Last week I attended an international conference and had many conversations on economics primarily with participants from the European Union. The U.K. colleagues have very similar impressions to most Americans - the foundation of an economy is production. I would not label the U.K. attitude glum, but it was not optimistic.
New Employment Numbers and the Future of the Economy explains this recession is structural - when the economy picks up, things will not be the same. A sobering prediction is that more workers will be contract workers, quite possibly leading to more frequent recessions because the economy will be more brittle and less robust. Temporary employees will not be limited to lower wage scales, but extend throughout the economy. And oh yes, the simple prescription that unemployed workers need only be reeducated may finally be debunked. The San Diego Examiner explains that the developing world now has respectable universities. Education, long the crown jewel of America, has been transplanted offshore.
Back to the U.K. The November 30, Morgan Stanley Euroletter warns, UK [could become]the first big economy to suffer a financial crisis. It is possible the lagging economy will lead to Parliament gridlock, spiraling into poorer economic performance. Reader comments to the Telegraph express both angst and common wisdom. Common thinking is that economies need to produce something.
So is there optimism for the American economy? Yes - unlike much of the world, America can feed itself. It also has substantial energy reserves in the form of coal which could drastically balance its deficit instead of trading dollars for foreign petroleum. It will take technology to make those energy resources 'green', but it is worthy of national investment.
Back to the title question - is a service economy sustainable? Not with any mathematics I know.
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