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GDP accounting underestimates intangible capital, overstates nancial capital, and is all but oblivious to the the<br />
U.S.<br />
of human and social capital. A serious growth slowdown is coming.<br />
erosion<br />
American economy changed rapidly in the last half-century. We kept track of this transformation through the National<br />
The<br />
and Product Accounts (NIPA), a set of statistical constructs that were designed before these changes started. Our<br />
Income<br />
accounts have stretched to accommodate new and growing service activities, but they are still organized by their original<br />
national<br />
This can be seen in the growth of nancial activity and the e orts of many economists to t nance into our<br />
design.<br />
of national product and of economic growth. I argue in my paperthat our current economic data fail to describe<br />
measurement<br />
the path of growth in our new economy. They fail to see that the United States is consuming its capital stock now and<br />
accurately<br />
growth theory started with two papers by Robert M. Solow in the late 1950s. The rst paper showed that it was possible<br />
Modern<br />
create a stable model of economic growth using a Keynesian model of investment and capital. The second paper showed that<br />
to<br />
1/4/2019 The Hidden Decline in Human Capital—and the Danger Ahead<br />
Commentary ❯<br />
The Hidden Decline in Human Capital—and the<br />
Danger Ahead<br />
By Peter Temin<br />
JAN 2, 2019<br />
Blog<br />
will su er later, rather like killing the family cow to have a steak dinner.<br />
th<br />
this model failed to explain most of American growth in the rst half of the 20 century (Solow, 1956, 1957).<br />
https://www.ineteconomics.org/perspectives/blog/the-hidden-decline-in-human-capital-and-the-danger-ahead 1/4
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