Wednesday, May 04, 2005
Are we overplaying the service-based economy?
There's a great article in this month's American Prospect about Japan. Japan, not China, is the real threat to the US, because they are dominating high-tech, intelligent manufacturing (and their economy is essentially closed to imports). People talk about the end of American manufacturing with a degree of inevitability, because labor is so cheap overseas. And for uneducated, unskilled, simple labor, that's true. But making cell phones and lens and fuel cells and hybrid engines takes very educated workers that are paid very well. Japan is apparently doing a much better job in the high-value manufacturing sector than we are. Every camera on the market is Japanese. And so many components of Boeing's planes are manufactured in Japan that we shouldn't think of it as an American plane. To catch up and create more high wage jobs, we do not need to keep taxes low on wealth. We need to invest in education, particularly higher education. That is one thing Governor Blagojevich understands. His campaign kickoff and victory party were in the high-end steel mill west of Lincoln Park: Finkl and Sons. So let's not try to compete with Chinese manufacturing with ever-lower wages. Let's compete with Japan for ever-higher quality and wages to match.