How rich is the United States?

Source: The Economist

I quote from the article in The Economist:

Gauging an economy by its GDP is like judging a company by its quarterly profits, without ever peeking at its balance-sheet. Happily, the United Nations this month published balance-sheets for 20 nations in a report overseen by Sir Partha Dasgupta of Cambridge University. They included three kinds of asset: “manufactured”, or physical, capital (machinery, buildings, infrastructure and so on); human capital (the population’s education and skills); and natural capital (including land, forests, fossil fuels and minerals). 

By this gauge, America’s wealth amounted to almost $118 trillion in 2008, over ten times its GDP that year. (These amounts are calculated at the prices prevailing in 2000.) 

This gives one perspective on the debt of the federal government which is approaching $16 trillion, or about 14 percent of the estimated assets of the nation. Of course, the debts of state and local governments and of private organizations and families should be counted as well. Still, the federal debt doesn't look all that bad in this perspective.

Of course, a lot of the capital of the nation is in human capital, and we will not get a return on that capital unless we can achieve full employment and to assure that the nation remains internationally competitive.

The federal debt might be considered as divided into investments and consumption. Unnecessary foreign wars are not investments, but there is some justification for debt financing of investments in education, science and technology and infrastructure.

Still, our kids and their kids are going to be working to pay off the federal debt for a long time.

Note by the way that Japan is estimated to have higher levels of per capita wealth than does the United States, but Japan has been mired with a weak economy for years. Wealth can lead to income, but the relation is not automatic.