The cover story of the latest Business Week is all about intangible asset: Why The Economy Is A Lot Stronger Than You Think. It's a great story for highlighting the intangibles issue. But I disagree with their optimistic conclusion:
In a knowledge-based world, the traditional measures don't tell the story. Intangibles like R&D are tracked poorly, if at all. Factor them in and everything changes
As my monthly tracking of the intangibles trade balance shows, I'm not optimistic that intangibles will save us. And then there is the fact that policymakers are oblivious to some of the key intangibles, such as design, while our competitors are gaining ground in new product development. More on that next.
One of the points that the story makes concerns the classification of government spending. R&D and education is classified as consumption rather than investment. I agree. I have long thought we need an intangibles assets budget as part of our Federal budget. This would include not just R&D and education, but also all the other intangibles assets of the Federal government: workforce training, arts & humanities funding, government information creation (like statistical agencies and the weather service), training of government personnel, organizational capacity building, technical assistance such as MEP) and export promotion activities (brand building).
I was also surprise that the article didn't mention the earlier work by Leonard Nakamura, such as Investing in Intangibles:
Is a Trillion Dollars Missing from GDP?
Nor did the article explore the huge finagle factor present in the measurement of intangibles.
Still - it is good to see a publication with the prestige and wide-spread readership as Business Week take on the issue. I hope there are more articles to come.
Great reading, keep up the great posts.
Peace, JiggaDigga