The foundation of economic progress is not debt. From Kurt Cobb at oilprice.com:
- It seems increasingly apparent that the focus on “finance” will be less rewarding and the focus on “stuff” will become more important to the nations of the world.
- In advanced countries, the percentage of the total economy devoted to services has long exceeded that devoted to goods.
- All service industries remain completely dependent on the raw materials and manufactured goods sectors to function.
As a military conflict rages in Ukraine between Russia and what the Russian government calls “the West” (apparently meaning NATO allies and particularly the United States), there is a parallel economic battle between “stuff” and “finance.” Both categories are affected by economic sanction regimes imposed by each side. But there is a striking difference in what each side has to sell. In advanced countries, the percentage of the total economy devoted to services has long exceeded that devoted to goods. This is a reflection of the increasing productivity of those working in manufacturing, mining, agriculture, forestry and fishing who make it possible for so many people to work in service industries. These raw materials and goods industries provide all the stuff those of us in the service economy require to stay alive and perform our services.
It is a testament to the remarkable rise in productivity of the raw materials and goods industries that in the United States, for example, the service sector accounts for almost 77 percent of all economic activity. In France, the percentage is about 70 percent. In Russia the percentage is a little lower, about 68 percent, which may reflect Russia’s relatively large mining, forestry, and agriculture inputs to its economy.