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Aug 21, 2009

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Travis Greene

Good thing we can generate wealth without actually producing anything, huh?

Michael W. Kruse

First, while percent of the labor force has been declining, actual output of manufactured goods has steadily been increasing (at least until the recession). That means that production per worker has been soaring (making more and more with fewer and fewer workers). Technology just keeps making workers more productive but wealth gains from technology tend to disproportionately benefit the wealthy who own the stock in the such enterprises. I think that has been the cause for the healthy growth in living standards in recent years but high growth among the wealthiest.

Second, we're still making stuff. It's just that now we transform bits instead of atoms.

LeVon Smoker

Travis, are you referring to the "alphabet soup" instruments of the last few decades? Ie, CMOs, CDOs, MBSs, CDSs. Or maybe another name would be "the great confidence game."

Fascinating read here: http://nymag.com/news/business/55687/>My Manhattan Project: How I helped build the bomb that blew up Wall Street

Michael W. Kruse

LeVon, there is the atom economy and the bits economy. You're referring to the fairy dust economy. :-)

LeVon Smoker

Michael: True enough. Unfortunately, they all do a fair amount of mixing together such that the more honest economies are seriously influenced by the dishonest ones, ie, Citibank's purchase of the Bank of Mexico which is known to be a drug money launderer.

Jesse

Why all the romance about manufacturing jobs? Last time I checked (I have no personal experience, thank goodness) manufacturing jobs were hard, dirty, and wore your body out. As Michael points out, our output of manufacturing has continually risen, almost the inverse of this graph - we have been producing more and more with fewer and fewer people.
And by the way - those jobs that remain are easier and higher paying because they require more technical prowess (on the whole).
So, we have found a way to manufacture more goods with less labor, in a cleaner, safer environment, fewer injuries and accidents, and less long run health problems due to lifetimes of manual labor. Why are we so nostalgic?

The data on manufacturing increases come from the 2009 Economic Report of the President and are available in table B-51 at http://www.gpoaccess.gov/eop/tables09.html#erp3
(and do note that these data are adjusted for inflation).

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