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Another thing Buffett said is that the "nature of the business" of service sector firms is inherently more profitable than that of manufacturing sector firms. The reason is that manufacturing firms require huge, ongoing, expensive capital expenditures in plant and equipment just to maintain their ability to do business. Buffett says plant and equipment are the "worst kind of costs" because they experience heavy depreciation and are vulnerable during periods of rising inflation. On the other hand, service sector firms usually have much lower capital expenditure requirements, if at all, and are generally more profitable. Advanced economies like the US naturally gravitate toward more profitable ventures like the service sector and leave low-profit manufacturing to Third World countries like China. Service jobs generally also require higher levels of education than manufacturing jobs, and advanced economies like the US tend to have better education systems and more highly educated people. The ultimate service sector industry is the financial services industry. They don't sell any actual, tangible product. Nevertheless, it is a highly profitable industry. Real profits, real wealth generation. Service firms wouldn't be engaged in service businesses in the first place if it wasn't profitable. Buffett's big holdings don't include any firms involved in heavy manufacturing.

Just little humor for you:

Finding a Job

Joe Smith started the day early having set his alarm clock (MADE IN JAPAN) for 6 AM While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA). After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) and continued his search for a good paying AMERICAN JOB. At the end of yet another discouraging and fruitless day, Joe decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can't find a good paying job in ... AMERICA ...