When someone asks about your wealth, don’t you consider more than your income?
A new UN report explains where countries might do the same thing.
The report suggests that we focus more on a country’s land and capital assets. By land, they mean natural resources like forests, minerals and land. Dividing capital into its 2 components, they look at physical and human capital. Physical capital takes us to such structures and equipment as our roads and machinery. Somewhat intangible, human capital refers to facts about the learning people gather that enables them to become more productive. For 17 of the 20 countries in the UN study–all except Russia, Nigeria and Saudi Arabia, human capital is a top number.
The Productive Base
||Land (Natural Capital)
From: Inclusive Wealth Report 2012, p. 40.
Although not the focus of the report, an insight from economist Michael Mandel came to mind. He said that what we measure shapes our policies and priorities. If, in addition to GDP, we anxiously awaited a land, labor, capital asset report how might legislation be affected?
You might want to look at the UN Report for their long list of variables for each of the 3 asset categories (p. 31).
Quite a tome at 339 pages, the UN Report takes readers to sustainability issues after looking at wealth. In a detailed article, the Economist summarizes the report.
After looking at these 18 charts, I thought, what you learn depends on whom you ask. Created by Washington Post journalist Ezra Klein, the slide show is from “some of his favorite economists” who were asked for “the graph that had done the most to influence their thinking in 2011.”
My concern is that the topics are precisely what you would expect. Most focus on the U.S. budget, health care, debt, jobs, inequality, interest rates. Even when targeting the developing world, the connection is their savings feeding our debt. Tyler Cowen’s graph is the only chart that relates to innovation.
Yes, I do recommend looking at the 18 charts for a quick summary of key issues. However, if you ignored headline topics about the U.S., where would you focus?
The Economic Lesson
Economist Michael Mandel has said that our economic yardsticks shape our problem solving. The GDP, for example–a total of investment (tools, equipment types of items–not stock market), consumer spending, government spending and exports minus imports–insufficiently focuses on key areas of local and globally interwoven activity.
His point? What we measure determines government policy.
An economic question: If you were creating 10 charts that not only looked back on 2011 but would take our focus forward productively, which topics would you select?