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The Remains of Detriot - GDP vs GDS

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Kung Fu Steve

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A buddy of my gave me this link I thought was pretty cool: The Remains of Detroit - Photo Essays - TIME

But it brings up something that has been on my mind for quite a while. Obviously here in America the GDP is no longer the GDP, it is now the GDS (funny as I type this GDP doesn't get underlined as an incorrect spelling but GDS does...) - because services have overtaken products within this past decade, and the trend seems to be continuing.

I am curious about two things...

Since America no longer manufactures, or produces products (and I use those words loosely) - does this mean that there are major opportunities in the manufacturing world? Or is it that we have fallen so far behind, and it is so much cheaper to manufacture offshore that we don't stand a chance in this market? Not necessarily as a country but as an individual. Obviously the smart entrepreneur follows the money. A market that tries to serve a demographic that doesn't have a need just doesn't plain make sense. Question number one is, should an (not saying me - cuz I love me some service businesses) entrepreneur be focused on creating products because everyone is running in the opposite direction? The old theory that if everyone is running one direction you might want to run the opposite way.

Number two thought is if we are focused so soley on Services, what in the heck do we produce? I am thinking about myself between the business and a half that I have, I produce black belts and good feelings? While that's all well and good - it's alll internal, there is nothing really to show for it but increased productivity for them. Increased quality of living. Increased happiness. Is there a way for service based businesses to produce as well?

Maybe I'm rambling but just thought going through my head...
 
That headline is repeated so often that I guess it will become true someday. We do have manufacturing jobs in America, we do produce goods. They produce GM cars about 20 miles from me in Arlington, TX. There are other factories all over DFW.

I began my career in manufacturing in 1977. I ran one machine for 10 hours a day. The shop was filled with guys like me. It was good pay for no college and steady work. They began bringing dudes with suit and ties on the shop floor. The dudes had clipboards and stop watches. They were there to observe processes and quantify everything. Later came computerized machines. I was running 2 high tech machines and making a buck or two more an hour. The workforce was cut in half. The labor cost was cut 40% and the output was the same. Then the dudes reappear. They quantify everything again and refine processes again. The labor cost reduces and output stays the same or even increases.

Later I am running a 5 axis CNC. I am making a part that takes 8 hours to make. It is made out of one piece of metal. This one part used to be made out of 10-12 individual parts taking many days to make. My machine is putting 4-5 guys out of work and producing works of art, without error.

The whole goal of manufacturing is to get the most out of the labor for the least cost. Our country still does have the capacity but it is a double edged sword. We can produce and flood the market with anything with relatively low manpower.

Example: We still produce a lot of cars in the Detroit area. We do it with far less labor. I would venture a guess and say that we would produce the same vehicles now with even less laborers if it were not for unions protecting the jobs.

Sure, the headlines are right, jobs do go overseas. I heard a story on the radio this morning that China now only has a 15% advantage on labor costs over the US as of right now. That 15% could evaporate in a short time if the currencies shift favorably. The jobs could come back here quickly but there still will not be as many jobs. The world, right now and in the foreseeable future, does not have the demand for the amount of capacity we can produce. That is going to drive down the pay of the laborers no matter which country is producing.

Basically, the worlds manufacturing has gotten too smart for its own good.
 
PS: It is about time for our country to get over "The good old days." Those days are gone and will never come back. The sooner we face it the sooner we can find solutions.
 
Kung Fu Steve,
This is an awesomely important thread to start!

The reason Detroit looks like that, in a nutshell, is b.c. THERE IS NO SUCH THING as a ’SERVICE BASED ECONOMY’. Complete Tripe – a bill of goods sold to placate the masses as their economy and infrastructure was sold off.

The Austrian School of economics explains that you cannot build a Real economy on Fake money. Yet that is just what we tried to do (The folks prefer the Keynes 'money for nothing' charade), and that slideshow is only a small glimpse behind the curtain.

Here are even better selections of “US City Decay Porn”:

Inner City US Ghetto
Worst Slum/Ghetto Pics - SkyscraperCity

(Awesome pictures and comment thread.)

Here is Gary, Indiana:

Growing Chicago - Pictures of Other Cities - Downtown Gary Indiana, Complete Abandonment
Gary Indiana - a set on Flickr

And here is how the city of Gary, that same street - Broadway - looked like in 1959

http://infraliant.com/gary's_broadway_shot_northward_from_8th_in_1959.jpg

That USX Steel plant extended 14 blocks!

Though, we should ignore Detroit either, great case study:

Detroit vs Hiroshima

Liberalism: More powerful than the Hiroshima Bomb?

You can rebuild after a nuclear bomb, but fake money destroys completely…
 
I understand Greg's point that maybe there just isn't enough demand for products. Technology keeps evolving and eliminating jobs. On an economical grand scale, there is the 1 islander who fishes for all the fish for the island and the other 9 out of work. The "correct" (who knows if I'm right about anything) thing to do for those 9 would be to invent new and better huts, better boats, venture out to trade with other islands, etc.

I think we are caught in the 9 people not doing anything. They should be standing in the inventors line instead of the unemployment line!

But I'm pushing the limits of politics with that statement so I will come back to my original question:

Where is the opportunity? Services are great, we all enjoy services - but at some point we need someone to produce food, clothing, transportation, etc.

What are the fastest growing countries right now and what are they doing right? Everyone talks about China becoming a strong power, but what are the facts? Not just speculation... If they are really growing - as a whole and as individuals - what are they doing?
 
There is opportunity in developing and distributing the latest "got to have it" product. However, the market will be saturated quickly and you will have to have the next product already flowing. That is on the manufacturing side.

On the service side, I think there is opportunity in being the coordinator. I have been reading Jack's thread and thinking. I came to the realization(way late) that I have been limited in my business creation.

Take lawn care for instance. I want to go into lawn car so I buy the equipment and truck and begin mowing lawns. If I get busy enough I hire a couple of people. If I get real busy I hire enough people to get me into an office. Then I can train a dispatcher and salesman. Then, after many years, I am out.

But following Jack's idea. I hire the sales and dispatcher first. Have the commission salesmen hit the ground running to get appointments. Contract out a dispatcher and buy the equipment. Hire a crew and have the dispatcher send the crew to work. More sales = more crews.

There are a lot of people wanting jobs. Be the creator/coordinator of those jobs.

The second benefit of this is the new business will need to work smarter and faster, so there will be a need for better equipment. The need will require the equipment to be produced by someone. The cycle continues.

However, there is going to have to be some unknown items inserted to get back to full employment. We can only work with what we know, so we have to learn more.
 
Maybe some of the subtleties of looking for the NEED first. Interesting thought. Have you ever read the Book of Five Rings? It's a pretty old book written by Miyamoto Musashi who was supposedly one of the best swordsmen who ever lived. Interesting guy, won some 50 (or maybe 100? I forget now) duels to the death, then went up in the mountains and wrote this book. Anyways he said - in regarding to warfare - if one person can kill 10 people, then it is possible for 1,000 people to kill 10,000.

Just thought of this while I'm typing: do you think there is a need for needs? Is it possible that we are all just too comfortable and don't need for much? As I type this several thoughts are going through my head. "Well that's silly, what about world hunger? What about energy? What about pollution?" - Those are some pretty serious needs... MJ tells me to create better chocolate chip cookie dough for the people who think the current chocolate chip cookie dough sucks (hehe :smxB:) - which is good for the individual, but is that powerful enough to kill 10?

I'm all over the place - more thought... Am I just a total unsophisticated nut here? (probably) Is there a solution to this? (always if we're committed) Am I just babbling like an idiot? (of course) ...
 

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