It's good to be a service worker

A common complaint among globalization skeptics in rich nations is that, in a global market for products, it makes most sense to do the manual work in lower-income locations. This tends to shift rich nation employment patterns towards the service sector.

"Services" is an often misunderstood term, and given the fact that the category includes employees at McDonald's (as well as computer programmers, accountants, lawyers, and graphic designers), as an economic detail, it is often misused to make it seem that America is turning into one vast fast food supply chain.

That being said, there are hard realities involved in the changes driven by spreading globalization. Real people do lose jobs, incurring real pain. Life, in other words, is not a giant Excel spreadsheet, and even though the "pluses" might outweigh the minuses by a wide margin, it certainly doesn't feel that way to those who find themselves in the minus category.

That speaks to the need for governments to "ease" the path to change by providing better support for workers affected by it, thus ensuring long term acceptance (if not enthusiasm...a hard enough thing to inspire in the dry discipline of economics) of policies that benefit the country in the aggregate.

Governments, however, ought to do a better job of explaining to citizens the benefits of globalization, something the do infrequently, a fact that was the source of the lament in a recent article in the March 1st edition of the Economist. The article was targeted specifically at European leaders who play to populist sensibilities, but it applies more generally, and has particular resonance to people who work in the IT sector.

On the subject of Chinese competition:

...two-thirds of Chinese exports involve foreign brands, a good chunk of which are European. Nor does a "made in China" tag mean big revenues for Chinese firms. In a recent speech defending globalisation, the EU trade commissioner, Peter Mandelson, cited a University of California study into who gains when an iPod is sold in America for $299. Only $4 stays in China with the firms that assemble the devices, Mr. Mandelson explained. $160 goes to American companies that design, transport and retail iPods. A similar pattern holds for many European products.

Services are quite profitable. If given a choice, it's clear where developed nations should concentrate their efforts.