Wow, America's economy is almost 80% services.?

Question

Is this OK? What ever happened to manufacturing (yea, other than outsourcing)?

Should we all sell insurance to eachother?

Answer 1

THE ADD-VALUE CHAIN
Former Fed Chief Alan Greenspan said around the 1980s that the US economy was "getting lighter", meaning the weight of total production (GDP) was getting lighter. The composition of the US economy is indeed mostly services. One criterion for a nation to become a developed country is that it has a heavy focus on the tertiary [services] and quaternary sectors [investment-related]. Services are worth more than manufacturing in general because it is through services that the manufactured goods can be delivered. Goods without complimentary services are worthless. Services tend to be higher up on the add-value chain than manufactured goods because


EXAMPLE:
Coffee is the second most consumed beverage in the world (more than 500 billion cups consumer every year), with tea being the only beverage higher in consumption. It is a common question of non-economists to ask why coffee growing nations such as Africa are so poor if they supposedly control one of the most valuable and sought-after commodities in the world. At each stage, from initial production to the final delivering of coffee to the consumer, I shall include the total price [TP] (not real, of course). Prices are assumed to be converted to USD.

1.) 10,000 kg of raw coffee beans from Africa bought for $2.50 per kg.
[TP= $25,000]
2.) Transported to coffee roasters in Italy for a Fright-In fee of $5,000.
[TP = $30,000]
3.) Bought by Starbucks (in US) from roasters for $3.50 per kg, for a total of
[TP=$35,000]
4.) Transported to Starbucks (in US) for a Frieght-In fee of $6,000.
[TP=$41,000]
5.) Coffee is ground for Starbucks for a fee of $1 per kg. [TP=$51,000]
6.) Coffee sold to consumers at $4 a cup, with less than 100g of coffee grind needed for each cup of coffee.

As you can see, a substantial proportion of the value from the final product is added by services, which is the case even with heavily commoditised goods (sometimes primary produce does not apply as to certain circumstances, eg. local farmer delivering his produce to the flea market for him to sell personally).

[Note: I do not in any manner purport to know anything about coffee manufacture, Starbucks, or just pretty much anything in the above example. Lol.]

Answer 2

Shifting of economy from manufacturing to services is considered progressive and most developed nations have gone through this transition. Also, the developing economies are also passing through this phase.Services industries also generate highest self employment thereby increasing personal incomes and a better standard of living.Yes,why can't you sell me life insurance and in turn I insure your foreign exchange earnings(non life insurance,through hedging of foreign currency) ?It's the done thing and were better off instead of both of us working alternate night shifts in a factory on a fixed salary.

Answer 3

we're outsourcing all the hard and back-breaking jobs... so what if we have to sell services to each other.. as long as we make money, i'm cool with it..

Answer 4

Seriously! Would you rather push paper or vats of molten steel?