America builds wealth without common wealth

Umair Haque suggests that to measure the welfare of America, it’s time to focus less on GDP — a measure of the national income — and consider instead an equation that says “real human welfare equals natural capital, plus financial capital, plus intellectual capital, plus human capital, plus social, emotional, and organizational capital.” If one was to assess these different kinds of capital:

You might see social capital — the wealth of relationships — crashing. According to Ohio State University’s Pamela Paxton, declines in trust among individuals of half a percent per year from 1975 to 1994. A life rich in relationships and connections seems to be a more and more elusive goal.

You might notice human capital — the wealth in people — splintering. Perhaps the most essential component of human capital is education. Yet, the Brookings Institution found that, for the first time, older generations have attained more higher education than younger ones. That points to an inflection point in human capital, marking a peak in American educational attainment.

Human capital is also composed of mental and physical health. Both mental illness and obesity rates have risen steadily for the last century in America. And rates of happiness in the United States, United Kingdom, and Japan have flatlined — and by some measures, fallen — over recent decades.

You might see intellectual capital — the wealth of ideas — struggling to develop. Intellectual capital is often assessed simply by looking at the sheer number of patents, but I’d choose a higher bar: the creation not merely of patents, but of new industries, sectors, and markets. Fewer industries were created in the noughties than in any decade since 1930: just two, by my count — search and nanotech. Though patent applications have skyrocketed, patent quality has dropped. They are now less expressions of true intellectual wealth than tools for strategic control.

You might see organizational capital — the wealth that harmonizes and synchronizes the other kinds of wealth — cratering. Organizational capital is the toughest kind of capital to measure and observe. I’d roughly gauge it by looking at the creation rate of new jobs, because new jobs often represent new roles, gains in the division of labor, the raw stuff of organizational capital. America is often said to be the most dynamic economy in the world, but the net creation rate of new jobs has dropped steadily since 1970. I’d also look at an alternative measure of organizational capital: political decision-making. Here, we find more “gridlock”: filibusters in the Senate have risen exponentially over the last three decades to an unprecedented high.

Here’s what the glimpse I’ve given suggests: the state of the Common Wealth is in crisis. In terms of an authentically good life, we’re going nowhere fast.

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