The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [97]
Measuring comprehensive wealth, including natural and human capital, will go a long way toward shaping policy around a longer time horizon. However, it will not be sufficient by itself. The short focus of policymaking was identified as the reason the future debt burden has been allowed to grow to unbearable proportions. Chapter 3 discussed the way the structure of pensions and social security, as well as other deficit spending, has allowed current and past generations to live off the earnings of future generations. The hidden burden has grown to such an extent that it is unlikely to be honored by those future workers. In addition to redesigning the structures of spending that created the problem in the first place, the element of time needs to be incorporated into the accounting system for government finances.
This could be done with the introduction of generational accounts. These are increasingly widely available, although typically as the work of think tanks and academic researchers rather than official statistical offices (although the UK’s National Statistics and Treasury have in the past done some work of this kind). For the reasons set out in chapter 3, looking at the impact of current government spending patterns on future tax bills is a very bad news story, and it would take a brave politician to start publishing these as part of the standard official statistics. That courage is necessary, though, to make it possible for policy reforms that might avert the social and political catastrophe that is otherwise the only mechanism for enforcing fiscal sustainability. Again, official statisticians need to undertake this work.
However, measurements that will encourage decision-making over a longer time horizon don’t by themselves address the challenge set out in this chapter. Economic growth in affluent societies like the United States and United Kingdom consists more and more of intangibles rather than physical stuff, and although GDP statistics do include services and other weightless attributes such as design and quality, they don’t do it all that well. The problem, as the earlier description makes clear, is that the concepts suitable for measuring the number of very similar cars or refrigerators, and the metals and plastics used to make them, aren’t right for measuring the care of a doctor or the attention of someone who’s gone out to the movies.
For some years now, researchers have been puzzling about finding better ways to measure intangible value, a second area of important statistical innovation. Over the years there have been several research efforts on intangibles.20 Early in 2009 the U.S. Bureau of Economic Analysis (BEA), which has often been at the forefront of practical statistical innovation, announced that it was exploring the feasibility of the experimental compilation of intangibles statistics in a “satellite account,” which would offer a comprehensive framework for assessing this form of value in the economy. This satellite would include human capital, the knowledge captured in computer databases and creative property such as movies and music, brand values and “organizational capital” for example.21 The aim of the work is to measure investment in intangible assets, but the BEA’s report notes that the main barrier is the absence of the underlying measurements—for example, businesses don’t record “investment in organizational capital” in their management accounts, so they can’t answer questions about it in BEA surveys. And as the statisticians observe, the absence of measurements