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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Robert Douglas who wrote (6014)5/10/2004 6:25:34 PM
From: yard_man  Read Replies (1) of 116555
 
the specific issue addressed in the Wall Street Journal has in fact been debunked in detail if you subscribe to contrary investor -- he looked at increases in jobs by sector a little while back -- job gains are occuring in lower wage positions -- but there is a larger issue. How more jobs are moving into the service sector -- you have to know how to distinguish macro/micro effects and short/long run effects. For the guy who get a service sector job after losing a mfring job s.t. the service job is paying more (it doesn't happen this way in reality, because the guy that lost the mfring job was probably being paid more than the average today and probably, if he is "lucky" enough to get a job in the service sector, finds one paying less than the average for services) -- well suppose it does happen that way -- he is now in services and making a bit more money -- good for him, right?? It's good from a micro perspective -- but what about the shifting of large numbers of jobs from mfring to services -- is it simply the aggregate growth in wages that tells us whether everyone is better off?? Of course not!! First, even in the short run prices may be increasing more rapidly for what the wages are spent on -- there may be benefits to consider -- but underneath it all, is the long run health of the economy

I would posit that the financial services, banking, mortgage and other associated services -- making up an ever larger and larger size of the economy is not making us richer, except perhaps in nominal terms --
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