(Eco) Imagine That!

GE CEO Jeff Immelt recently lamented our national obsession with financial services , and he gave a plug for prosaic activities like manufacturing. He's put his finger on something that's very important for the future in which our children will live and work. Not everyone will be able, or want to, get a job with Goldman Sachs or a hedge fund.

In the simple two by two (two countries and two classes of goods) models of international trade theory, it was pretty unreasonable to get a "corner solution" where one country completely specialized in producing one tradeable good. Indeed, it's just not healthy for a society to be totally specialized. We shouldn't all be "knowledge workers," whatever that means.

GM factories converted to the WWII effort were able to go from producing cars to airplanes because the workforce had the skills to bend metal and to join parts together. If General Electric is to benefit from its eco imagination strategy, it will need a large supply of mechanical, industrial, electrical and chemical engineers, as well as a dedicated and savvy technical workforce to manufacture products for the smart grids of the future in high tech assembly modules. Some of the kids interested in these careers may not go to college to study business and accounting, but they may need technical associate degrees. Hopefully, our society will also value art, music, theater as professions, so that our culture serves our humanity as well as our commerce.

Our financial services sector needs to get smaller, and much of what it sells are commodities, like white bread. We don't need the best and the brightest to develop new forms of life insurance. Financial innovation, with all the blowhard rhetoric aside, is not like scientific innovation. All of our decades of financial innovation brought us not a cure for cancer, but a financial nuclear winter. Enough already!