Giving a grade of “One Pinocchio,” the Washington Post assessed the accuracy of President Obama’s February 7, 2011 speech to the U.S. Chamber of Commerce.

Most interesting, though, were the topics on which he focused. Yes, President Obama said the U.S. has the most labor productivity when, according to the Bureau of Labor Statistics (BLS), Norway does. And, for education, he said we had the best universities although actually U.S. News ranks the U.K.’s University of Cambridge first. And finally, he said we had the freest markets but according to the Index of Economic Freedom we are #9.

Still though, statistics are complicated. I am sure that we could find other numbers to support his conclusions. The key is that he looked at the right stuff.

The Economic Lesson

Focusing on productivity, education, and the market, President Obama took us to the basics of economic growth. Of course, in order to grow, we need to produce more per worker hour. And how can we grow? We need to develop our human capital. Only then can we innovate. And finally, through the market, individuals have the freedom to pursue their self-interest and start businesses with the new ideas they create.

In The Wealth and Poverty of Nations, Harvard professor David Landes tells us that physical capital that includes tools and machines, and human capital which involves education, entrepreneurship, and health, are most crucial for economic growth. Physical and human capital provide the highest return on investment (ROI).