Essay on Our Transforming Economy

705 Words 3 Pages
As the stock market seemed rebound back from the worse recession since the Great Depression, the situation on the ‘Main Street’ hasn’t improved much. The unemployment rate is hovering around 10%, and over 6 million of people are jobless for more than 27 weeks (Employment Situation Summary, 02/05/2010, Bureau of Labor Statistics). Some economists believe strongly that it is quite possible those lost jobs won’t return to pre-recession levels at any point over the next 10 years (A decade of high unemployment is looming, 12/27/2009, Associated Press). As the government is scrambling to try either ‘create’ or ‘save’ jobs, maybe we should take a step back, and try to understand some fundamental issues about the economy crisis.
U.S. Census
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It is important to note that these four sector categories are also representing the only four essential things humans can do economically: product food, manufacture goods, provide service, and do nothing.
Since GWU sector is the only one, out of those four major sector categories, that is not based on added value production (it is based on taxes-financed consumption), it doesn’t contribute to employment opportunities in any sustainable fashion. On the other hand, with the accelerating productivity growth (due to technology advancement), it is taking less labor resource to produce cheaper goods for both agriculture and industrial sectors.
The service-producing industry has much lower productivity growth, compare to agriculture and industrial sectors. However, it is experiencing the same salaries and wages growth rates across all other sectors, which makes the service even more expensive to obtain. Based on the nature of the free market, consumers will try to substitute cheap goods for expensive services.
As the result of that, we started to see the changes in consumer behavior regarding services. People are buying DVDs instead of watching movies in the theater, buying new shoes instead of get the old one repaired, online banking instead of going to local branch, etc.
When the basic human economic activities have been exhausted, the economy started to evolve. This ‘self service’ phenomenon is more than just a simple…