MEMPHIS, Tenn. - The scanners are the least impressive things at the FedEx global distribution hub here in Memphis. The first thing you notice during the overnight sort is the endless parade of planes stacked up in the night sky. Then there are the swarms of workers who descend upon the planes once they land and strip them of their cargo. Then begins the scramble of the caterpillars - little motorized tugs towing strings of cargo containers pell-mell around the complex and honking out warnings at every intersection.

They're bringing about 1.3 million envelopes and packages a night to vast sorting arenas with names like the Primary Matrix Area. Inside these stadium-sized rooms there are rows and rows of speeding conveyor belts and rushing envelope trays. Little devices push or tip individual packages into one of the thousands of chutes and slides and ramps. If you stand on a catwalk over the conveyers and look down at the pulsing motion below, you feel that same disorienting, perilous sensation you get on a bridge staring down into a waterfall.

But it's really all about the scanners, the little cross-hatched red beams of light, like at the supermarket, that register each package's bar code at least a dozen times during its overnight trip. The scanners mean that customers can check the progress of their packages over the Internet. Plant managers can monitor the nightly flow and prevent bottlenecks. FedEx can manage this gigantic business and still have accessible information on each individual item.

One employee told me that when he started work at the company 17 years ago, he marked individual packages with crayons. But FedEx has participated in the productivity surge that has been reshaping the American economy. If you were obsessed with the political campaign over the past year, you would have gotten the impression that there's no such thing as a service sector of the economy - it's all manufacturing - and that the United States is getting trounced by China and India in the competition for global business.

That's a distorted view of reality. Since 1995, the United States has enjoyed a productivity renaissance. The McKinsey Global Institute breaks the economy down into 60 sectors. U.S. workers are the most productive on earth in at least 50 of them. Productivity gains cause standard of living increases. Productivity gains lead to employment gains. If history is any judge, yesterday's excellent job numbers could mark the beginning of another surge in job creation.

As William W. Lewis, a former McKinsey partner, writes in "The Power of Productivity," about half the U.S. productivity gains have occurred in just two sectors, wholesale and retail trade. We've gotten really efficient at getting stuff from the hands of manufacturers to the hands of consumers. These innovations have had more important effects on how people really live than anything done in Washington.

Some of the effects have been entirely positive. In part because of scanners, companies now know how much stuff they are selling. Inventory-to-sales ratios shrink; companies are less likely to overproduce. That helps reduce the boom-bust cycle, which disrupts lives. During the first half of the 20th century, the U.S. economy was six times more volatile than it is today, according to a study by Bill Martin of UBS Global Asset Management and Robert Rowthorn of the University of Cambridge.

Other effects are double-edged. WalMart, a productivity powerhouse, gives middle class folks access to great products at great prices. It also decimates small merchants and contributes to the uglification of American suburbia.

Over the next seven months, the politicos are going to argue about the economic merits of the Republican years versus the Democratic years. That's a crime against intelligence.

The reality is that since about 1977, administrations from both parties have undertaken a series of policies, starting with deregulation, that have leveled the playing field and hence led to the period of intense business competition we enjoy today. That's the environment that fosters innovation.

Friday's good economic news - and the generally good news we've seen over the past 20 years - owes more to innovators like FedEx's Fred Smith than to any of the many fellow Yalies who have sat or will sit in the Oval Office.