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I think your model breaks down all over the place. Obviously raw materials are not irrelevant, but they represent a tiny fraction of the wealth of a modern developed economy.
Go dig up a shovelful of dirt in your backyard. That dirt contains most of the raw materials needed to build a CPU. But there are many, many orders of magnitude difference between the value of that dirt and the value of a CPU. Almost all that value comes from intangible things:
The knowledge and time of skilled electrical engineers and chemists figuring out how to design and fabricate CPUs.
The university system that educated them and provided the foundational knowledge they built upon.
A legal system that enables companies to enter into and enforce contracts with one another in a reliable way
Systems of IP protection that incentivize R&D expenditures in CPU development.
Consistent law enforcement and property rights that allow companies to invest billions of dollars in semiconductor fabrication equipment without worrying a government or criminal organization will take it away from them.
Financial institutions that will lend money to these companies if they don't have billions of dollars sitting around to build semiconductor fabs.
On and on. It's intangibles (almost) all the way down.
Like CPUs, surgical equipment and drugs are mostly made out of cheap-as-fuck raw materials that are then synthesized into useful things. It's engineers, chemists, biologists, lawyers, etc. that make it possible for this stuff to exist. And of course much of healthcare is made up of other sorts of intangibles, like medical training. Surgical equipment isn't of much use without surgeons.
You act like this is trivial, but it's not. There exist countries in the world today where you can't trust banks to hold your savings and the average person can't get loans because the economy is too unstable and risky. These are the so-called "shithole" countries, and they're shitholes not because of a lack of natural resources but because of a lack of the kinds of intangible goods I've been talking about.
I doubt it contains many rare earths!
I accept that manufacturing is necessary. I accept that R&D, which relates closely to manufacturing, is neccessary. I accept that finance is needed to fund the whole operation. You do need trained workers to operate machinery.
What I'm trying to strike at is the jobs that are furthest from primary production and manufacturing. Most jobs in modern economies are in the service sector, there are many, many jobs which could just be put on hold during the pandemic. All kinds of 'coordinators', 'inspectors' and 'consultants' that didn't seem to be needed at all. What is the point of them, then? No real wealth is being produced from people who make others fill out forms, check paperwork and refuse approvals for other people to go and create wealth.
Some of that is necessary. There does need to be some law, amongst other things. But there's a huge amount that isn't and it hugely pumps up GDP figures to the point where they become unhelpful, abstract measurements. The EU couldn't manage to send a million artillery shells to Ukraine, North Korea could. I'm told their GDP is less than a hundredth of the EU's, that it's a shithole country if ever there was one... What good are these intangibles in and of themselves?
They aren't very rare, just costly to separate. They make up a good amount of the impurities in other metals, for the matter. The difficulty in extracting them is accumulating them, because a lot of random dirt will have them in small amounts, so you need to pick them out of a lot of dirt. This isn't generally economical, but China has been subsidizing it. Other mines can "simply" spend the money to accumulate them when processing other ores and some are beginning to.
As of 2023, China leads the world in rare earths because they are the only country with good chemists and weak environmental laws. The US has plenty of rare earths - they just need to agree to some unimportant parts of the mountain west being despoiled in order to get at them.
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I agree with your take in spirit, although I think you're a little too negative on how much the West produces. We still produce plenty of real wealth. And it shouldn't be underestimated just how expensive logistics is, deciding where to move resources and then actually moving them can take a lot of people to do.
But that said, I think burdensome regulations and taxation that's overly focused on redistributing the pie instead of making the pie bigger limit us a lot. It should be far easier than it is to build dense housing when you have such high prices. We need to and should be increasing housing supply much more than we are currently able to.
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Most valuable things, including the examples you raised in your post (CPUs, GPUs, drugs, and surgical equipment) don't contain rare earth metals. Of course, rare earth metals are indeed important and I am not claiming otherwise. But you'll notice that the countries with large rare earth metal deposits aren't necessarily the richest countries on earth -- some of them are among the poorest. This seems to be in tension with your claim that the wealth of nations is derived from natural resources.
The jobs that are truly not needed are, by and large, jobs that exist as a result of useless government regulations. Either government jobs, or private sector "compliance" jobs. It's true that many of these specific types of "service sector" jobs are dead weight and serve no purpose. You have correctly observed that government regulations are often pointless or counterproductive.
It does not follow, however, that service sector jobs are generally useless or fail to create wealth. In fact, as I laid out above, the vast majority of the wealth of modern economies derives from service sector jobs. Just not the specific class of useless service sector jobs you have identified.
The simple reason is that NK has a bunch of artillery shells lying around, whereas the EU doesn't. This is a pretty extreme case of special pleading. If we're talking about literally anything other than artillery shells (cell phones, eggs, insulin, toilets, tractors, etc.) the EU has far more of it and far higher quality versions of it than NK. And if the EU wanted or needed to, it could surely close the artillery gap with NK as well. This has almost nothing to do with natural resources and everything to do with intangibles like human capital, rule of law, markets, etc.
Good, persuasive points. I feel like the number of people who are directly and clearly needed in the whole IP, R&D, law+order, STEM university, manufacturing, logistics and extraction stack are in the minority but that's only a feeling, I highly doubt I could find any statistic to prove it. And what's the point of even being here if we don't put fact before feeling?
Let's run with this premise for a moment and assume it's true. Let's assume that if we were smarter about how we run these sectors we could cut 90% of the people in them and still get the same benefits. What are the implications of that?
First of all, it would still be true that the service sectors are creating most of the wealth in the economy. It would just be fewer people creating the same amount of wealth. Which means these sectors would be creating even more wealth on net, because we are having to pay fewer people to get the same result.
And now we can potentially do even more R&D, IP, logistics, manufacturing, etc. with the resources that are no longer being wasted on useless employees. I would expect these sectors to use their efficiency gains to grow and contribute an even larger fraction of the economy's wealth going forward. Money spent on bullshit jobs can now be spent on non-bullshit job. People who worked bullshit jobs can now be retrained to work non-bullshit jobs.
So even if you are completely correct about this, it doesn't undermine the importance of the service sector. If anything, it shows that services could potentially be even more important to the economy than they already are.
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