A couple of days ago Buttonwood over at The Economist touched on my favourite topics: the growth of the Western service industry, the death of Western manufacturing, and the deep interconnectedness of the global economic system. His hook was that most claims of parasitism are at best not-straightforward, and at worst are unfounded. From The Economist:
Are all manufactured goods intrinsically superior to services? Would you rather have a wig or a haircut? Just as there is only so much food we can healthily consume, there is only so much physical stuff we need. We have service-dominated economies because people like to consume services from TV programmes through video games to leisure activities like eating out. When General Motors sells a car, the chances are that it is selling it to someone who works in the services sector; so who is the parasite in this situation?
At the national level, we can say that most countries cannot produce all the things they need (or at least desire). Britain, for example, needs food from abroad. So it needs industries that can export stuff in order to generate the earnings that pay for imports. Here the bankers start to look a lot more valuable; Britain’s invisible earnings from financial services are highly valuable.
A more realistic question might be “would I rather have a factory making hair clippers, or a cabal of lawyers, financiers and bureaucrats who readily declare themselves too-big-to-fail and hose themselves down in taxpayers’ liquidity?”