National Wealth Including Human Capital
By definition, pure consumption rate is pure consumption divided by total capital.
This can be arranged as
pure consumption
total capital = (8.1)
pure consumption rate
Next generation theory modeled the pure consumption rate as 3.5% per year. Historical data showed dividend and interest rates as more or less in this region since Sumerian times. I model pure consumption as about three fourths of all consumption. | take consumption as personal consumption expenditure (PCE) plus
government consumption expenditure (GCE) per the national accounts.
GCE includes government outlays, at all levels of government, on education and welfare. These are easily recognized as consumption. It also includes costs of law enforcement, national defense, fire control, and maintenance of infrastructure such as highways and water systems and government buildings. These too count as consumption, even if we mightn’t have thought so. They are part of the cost of our survival. That’s why I agree with Kuznets and tradition, although | didn’t always,
that consumption includes all of GCE. PCE in 2015 shows as $12.429 trillion. GCE is reported at $2.5855 trillion. Both are
in 2015 dollars. their sum is $15.0145 trillion. Three fourths of that is $11.2609 trillion. Then (8.1) gives
pureconsumption — $11.2609
total capital = = $321.74 trillion,
pure consumptionrate 035 / year
in 2015 dollars. This rough estimate can be borne in mind when we evaluate the tax
base and the risk of national debt. U.S. public and private debt together has been
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