G'day,
Rome when? They had a perfectly workable service economy for hundreds of years. It was bult on the back of slavery so it wasn't equitable or fair but it certainly worked. A prostitute cost around $0.50. $2.00 if he or she was actually pretty good. Food and cloth was cheap enough that as long as you held some form of employment you had food and clothing. Accommodation was another thing altogether. They had shortages but you coped.
Medical Services. Pretty much all of Europe and a great deal of other companies have universal "fully paid" medical systems. This includes New Zealand, Australia. With some exceptions it actually works.
These so called welfare states manage to look after the poor and sick and unfortunate a hell of a lot better than the US and without it destroying their economies to do it. Indeed, many countries actually have surpluses in their economies.
Manufacturing is not the reason that countries go broke. China is currently the manufucterer for everyone. I can buy products in that country, ship them to mine, unload them etc, at ONE TENTH of what they would cost for me to make here. Funny thing is that the factories I deal with have had to increase wages over and over in the last five years from 200 yuan, to 400 yuan, to 600 yuan and now all the way up to 1200 yuan a month. Now this isn't much money but the jump is. But funnily enough I knew our prices would not go up for a very long time because of the slack in the Chinese economy. They did things inefficiently when it was so cheap, hiring an efficiency expert was more expense than just being ineficient. Then machines started to come in. That also improved quality control, as did the insistance of importers such as me for quality control inspectors, refunds on defective goods below very low levels and refusing to buy further products from those factories that failed to provide adequate quality.
This type of movement of manufacturing has been occuring for a couple of centuries now.
The US is in a recession and is a ticking time bomb financially because of factors you didn't mention at all but are extremely important. Your Government never met a pork barrel it could not stuff fuller than it was previously. Your Government runs on money, rivers of it, to elect even lowly Judges. A contested campaign for a Judge, who will earn maybe $120,000 per year is more than $1 million. What moron every thought electing a judge, a DA, a Sheriff, a coroner, dog catcher, etc, etc, was a good idea just took the idea of democracy and thought they would see if they could destroy it completely.
Now look at the money old Obama and Hillary and chewing up. All for a job that pays $500,000. Oh I realise that is what Bill now gets just to make a speach but there is always the chance after all that effort you die or get killed in office. Not a good investment if you ask me.
So every State and Federal elected representative needs to due a great deal of really really stupid things with the people's money to get re-elected.
Could you imagine a method where electoral donations are banned and the candidates are given funds in which to campaign with? This actually happens in many countries. Sounds a bit fairer than Enron donating millions to several politicians doesn't it?
Then you have a military that costs such an enormous amount yet it gives a terrible return for its investment. Instead of making planes that cost $3 billion each, just do what they have done with the B52s and keep fixing them. And even then look at what you want your military for and then pay them enough to actually be proud to be serving for their country. A country that pays their soldiers so poorly that they are eligible for State Welfare automatically, and who comes home from Iraq to find their car repossessed because their loved one had a choice between being late with the payments or feeding the kids because the food got more expensive real quick.
But the biggest doozy of them all! A lot of people don't know this but the US was a terrible investment for most of its existence and is now even worse. It had to borrow a great deal to fight the British and owed debts traditionally in very large amounts until the blessing of WWI came along. Now they wouldn't fight in it because that would mean were really a part of the world but they certainly took all sides' money. It is said that Mr Maxim, the US inventor of self reloading machine gun, was paid around $9 for every single soldier killed in the First World War because the guns were built under licence in Germany, Austria, Britain, France etc.
So for a while the US was out of debt and they even actually entered the war eventually when it was nearly over anyway. The Germans managed to lose because eating frozen turnips just does not keep one healthy and if you do that three years in a row and the supplies of food for the front just dry up then soldiers start to starve and, no more war. The US helped, a little bit, but it was the effectiveness of the British in blockading the Germans more than anything that lost Germany that war.
Because WWI didn't settle anything there was further unrest but the US was a powerhouse of business. Certainly they were huge manufacturers but it wasn't just that that made the US rich. It was the fact that even if something was manufactured in Japan or Mexico the investments was US and the profits flowed by to the US. The US didn't owe the world money. The world owed the US so much, had WWII not come along the US probably would have ended up technically owning almost the whole planet.
The US again didn't actually want to fight, despite the appalling harm the Japanese were doing in China and had been doing for years. It took years before they even decided that they would restrict oil to Japan for such little things as the rape of Nanking where hundreds of thousands of civilians were raped and about two million were murdered. And of course they didn't have to fit in Europe because they didn't have any treaties forcing them to do so, regardless of the devistation the Nazis caused to Poland, as did the USSR to the other half of the country. But once again they were happy to make money out of it. In this case very very large amounts of money.
After the ware there was an economic boom that looked like it would go for ever. The painful adjustment from agrarian enterprises to city enterprises were almost completely missed by the US (the Depression being but a small fraction of what could have actually gone wrong before it had sorted itself out properly).
But somewhere the US forgot that you cannot simply print money if you run out nor can you borrow money from others if you have no means to pay it back. But since the whole world was stuck with the US as its engine, a legacy of WWI and WWII, it didn't matter. The common currency of the world was the US dollar and it didn't matter how astronomical the amounts became or who ridiculous the deficits they just piled up.
It might have been worth going into debt temporarily to crush communism but then the payoff should have been a massive reduction in defence costs but this never happened.
Defence spending is part of a "service" economy as far as I am concerned. It does not produce consumer products or industrial products and its only use, if you do not use Armies like Rome of old to conquer and then collect taxes, is to throw your weight around or to create military equipment that, aside from exercises actually never gets used.
Service economies can and do exist where the country remains economically healthy. Service economies can be based on Tourism or banking or computer services or all manner of things that are not directly goods. You are still producing something. It just isn't something that fits in a box.
Land prices are a big problem in any modern economy and no one has yet to come up with a reasonable solution. You want your citizens to be secure in their old age so they won't spunge on the welfare system so you want them to have a house but if you encourage them to by one when they are young the prices go up and ironically they become too expensive to afford by all but the affluent. It is clear that all over the world residential property prices are too high. In some cases the amounts are around 50% or 70% over what they should be worth as shelter for people with the amenities supplied near them.
I'm not sure anyone has a solution to this one. Hong Kong certainly does not show a good example. Singapore's model isn't all that terrific and Russia's just plain sucks.
But housing busts are cyclical. It is the problem when there are many other fundamentals of an economy that are not very good that you end up with terrible consequencies. Problems such as national debt that just cannot be paid and if even 10% of those owing the debt decided to put the money somewhere else the US would have to declare bankruptcy are the sort of things that, if I was a part of the system that created, the current woes, would keep me awake every night.
This is all just my two cents worth written late at night because I cannot sleep at all.
I do not hate the US in any way and have a great deal of time for its citizens and great respect for its Armed Forces, so please no one think this was just someone bashing the US. But its amazing how clearly others can see what's wrong with the US when the US has no idea. It would also amaze most citizens of the US how much the average person in other countries knows about the US compared to the almost total vacuum of knowledge the other way.
It doesn't take a genius to work out that banning ALL guns except those absolutely necessary and them making them be in a gun safe and the owner licenced would stop 12,000 deaths a year fairly quickly. Would take a while to eventually get the guns out of the country but slowly it would happen.
It also doesn't take a genius to work out that wearing a seat belt keeps you alive yet the US does not seem to think its worth doing or that they have the right to kill themselves. I usually counter that argument with what about the rights of the poor person that might also be involved in what should have been a minor accident or the first responders who have to scrape the bloodied bodies out of the car? Don't they have rights?
It also doesn't take a genius to work out that you must have something really wrong with your system if you claim to be extremely religious and "Just Say No" to drugs and sex is all you need to practice if you happen to have the highest teenage pregnancy rate in the world.
If you live in a country like Britain where the gun deaths, I Believe, are below 100 a year or Australia where compulsory seat belts came in in 1973 and the death toll from car accidents is now lower than it was at the time of WWII, per capita, several times lower than the US, the "rights to bear arms" or to be really lazy so you kill yourself starts to be something out of the files: "Only in America ...".
Regards
Ric
