I don’t know enough about economics, nearly enough, in fact I’ve decided after listening to an economics podcast for the past month (still working through the backlog) that I’m essentially a know-nothing today.
That said, I have some questions if there’s an economics know-something around here, because there might be an alternative explanation than just a rise in inequality. For one thing, to maintain the standard of equality/inequality that exists today, I would think even the richest would need something to dump their money into. Right now that seems to be the United States economy, mostly, and a few fairly solid foreign markets, Japan, the EU, Hong Kong, Britain, and for the less risk averse, there’s also the PRC and various developing economies. Mostly the US is where you get your safest ROI.
So a massive growth in investment, would seem to also suggest a massive growth in the financial services market. Not to mention the massive amounts of money sloshing around throughout the Bay Area. At the end of the day, you still need bankers handling all the transactions.
And that’s just it, the United States today, near as I can tell and certainly this is what I was taught and the dogma of today, is a services-based economy. Banking, health care, government, etc, not to mention the usual suspects among tech: Google, Facebook, Amazon, Apple, Uber, Lyft, Doordash, Microsoft, Netflix, etc.
Now between them, there’s a lot of products getting designed, and built, and shipped, and sold. Computers, phones, and I’m sure even the cars drivers use for fares and deliveries are consuming a fair amount more resources than your average car. In providing their services, they are charging a premium, and in return you get convenience. If you use AWS or Azure, you’re still using something tangible and real, you just don’t own the infrastructure. But the people that do are benefitting from economies of scale large enough that there are ultimately fewer servers and data center than there otherwise would be if all of their customers bought their own. So in a real sense, it really does seem like more value is being created with less resources that way.
So now that whoever is reading this knows where I’m coming from, here is my question to economics know-somethings (fair warning, my jargon might even be off or used incorrectly): does our economic shift away from agriculture and manufacturing towards a service and information-centric economy have a possible causal effect on our ability to grow the economy with seemingly fewer resources? If so, is there one part of the services sector which seemingly has an outsized influence in decreasing our resource use while growing the economy, be it financial or tech or something else?
Seriously, thanks in advance.