Recently, I came across an interesting article entitled “the real wealth of nations” (The Economist, June 30th 2012, p. 75), reviewing the voluminous study, “Inclusive Wealth Report 2012”, published a few months ago by the United Nations. To date, economists have tended to assess and compare the wealth of nations in terms of GDP, which, the article claims, is not about wealth or a stock of assets, but a “measure of income” based on “a flow of goods and services”.
The article claims that a nation’s wealth should include its natural resources, skilled workforce, as well as the infrastructure it has built up. Until now, however, there has been no widely accepted “monetary measure” to evaluate “this stock of natural, human and physical assets”. Thus, this new UN report is the first to attempt to present the balance sheets of the “inclusive wealth” of 20 selected nations which are based on 2008 data. It evaluated three kinds of asset: “manufactured or physical capital (machinery, buildings, infrastructure, etc.), human capital (the population’s education and skills) and natural capital (including land, forests, fossil fuels and minerals)”.
Government officials often assert that their human resource is the most important national asset, and this was true in 17 out of the 20 countries examined. The calculation of the human capital of a nation was based on its population’s “average years of schooling, the wage its workforce can command and the number of years they can expect to work before they retire or die”. Human capital represented as much as 88% of its wealth of the United Kingdom and 75% of the United States.
According to the UN report, the United States topped the list of the countries in 2008 with inclusive wealth of $117.8 trillion, which was “over ten times its GDP that year”, followed by Japan with $55.1 trillion and China with $20.0 trillion. However, Japan’s per capita inclusive wealth was the highest, at more than $400,000, followed by the United States with less than $400,000.
For someone like me, born in Japan when it was still occupied by the US, following its total destruction and defeat in WWII, I am surprised to see such figures. By the time I started going to school, my country had regained its independence, but people were still struggling very hard to make ends meet. As a child, whatever I read or heard about the US, –though information was sometimes erroneous, and compared with my tiny country, situated at the edge of the Far East on the world map, –gave me a strong impression of the might and wealth that nation had.
One such incident to illustrate my feeling of awe, and which I still remember vividly, took place in a geography class at my elementary school. We were learning about world agricultural production. Our teacher informed us the US was the major producer of corn, then added that it was produced mainly for animal feed, and not for human consumption. The only type of corn I knew of at the time was that eaten by Japanese people, so his word left me with a powerful image of America as being far richer than my country. After all, we ate, I had just learned, what animals in America were being fed. When I arrived in the US years later and saw people eating corn, I came to know that both peoples indeed consumed sweet corn, while animals were fed a different sort. Nevertheless, seeing Americans living in bigger houses, driving huge cars and shopping in gigantic supermarkets, for a long time I could not help retaining the image of them being far wealthier than us.
Realizing how far my country had to rise from the ashes of total destruction after WWII to catch up with the US in terms of per capita inclusive wealth, I am amazed by our achievement. However, inclusive wealth does not necessarily reflect people’s sense of satisfaction and fulfillment in life. True, wealth can provide us with a certain amount of emotional security and contentment, but it does not seem to be the key to people’s happiness. This is illustrated in the World Happiness Report, another recently published UN study, which shows that peoples of many poorer countries feel happier and more satisfied with life than those in Japan and the US do.
Happiness is a subjective measure and difficult to quantify, but most of us strive for self-contentment as the ultimate goal in life. In this sense, both Japan and the US still have a lot of work to do to achieve real and sustainable wealth and happiness their people can fully appreciate with their heart, mind and body.