My story starts yesterday with a Penn Professor of Astronomy and Astrophysics. Explaining that an image of the history of the universe could emerge from two celestial bodies, he added that similarly, we could describe the US economy through Warren Buffett and Bill Gates.
Thinking about Buffett and Gates rather than the universe, my first response was, “No.” These men are outliers, unusually successful, exceedingly affluent. But then, he began to expand and I realized he might be right.
As an investor, Warren Buffett represents the sophisticated financial infrastructure that facilitates transactions. He reminds us of the current and past role of financial intermediaries who fuel business expansion by pairing savers and borrowers. Within a developed economy, a Warren Buffett can receive an education, start a business and attract investors.
With Bill Gates, we can go to technology. As an entrepreneur, he innovated, mass produced, and contributed to an expanding information infrastructure. More than goods, services are what he produces.
Perhaps then, the Buffett and Gates stories are just tips of an iceberg that reflect US economic growth.
Previous stages of economic growth?
- Colonial barter.
- Early 19th century transportation infrastructure of canals and railroads begins to create a national market.
- Mid to late 19th century capital goods and financial foundation from new industries like railroads, steel and oil.
- Early 20th century consumer goods from new industries like the auto.
- 1930s depression and more government.
- Our contemporary services dominated economy.
Sources and Resources: My thanks to Penn’s Professor Mark Devlin. His cosmology research is fascinating.
Note: This post was edited after it appeared.