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Wednesday, July 04, 2007
Jonah Goldberg :: Townhall.com Columnist
The wealth between our ears
by Jonah Goldberg
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These numbers come from Kirk Hamilton, a World Bank environmental economist and lead author of a new study, "Where is the Wealth of Nations?" (available at worldbank.org). In a fascinating interview in Reason magazine, Hamilton explains how, when measured properly, "natural capital" (croplands, oil, etc.) and "produced capital" (factories, iPods, roads, etc.) are the smallest slices of the economic pie. What Hamilton calls "intangible capital," which includes the rule of law, education and the like, is by far the biggest slice. The entire planet's "natural capital accounts for 5 percent of total wealth, produced capital 18 percent and intangible capital 77 percent.

This makes some intuitive sense. We'd all rather be the man who knows how to fish than the man given a fish. Or think of it this way: The Malthusian thinks only about hardware, when the money is in software and design. China makes America's iPods; America collects the profits.

Also, the richer a country gets, the less it needs to live off its natural resources. Therefore, it becomes cheaper - and more popular - to protect the environment. This has been the trend in Europe and America, and hopefully it will be around the world.

This sea change in economic thinking doesn't cut easily along the left-right political axis, and its implications could be profound. "Root-causes" liberals can find a great deal of satisfaction in the emphasis "Where is the Wealth of Nations?" places on education. According to Hamilton, education explains about 36 percent of a country's intangible wealth. Conservatives can find solace in the importance of property rights and, moreover, in the confirmation that not all cultures are equal - at least when measured on their ability to produce and sustain wealth. And both right and left will agree that the rule of law - including fair courts and government transparency - is the single most important contributor to a nation's wealth.

A potential lesson for the World Bank may be that building roads, dams and factories in the Third World is a fool's errand until those nations have the intangible capital required to maintain such things. The Marshall Plan's success in rebuilding Europe after World War II stemmed not from the U.S. footing the bill for concrete and bulldozers but from the intangible capital locked in the hearts and minds of everyday Europeans.

In an odd way, I think this complements Weisman's depiction of a post-human future. The greatest symbols of our civilization - from skyscrapers to libraries - not only count for a mere fraction of our wealth, they would turn to dust and rubble if we disappeared. The hardware is nothing; the software, everything. All that civilization is and can become exists within us. If we forget that, we forget literally everything.

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About The Author
Jonah Goldberg is editor-at-large of National Review Online.
 
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Awesome
I've never read Mr. Goldberg's articles before, but I'm now a fan.

To the poster who commented on the "fool's errand" of building in Iraq before the country was ready to handle maintenance--that's a new thought to me. And a good question. However, how can we really be certain that the country wouldn't be ready to handle it on their own? A Jordanian resident we know commented on how many well-educated Iraqis in Jordan were champing at the bit to re-enter the country and build new lives with their families in Iraq once the fear of violence was ended. His comment was that Iraq's surrounding countries would never let a strong Iraq come about without a fight. I think an Iraq free from interference and fear of surrounding countries would definitely be able to maintain an infrastructure since so many of the unwilling emigres went on to schools in the West. But, then again, I'm just an amateur who loves to root for the underdog.

Mondamay writes this is ....
.... The best Mr Goldberg piece (I've) seen and that it is well worth the read.

Hear! Hear! Mondamay.

Mr Goldberg, whom I've never really forgiven for censoring/axing the delightful Ms Coulter, Conservatism's brightest star and (well, after me and alongside Mr Stein) greatest intellect -- gets better and better -- and hasn't, thank you, Dear Lord, published the words, "my mother," for simply ages.

Way to go, Mr Goldberg!
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