Saturday, July 07, 2012
Comprehensive wealth
Many national security commentators seem to uncritically use GDP as the metric for economic size. A recent Economist article, however, surveys a new approach that measures a nation's stock of wealth (as opposed to GDP, which measures a flow - namely the annual rate at which a nation's wealth increases). Sir Partha Dasgupta of Cambridge University's methodology considers three stocks of assets:
A useful reminder that whatever the challenges that the U.S. economy faces (and it faces many), it continues to remain in an enviable position.
- “manufactured”, or physical, capital (machinery, buildings, infrastructure and so on)
- human capital (the population’s education and skills)
- natural capital (including land, forests, fossil fuels and minerals).
The resulting measurements have interesting results. The U.S. has more than twice the comprehensive wealth as Japan and over five times the wealth of China. Furthermore, China's rate of comprehensive growth has been markedly slower over the past two decades than its GDP growth has been.
A useful reminder that whatever the challenges that the U.S. economy faces (and it faces many), it continues to remain in an enviable position.
# posted by Wiggins @ 7:18 PM 
