Income Inequality is Good for the Economy

The notion that "America doesn't produce anything" means anything about our economic health is absurd. We have the largest economy in the world. There is no single industry that is the key to a good economy.

In 1900, 40 percent of America's workforce was employed by agriculture.

If there was a message board thread then, people would have been convinced that farming, or things like chopping wood and mining ore, was what made an economy strong.

Today, only 2 percent of our workforce is in farming, and we are 20 or 30 times richer as a nation than we were in 1900. As the economy changed, people on here would have been fighting to save the American farmer, despite the fact that in hindsight we know. ... we grow a lot more food in America today than we did in 1900, with 1/20th of our labor devoted to it. Which has freed us to live better and do more things.

Of course, there would have been no manufacturing economy to follow without freeing up the resources from agriculture.

So now make it about manufacturing, which is what people get up in arms about. Manufacturing jobs have been falling in this country since 1950, both as a total percentage of employment, and just in real job numbers. Yet, manufacturing output has risen dramatically over that time. We make a ton of stuff. Way more than ever. Way more than we did even 20 years ago, let alone 50 years ago.

We do it with fewer people, through technology and innovation. That has meant less manufacturing jobs. But the effect on our economy is that it has freed up people -- the scarcest resource -- to create all new products and technologies and services. Which has benefited the average person in way too many ways to count. Our standard of living is way better since 1950, despite the cries of America being hollowed out by loss of manufacturing jobs. We have big screen TVs and computers and Google and way better medicines and cell phones and tablets in our everyday lives.

It's called progress. The idea that we need to stand in the way of it to tether ourselves to a model that people want to force on us because of the past, is as dumb as the notion that we needed to be a nation of farmers to be prosperous was in 1900 -- only it takes hindsight of how the progress evolved to realize it. It's great that we are NOT tied to farming, or to factories, because when we need fewer resources to provide the things that farms and factories provide us, it frees us up to do other things.

What that has meant has been adding a huge services-related, information and technology economy to the mix. That has been a great thing for America. Our GDP is the largest in an increasingly globalized world where standards of living are rising almost across the board, and our standard of living is better than what people's Luddite notions are so attached to.