We should welcome increases in income inequality that result from revolutionary, breakthrough technologies like fracking

Great post from Mark Perry of "Carpe Diem."

"In his recent book “The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters,” author Gregory Zuckerman offers these insights about why the shale revolution could have only happened in America:

Foreign nations lack perhaps the key element behind the US energy revolution: an entrepreneurial culture and ample incentives for the years of trial and error necessary for shale breakthroughs. George Mitchell, Harold Hamm, Mark Papa, and other headstrong wildcatters persevered because they knew they could gain both fame and remarkable fortune finding economic ways to tap shale. Comparable prizes don’t always exist in other countries, where governments can play a larger role in society.

There are a few things the United States seems to do better than anyone else, such as create computer apps, drones and rap stars. Fracking, so far, has been another area where there’s a distinct American advantage.

For all of the criticism the country has fielded for losing its edge in innovation, surging American energy production is a reminder of the deep pools of ingenuity, risk taking, and entrepreneurship that remain in the country. Many smaller American towns are experiencing a rebirth, with some young people in the energy business enjoying six-figure salaries, suggesting an underlying resilience in a country still recovering from the deep economic downturn.

The successes of the architects of the shale era are attributable to creativity, bravado, and a strong desire to get really wealthy. It doesn’t get more American than that. Indeed, while the huge rewards promised in the market-driven American economy have led to an unfortunate income divide, they also provide incentive for remarkable achievement.

MP: In a previous CD post, I took minor issue with Zuckerman’s term “an unfortunate income divide.” Upon reflection, I think it would really be more accurate to say “an inevitable and highly desirable income divide.” It is only because of the huge financial rewards that potentially result from a market-driven American economy that we get the innovation, risk-taking and entrepreneurship that will necessarily result in both breakthrough technologies and greater income inequality in the long run. The shale revolution has created thousands of millionaires and in the process increased income inequality in America. But everybody has been made a little better off with lower and more stable energy prices thanks to shale oil and gas, and millions of Americans are much better off thanks to the shale prosperity that has spread jobs, royalty payments and wealth across the country.

An increase in income or wealth inequality is a small price to pay for The Great American Energy Boom that did bestow massive wealth on a small group of petropreneurs, but also delivered a little bit of greater wealth to all of us. We should all welcome the increased income/wealth inequality that will result from future revolutionary, breakthrough technologies like hydraulic fracturing and horizontal drilling."