are willing to work there should be a way to let them do so in a way that lets them hook up with other people who also want to work and let them trade one thing for another. Unemployment due to reasons other than laziness seems like a failure of coordination more than some inevitable byproduct of technology.
I’m mostly thinking out loud with this post, so take it for whatever it’s worth.