Reading Notes:Macroeconomics in Context, Chap 8: The Structure of the US Economy

Neva Goodwin, Julie A Nelson, Jonathan Harris

The US Economy can be broken up into 3 sectors:

The Primary Sector– Extracts natural materials and feeds them in to industry. This includes mining and agriculture.

The Secondary Sector– Takes natural materials and turns them into finished products.

The Tertiary Sector- Sells finished products and uses them to perform services.

The Primary Sector

Though important, is a tiny section of GDP. This is mostly becuase natural resource extraction has become highly labor efficient and financially efficient (if not necessarily energy and resource efficient.) Does this mean that we can potentially double the cost of these raw materials to get them sustainably without a major impoact on the global economy? If anything, this would employ more people.

The Secondary Sector

The US is still the largest manufacturer in the world, though other countries are catching up to us. Though the value of what we produce has stayed constant, the jobs it takes to produce those things have had a huge drop. Many of those jobs have gone overseas. while many more have been eliminated due to labor efficiency. (Even in China net manufacturing jobs have gone down due to increases in efficiency.) A focus on material and energy efficiency, rather than labor efficiency, would create demand for higher skilled jobs while lowering overall costs. This could reduce the ecological impact of manufacturing while increasing the # of people employed. 

The Tertiary Sector

This sector is by far the biggest and the fastest expanding. A huge chunk of it is (was?) financial services, though areas like healthcare and education are also significant. GNAW states that a big chunk of this sector is used managing and optimizing the system, including growing sectors of data and waste management. Continued growth of this sector, with skillsets similar to those in the financial sector, seems like it could line up well with a shift to a more sustainable economy. The only question in my mind is how the demand for such an economy can be effectively expressed in market terms. 


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