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Quotation of the Day…

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… is from pages 280-281 of Douglas Irwin’s vital 2017 volume, Clashing Over Commerce; Doug here is writing about, roughly, the half-century following the U.S. Civil War (link added): [P]roductivity growth in non-traded sectors (such as transportation, services, utilities, and communications) was much more rapid than in agriculture and in manufacturing, the sectors more affected by trade.  Productivity growth in the service sector is usually explained by particular technological innovations – such as railroads, electrification, and the telegraph – none of which depended on protective tariffs.  And yet the service sector was key to US economic performance during this period.  As [Stephen] Broadberry (1998) has shown, output per worker in the United States grew relative to that in

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… is from pages 280-281 of Douglas Irwin’s vital 2017 volume, Clashing Over Commerce; Doug here is writing about, roughly, the half-century following the U.S. Civil War (link added):

Quotation of the Day…[P]roductivity growth in non-traded sectors (such as transportation, services, utilities, and communications) was much more rapid than in agriculture and in manufacturing, the sectors more affected by trade.  Productivity growth in the service sector is usually explained by particular technological innovations – such as railroads, electrification, and the telegraph – none of which depended on protective tariffs.  And yet the service sector was key to US economic performance during this period.  As [Stephen] Broadberry (1998) has shown, output per worker in the United States grew relative to that in Britain because US labor productivity in services converged to the higher level in Britain.

DBx: As this, and other, empirically grounded arguments demonstrate, U.S economic growth during the 19th century was not plausibly promoted by protective tariffs.  Note also that, contrary to popular myth, the growth of the American service sector is not a post-WWII phenomenon; and the service sector itself is no ‘inferior’ sector the growth of which is to be lamented if that growth occurs relative to that of the manufacturing sector or even if it helps to promote the relative or absolute decline of the manufacturing sector.

As I and others have pointed out repeatedly, no one who hopes that his or her child will “grow up to be a doctor or lawyer” – or engineer, or architect, or accountant, or opera star, or preacher, or hedge-fund manager, or (heaven help us) ‘the president’ – has any standing to lament the rise of the service sector relative to that of other economic sectors, including that of manufacturing.  Only someone who truly hopes that his or her child “will grow up to be a factory worker” and not the likes of a doctor or lawyer – or who honestly believes that such a wish is one that most parents should have for their children – has any business lamenting the decline of the manufacturing sector relative to that of the service sector.

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Don Boudreaux
He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

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