The "bloated" services sector

DidierMc

We have far too many people involved in useless service jobs that create no wealth ie Marketing, advertising, sales, law, financial services etc

Surely we need to start moving back to a manufacturing based economy or even towards a more efficient primary sector such as fishing and drilling for oil and gas.

One of our big problems is not unemployment but rather that too many people are involved in useless activites that are of no benifit to society.

gandalf

They pay taxes......

PeakOutput

DidierMc wrote: »

We have far too many people involved in useless service jobs that create no wealth ie Marketing, advertising, sales, law, financial services etc

Surely we need to start moving back to a manufacturing based economy or even towards a more efficient primary sector such as fishing and drilling for oil and gas.

One of our big problems is not unemployment but rather that too many people are involved in useless activites that are of no benifit to society.

emmmmmmm no

what we need to do is promote entrepeneurship and innovation so that new start ups begin exporting goods all over the world and bringing other countries wealth to our shores

the services sector is vital to this type of thing although right now yes im sure it is bloated

going back 20 years to a manufacturing economy or even further to a farming or fisheries based economy is not a good idea

ClayDavis

Are all non-manufacturing jobs valueless then? How do you define valueless?

DidierMc

deadtiger wrote: »

They pay taxes......

So? If I hired lads to dig a whole in the ground and fill it back up again they would pay tax. It still wouldn't be productive.

DidierMc

ClayDavis wrote: »

Are all non-manufacturing jobs valueless then? How do you define valueless?

No I never said that. of course you need a service sector. but what I'm saying is that the service sector is far too big and if it continues this way we will begin to run up huge trade deficits like the US did when it moved to an almost entirely service economy.

PeakOutput

DidierMc wrote: »

So? I I hired lads to dig a whole in the ground and fill it back up again they would pay tax. It still wouldn't be productive.

if no1 is hiring them they wont get paid, someone is obviously still availing of their services, ie there is a demand so whats the problem?

DidierMc

PeakOutput wrote: »

if no1 is hiring them they wont get paid, someone is obviously still availing of their services, ie there is a demand so whats the problem?

Do you not believe a persons labour should be used in a useful way? Or is the purpose of labour just to get paid?

thebaldsoprano

DidierMc wrote: »

We have far too many people involved in useless service jobs that create no wealth ie Marketing, advertising, sales, law, financial services etc

Can you provide some figures to back that up?

gandalf

DidierMc wrote: »

Surely we need to start moving back to a manufacturing based economy or even towards a more efficient primary sector such as fishing and drilling for oil and gas.

Manufacturing, what type. Most manufacturing jobs have moved to low cost economies like Eastern Europe & China. Are we going to drop our costs to compete with those?

Fishing is being controlled heavily as well due to dwindling fish stocks. I think that might not be a runner either.

Drilling for Oil and Gas, sure if our government take a larger share of the spoils this time maybe. We have to find the oil/gas fields first.

Any other ideas?

PeakOutput

DidierMc wrote: »

Do you not believe a persons labour should be used in a useful way? Or is the purpose of labour just to get paid?

so you want to force people into other areas?

dan_d

Ideally, yes, a manufacturing economy could potentially make us a lot stronger economically, rather then an economy that's weighted towards tertiary sector employment (which I don't believe ours is right now).
But you can't just write off every other job out there as useless.....we need a rounded economy, one that involves all sectors, not just manufacturing. I wouldn't call law and financial services useless either - they would still exist in a manufacturing economy, as would sales/advertising etc.
It's a very sweepng statement.

DidierMc

thebaldsoprano wrote: »

Can you provide some figures to back that up?

Well I don't have figures on how much is spent on advertising gloabbally. But I'm sure it's massive. And it's all a complete waste of both capital and labour. What is advertising except convincing people to buy products and services they don't need or want? If a product is good it should be able to sit on a shelf and sell itself.

gandalf

DidierMc wrote: »

Well I don't have figures on how much is spent on advertising gloabbally. But I'm sure it's massive. And it's all a complete waste of both capital and labour. What is advertising except convincing people to buy products and services they don't need or want? If a product is good it should be able to sit on a shelf and sell itself.

That is a very broad brush you are painting with.

So is that every service and every product that's advertised that people don't need? Or do you mean some products and some services?

DidierMc

deadtiger wrote: »

That is a very broad brush you are painting with.

So is that every service and every product that's advertised that people don't need? Or do you mean some products and some services?

Well give me an example where advertising helps provide people with better and cheaper products?

Eliot Rosewater

People voluntarily set up advertising agencies, other people voluntarily work for them, and other people voluntarily pay them for their services.

Yet you would seem to prefer a situation where you step in and prevent these people from engaging voluntarily with each other, just so society will resemble your overarching blueprint.

No thanks.

Oafley Jones

deadtiger wrote: »

Drilling for Oil and Gas, sure if our government take a larger share of the spoils this time maybe. We have to find the oil/gas fields first.

Not to mention Ireland can't afford to carry out the risk of drilling exploration. Each test drill costs €100million and we've a strike rate of 6%. Not good odds, hence the poor deal the government got with Corrib.

thebaldsoprano

DidierMc wrote: »

Well I don't have figures on how much is spent on advertising gloabbally...

Okay, well how about some on the number of people employed in marketing, advertising, sales, law, financial services etc in Ireland?

Surely you have these given that you claimed:

DidierMc wrote: »

We have far too many people involved

ClayDavis

DidierMc wrote: »

it's all a complete waste of both capital and labour. What is advertising except convincing people to buy products and services they don't need or want? If a product is good it should be able to sit on a shelf and sell itself.

So, people are not responsible for what they spend their money on? It's all just poor Joe Citizen brainwashed by evil Madison Avenue types? I think it's this sort of abidcation of personal responsibility that got us into the mess we're in now.

DidierMc

thebaldsoprano wrote: »

Okay, well how about some on the number of people employed in marketing, advertising, sales, law, financial services etc in Ireland?

Surely you have these given that you claimed:

I think it's a fair point to say that alot of the jobs in Ireland do not create new wealth but merely change it from one form to another.

syklops

Manufacturing is generally low paid low skilled. Marketing/Advertising, legal, and financial are skilled, usually highly paid jobs.

If the entire 5 million population of Ireland were working in Intel, earning between 25k and 35k a year, the tax take from it would be a hell of a lot less than if the entire population was working as advertising execs earning 70k+. Considering you may more tax the more you earn, the tax take would be double than if everyone was on 35k.

I dont see where your 'Its wasteful' argument is coming from. If Irish people made the best adverts, then companies from other companies would come here and pay Irish people good salaries to come up with advertising campaigns for them. Some of that money would go into the exchequer, some would go into the economy(If your on 70K then you will spend money on nice things right?), and some would go into savings accounts.

If instead Irish people were just good for standing on an assembly line, screwing in screws, other companies would go : "The Irish are great on assembly lines, but if we move to India, we can get 5 indians to work, for the cost of one Irish guy so Bangalore he we come!".

A healthy economy is one where there is not a dependence on any one industry. While the Celtic Tiger was a boom, it wasnt healthy as we had an over dependence on the building industry.

zootroid

DidierMc wrote: »

I think it's a fair point to say that alot of the jobs in Ireland do not create new wealth but merely change it from one form to another.

Please explain

syklops

DidierMc wrote: »

I think it's a fair point to say that alot of the jobs in Ireland do not create new wealth but merely change it from one form to another.

Thats how economics works. The movement of money. I cant think of any industry that makes money out of thin air. Apart from the manufacturing of Counterfeit notes that is

thebaldsoprano

DidierMc wrote: »

I think it's a fair point to say that alot of the jobs in Ireland do not create new wealth but merely change it from one form to another.

Yeah, but I wasn't disputing that.

I was asking for figures to back up your claim that:

DidierMc wrote: »

We have far too many people involved in useless service jobs that create no wealth ie Marketing, advertising, sales, law, financial services etc.

RichardAnd

DidierMc wrote: »

We have far too many people involved in useless service jobs that create no wealth ie Marketing, advertising, sales, law, financial services etc

Surely we need to start moving back to a manufacturing based economy or even towards a more efficient primary sector such as fishing and drilling for oil and gas.

One of our big problems is not unemployment but rather that too many people are involved in useless activites that are of no benifit to society.

Marketing and advertising are a huge industry and companies spend billions every year because without them, believe it or not, even the most ground breaking product will make no money because no one will know what it is or how it can help them.

And besides, all jobs create wealth to an extent. If you have 500 euros a week coming into your pocket, you can give some of it to a retail outlet in exchange for goods. They in turn could hire more staff. An economy isn't simply an onion where you can strip off layers, it's more like a woven piece of cloth, pull out a thread and the thing will start to unravel.

DidierMc

RichardAnd wrote: »

Marketing and advertising are a huge industry and companies spend billions every year because without them, believe it or not, even the most ground breaking product will make no money because no one will know what it is or how it can help them.

And besides, all jobs create wealth to an extent. If you have 500 euros a week coming into your pocket, you can give some of it to a retail outlet in exchange for goods. They in turn could hire more staff. An economy isn't simply an onion where you can strip off layers, it's more like a woven piece of cloth, pull out a thread and the thing will start to unravel.

That makes no sense

johnnyskeleton

DidierMc wrote: »

So? If I hired lads to dig a whole in the ground and fill it back up again they would pay tax. It still wouldn't be productive.

I think the point is that the fact that someone is prepared to pay for that gives it a value. If that service was worthless, you wouldn't pay for it and thus there would be no one doing the job.

Suppose I set up a service e.g. dog walking. If people pay me enough to live off of from walking their dogs, then it is not for you to say that it is not a productive service. Sure, you could say to the Irish people "walk your own dogs and use the money you save to invest in an iron foundry" but that's not how the system works.

As regards advertising, Galbraith made the point in the Affluent Society, that advertising increases demand, and while there is a philosophical argument as to whether this artificial demand means we buy useless trinkets etc, on a macro economic level it does provide a benefit.

Equally, financial services can provide a benefit by ensuring the distribution of wealth into the most productive areas. We have recently seen how this can go wrong, but that is not to say that the service in general is valueless.

Finally, law is an important part of business. Law can help enforce agreements between parties, collect unpaid debts, prevent anti-competitive practices and provides a mechanism for dealing with criminal conduct. All of that provides, indirectly and directly, a suitable forum for business to be conducted.

alfa beta

didier - what about services that can be exported?

I'm a copywriter. I write ad copy and marketing material for a number of UK clients. The money I earn and spend here in the Irish economy is for the most part money that comes from the UK.

We're not all 'valueless' you know.

DidierMc

johnnyskeleton wrote: »

I think the point is that the fact that someone is prepared to pay for that gives it a value. If that service was worthless, you wouldn't pay for it and thus there would be no one doing the job.

Suppose I set up a service e.g. dog walking. If people pay me enough to live off of from walking their dogs, then it is not for you to say that it is not a productive service. Sure, you could say to the Irish people "walk your own dogs and use the money you save to invest in an iron foundry" but that's not how the system works.

As regards advertising, Galbraith made the point in the Affluent Society, that advertising increases demand, and while there is a philosophical argument as to whether this artificial demand means we buy useless trinkets etc, on a macro economic level it does provide a benefit.

Equally, financial services can provide a benefit by ensuring the distribution of wealth into the most productive areas. We have recently seen how this can go wrong, but that is not to say that the service in general is valueless.

Finally, law is an important part of business. Law can help enforce agreements between parties, collect unpaid debts, prevent anti-competitive practices and provides a mechanism for dealing with criminal conduct. All of that provides, indirectly and directly, a suitable forum for business to be conducted.

You can't build an economy on walking dogs. Walking dogs won't get this country out of recession.

RichardAnd

DidierMc wrote: »

That makes no sense

Care to tell me why?

Amhran Nua

deadtiger wrote: »

Manufacturing, what type. Most manufacturing jobs have moved to low cost economies like Eastern Europe & China. Are we going to drop our costs to compete with those?

No they haven't, Germany was only overtaken as the world number one exporter early this year. Most of the top ten exporters of manufactured goods are developed countries.

Labour intensive manufacturing will move and has moved to developing countries, capital intensive manufacturing, more technical stuff, is in little danger.

PeakOutput

DidierMc wrote: »

That makes no sense

just because you dont understand something dosnt make it senseless what he said makes perfect sense

PeakOutput

DidierMc wrote: »

You can't build an economy on walking dogs. Walking dogs won't get this country out of recession.

your being deliberately dense because you can see how wrong your op was

going back to low paid line manufacturing jobs is the completely wrong move, that dosnt mean our country wont be producing anything there are plenty more things to be made then cheap plastic cups and teddy bears

RichardAnd

PeakOutput wrote: »

your being deliberately dense because you can see how wrong your op was

going back to low paid line manufacturing jobs is the completely wrong move, that dosnt mean our country wont be producing anything there are plenty more things to be made then cheap plastic cups and teddy bears

I think you're wasting your time man. This guy is ranting on in another thread about this and that. My guess is he's either a troll or he's just looking for a fight.

SeanW

Komrade DidierMc's excellent grasp of economics continues to shine.

useless service jobs that create no wealth ie Marketing, advertising, sales, law, financial services etc

Huh? People are employed in these jobs because people and businesses are prepared to pay for their services. This is almost the textbook definition of wealth creation.

Most manufacturing has moved to the Far East, where the Chinese etc work for sometimes less than $10 per week and are often forced to work 18 hour days. We cannot compete with this, realistically. Ergo, we find something we can sell, such as the service sectors you mention, as well as high value goods, Research & Development, and certain other export niches.

Ireland also has a near €40bn Balance of Trade surplus.
http://www.cso.ie/statistics/botmaintrpartners.htm

We do not however, have a Russian/Saudi style reserve of fossil fuel energy by most analyses, so any government expenditure in this area might not yield much return if any. Even if we did, it would make little sense to retool the economy for this because fossil fuels are limited in volume, i.e. they will eventually run out, and we're back where we started, only worse.

Frederich A. Hayek wrote:

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

Back to the drawing board Comrade :cool:

Amhran Nua

SeanW wrote: »

Most manufacturing has moved to the Far East

Once again, no it hasn't.

List of countries by exports
— European Union (minus internal trade) $1,525,000,000,000
1 People's Republic of China $1,202,000,000,000
2 Germany $1,121,000,000,000
3 United States $1,057,700,000,000
4 Japan $581,000,000,000
5 Netherlands $499,000,000,000
6 France $475,000,000,000
7 Italy $405,000,000,000
8 Belgium $370,000,000,000
9 South Korea $364,000,000,000
10 United Kingdom $351,000,000,000
— Hong Kong $330,000,000,000
11 Canada $316,000,000,000

The only place that could be called "developing" in there is China, which only overtook Germany a month or so ago, every other country has similar wage levels to ourselves.

johnnyskeleton

Amhran Nua wrote: »

Once again, no it hasn't.

List of countries by exports
— European Union (minus internal trade) $1,525,000,000,000
1 People's Republic of China $1,202,000,000,000
2 Germany $1,121,000,000,000
3 United States $1,057,700,000,000
4 Japan $581,000,000,000
5 Netherlands $499,000,000,000
6 France $475,000,000,000
7 Italy $405,000,000,000
8 Belgium $370,000,000,000
9 South Korea $364,000,000,000
10 United Kingdom $351,000,000,000
— Hong Kong $330,000,000,000
11 Canada $316,000,000,000

The only place that could be called "developing" in there is China, which only overtook Germany a month or so ago, every other country has similar wage levels to ourselves.

Are those statistics for manufacturing exports only or what? Because if they're not, I'm not sure how gross exports and manufacturing are linked. The fact that Hong Kong has such a high level of exports in the above list suggests that it is probably gross exports not manufacturing exports.

Amhran Nua

johnnyskeleton wrote: »

Are those statistics for manufacturing exports only or what? Because if they're not, I'm not sure how gross exports and manufacturing are linked. The fact that Hong Kong has such a high level of exports in the above list suggests that it is probably gross exports not manufacturing exports.

It also include re-exports, but to look at the numbers its literally impossible for China to supply the likes of even Germany with what it requires in manufactured goods. There is plenty of manufacturing in developed countries, thats what economies like Germany depend on, from 2008:

It was said that Germany no longer had a future as a manufacturing country, and that jobs represented its last export product.

But reality has refuted the theories, while Germany's economy continues to grow. Virtually all production indicators are pointing upward. The manufacturing sector is expected to grow by four percent this year, a rate more than twice as fast the economy as a whole.

For years, gross value added has grown faster in manufacturing than in the service sector. More importantly, the Association of German Chambers of Industry and Commerce (DIHK) estimates that industrial companies will be responsible for 100,000 of the anticipated 300,000 new jobs that will be created in Germany this year.

Even smaller countries with a closer profile to Ireland like Denmark have billions in exports and employ tens of thousands of people in turbine manufacture. To say that manufacturing is a dead end would therefore be a mistake, and we've had enough of those in this economy.

Low wage countries like China do labour intensive stuff well, or at least they will until wages start rising (and they are already increasing, with companies moving to places like Vietnam). Capital intensive, higher end stuff can be a good place to be.

thebaldsoprano

johnnyskeleton wrote: »

Are those statistics for manufacturing exports only or what? Because if they're not, I'm not sure how gross exports and manufacturing are linked. The fact that Hong Kong has such a high level of exports in the above list suggests that it is probably gross exports not manufacturing exports.

Looks like they're for all exports, but this article seems to confirm Amhran Nua's point:

Top manufacturing nations for 2008 were:

1. US
2. Japan
3. China
4. Germany
5. France
6. UK
7. South Korea
8. Italy
9. Brazil
10. Canada

Liam Byrne

RichardAnd wrote: »

Marketing and advertising are a huge industry and companies spend billions every year because without them, believe it or not, even the most ground breaking product will make no money because no one will know what it is or how it can help them.

Unfortunately for the most part, most advertising doesn't even remotely try to do this.

Motoring ads show cars "transforming" into other objects, or surfing on the water, and viewers are given absolutely no informational content about the item or "how it can help them".

Ads for houses showed a "lifestyle" image, with no indication of the product being sold.

Most video games have small print saying "not actual game footage".

There are hundreds of examples of vacuous, pointless and downright misleading advertising.......I'm still trying to get the seawater out of my Astra, and Opel's quality control dept have refused to reply to my complaint

Eliot Rosewater

SeanW wrote: »

eople are employed in these jobs because people and businesses are prepared to pay for their services. This is almost the textbook definition of wealth creation.

But SeanW, how are we to know that the textbooks themselves aren't "useless"?

cson

DidierMc wrote: »

What is advertising except convincing people to buy products and services they don't need or want?

Someone was watching Brad Pitts speech in Fight Club.

thebman

Liam Byrne wrote: »

Unfortunately for the most part, most advertising doesn't even remotely try to do this.

Motoring ads show cars "transforming" into other objects, or surfing on the water, and viewers are given absolutely no informational content about the item or "how it can help them".

Ads for houses showed a "lifestyle" image, with no indication of the product being sold.

Most video games have small print saying "not actual game footage".

There are hundreds of examples of vacuous, pointless and downright misleading advertising.......I'm still trying to get the seawater out of my Astra, and Opel's quality control dept have refused to reply to my complaint

Yes but the ad made you aware of the product and once you are aware, you can google and get the facts or talk to the man in the garage about what the car can actually do.

You don't see many people buying cars that have never been advertised on TV. Even the so called budget cars are advertised.

The strength of marketing and brand names is best demonstrated by the number of people that don't shop at Aldi/Lidl because they don't recognise the brand names on offer.

The likes of Tesco offer brand name goods and the Tesco Finest range to try to get people attracted to their goods.

People are more reluctant to purchase something they never heard of even if the ad offered no useful information.

astrofool

DidierMc wrote: »

So? If I hired lads to dig a whole in the ground and fill it back up again they would pay tax. It still wouldn't be productive.

You're confusing 80% of public sector jobs with private jobs again.

I do like your analogy of digging a hole, it works on two levels, that of the mess the unions are getting themselves in, and secondly on the mountains of paper that they push around, emptying and filling the metaphorical cubby hole.

RichardAnd

Liam Byrne wrote: »

Unfortunately for the most part, most advertising doesn't even remotely try to do this.

Motoring ads show cars "transforming" into other objects, or surfing on the water, and viewers are given absolutely no informational content about the item or "how it can help them".

Ads for houses showed a "lifestyle" image, with no indication of the product being sold.

Most video games have small print saying "not actual game footage".

There are hundreds of examples of vacuous, pointless and downright misleading advertising.......I'm still trying to get the seawater out of my Astra, and Opel's quality control dept have refused to reply to my complaint

Yeah true but those adds are at least informing the viewer that the product actually exists. IBM adds show an almost satirised vision of business where something is wrong and then we are told that it's time for IBM. It says nothing about what IBM do or how they do it but the viewer will be reminded that IBM exist.

gandalf

Amhran Nua wrote: »

Even smaller countries with a closer profile to Ireland like Denmark have billions in exports and employ tens of thousands of people in turbine manufacture. To say that manufacturing is a dead end would therefore be a mistake, and we've had enough of those in this economy.

Sorry I should have specified that it was low end high intensity manufacturing that I was talking about when I poo-pooed the OP's idea.

Of course high tech manufacturing is something that we can do and should do. The problem is we need to be investing a lot more in R&D or creating the atmosphere to allow investment.

thebman

deadtiger wrote: »

Sorry I should have specified that it was low end high intensity manufacturing that I was talking about when I poo-pooed the OP's idea.

Of course high tech manufacturing is something that we can do and should do. The problem is we need to be investing a lot more in R&D or creating the atmosphere to allow investment.

We also need the people with those skills. That means introducing FAS courses for the industries we hope to attract.

At the moment, I don't see FAS trying to encourage these courses on people from construction backgrounds who will most likely never get work in construction again or at least for a long time.

Its a case of the government leaving these people to help themselves which one might argue they should be doing anyway but I'm sure they are trying. It isn't easy for a bricklayer to know what high end manufacturing the government is going to push to invest in Ireland though so the government has to help steer the initiative.

alastair

DidierMc wrote: »

Well I don't have figures on how much is spent on advertising gloabbally. But I'm sure it's massive. And it's all a complete waste of both capital and labour. What is advertising except convincing people to buy products and services they don't need or want? If a product is good it should be able to sit on a shelf and sell itself.

What use is gold to anyone outside fairly limited insulation and conductive applications? Yet there's a massive industry and economy built around the acquisition of gold. Advertising is just another tool of commodification - turning often arbitary elements, objects, relationships, and ideas into commercial products. The essential 'goodness' of Coca Cola isn't the basis of it's value as a commodity - it's the manufactured brand values that matter, not the fizzy sugar water. That's why advertising costs lots - it generates massive economic revenues - for the winners in the game.

Nidot

DidierMc wrote: »

Well I don't have figures on how much is spent on advertising gloabbally. But I'm sure it's massive. And it's all a complete waste of both capital and labour. What is advertising except convincing people to buy products and services they don't need or want? If a product is good it should be able to sit on a shelf and sell itself.

So you mean convincing people to buy the products which are manufactured in this new manufacturing economy you talk of.

And services is merely the use of the products manufactured. Like how do you account for the products manufactured, the financial services required for these manufacturing companies, etc.

It's not as simple as 'oh, lets just manufacture' an economy is made up of many facets which all work depending on the other aspects of the economy.

My accounting job has nothing to do with Ireland. I am essentially generating an export by choosing to be located here. I used to be based in London but chose to move back and bring my job with me.

I pay my taxes to the Irish government and buy goods and services in the local economy - what is so terrible about that?

ei.sdraob

Deleted User wrote: »

My accounting job has nothing to do with Ireland. I am essentially generating an export by choosing to be located here. I used to be based in London but chose to move back and bring my job with me.

I pay my taxes to the Irish government and buy goods and services in the local economy - what is so terrible about that?

well said

the problem the OP has is that your job wasnt assigned to you from the Ministry of Plenty in their latest 5 year plan