Hollowed out

Larry Elliott describes, without endorsing, the case for protectionism:

There are those, though, who see textiles as merely the thin edge of a very large wedge. What will happen, they say, when China can flood the world with everything from pharmaceuticals to financial services?...From this perspective, the whole of western manufacturing and much of its service sector will be hollowed out unless there are more vigorous measures to meet the threat of China.

But what would an economy look like with its manufacturing "hollowed out"?
It'd look like my street, that's what. Almost no-one in Belsize Park Gardens, to my knowledge, works in manufacturing. And there are loads of service industries where no-one's employed either - and certainly, no agricultural jobs (though some do grow their own herbs).
This isn't jsut true of my street. It's true of most of the area. The people round my way work pretty much in just two industries: entertainment/meeja and financial services.
And are we poor? No. Sure, we have problems with single parents and drug users. But we're pretty rich, despite a catastrophic hollowing out of manufacturing, and despite the fact that almost all the food and clothing we buy is imported, sometimes from as far away as Camden Town.
What, then, is the difference between  my area and a country that makes hollowing out a problem in the latter but not in the former?
It's certainly not that only a few people have the brains to work in the meeja or banking whereas a whole nation cannot. Such a view misunderstands both these industries and the nature of comparative advantage.
Larry commits the latter error when he says:

Countries specialise in what they are good at.

This is wrong. People - countries if you must - merely specialize in what they are relatively least bad at.  Even if China  were to become absolutely better than us at producing everything, we could still earn a living by specializing in what we were less bad than them at producing.
Think of it this way. I am a worse economics writer than Larry Elliott*. But I can make a living by specializing in a field - financial writing - where my inferiority to him is smaller.
So, here's my question. If I, and my neighbours, can do OK without manufacturing or agriculture, why can't larger geographical units?
I suspect this is one of many ways in which thinking about countries rather than people merely  clouds our judgment.
And: Tim is good on this.
* This isn't false modesty. I lack two talents necessary for any columnist: the ability to pander to people's prejudices and to repeat myself week after week.

Comments

[bwanadik]

Might make you less-publishable, but a worse writer? That logically entails Richard Littlejohn is our greatest modern wordsmith.

[Curious]

Well done on your analogy. If I hear another argument/complaint about China regarding manufacturing I think I'll vomit!

Are British people prepared to work in the same conditions for the same pay? Do we have a higher or lower cost of living? What happened to the comparative advantage that became extint once our economy moved from manufacturing to services* (technology)?

* see Rogoff growth stages theory.

We can't beat China at manufacturing and moaning about it likens us to school children running to the headmaster for favours (change the rules of the game) after losing fair and square.

[Robert Schwartz]

What really drives complaints about the loss of manufacturing jobs is nostalgia for a past where the working class wore cloth caps, belonged to unions, and knew its place.

[Andrew Duffin]

A hypothetical question for all you experts:

Is it possible for the entire world to run on a service economy?

Just wondering.

[e m butler]

wealth is created by manufacturing,mining and farming...all others move that wealth around..The service industries might make one or all of the three more efficient but without them there is no wealth..period..