by Michael Greaney

Created on: August 19, 2008

As a measure of material prosperity and progress Gross Domestic Product is woefully inadequate. While useful, it only gives part of the picture. The temptation, however, is to assume - incorrectly - that "a rising tide lifts all boats." If Bill Gates or Warren Buffett, for example, make $300 million this week, per capita GDP goes up by $1. My income or wealth, however, stays the same (or, let's be honest - probably decreases).

Frankly, a rising tide lifts your boat only if you have a boat. If you don't have a boat, or if you have a boat with a hole in it, you're going to drown. It doesn't matter how much GDP is if you don't have a share of it. If I have $1 million and you have nothing as the other inhabitant of Me-land, our per capita GDP is $500,000 - but you still have nothing.

If you're unemployed and have no ownership of assets sufficient to generate an adequate and secure income, you don't have a boat. The rising tide doesn't lift you. The higher GDP goes, in fact, the worse off you are, relatively speaking. You drown.

If you have a rather typical wage-system job with no ownership stake in the company that employs you, you at least have a boat . . . but it has a rather large hole in the bottom. You can't get anywhere rowing because you have to spend all your time bailing water just to stay where you are - and are probably slowly sinking, anyway.

Only access to the means of acquiring and possessing private property in the form of productive assets will patch the hole in your boat, possibly even fit it out with an engine. Without that, you can slowly sink and, as you're drowning, salute the rich in their yachts as they sail off into Ayn Randland.

A better measure of progress - at least in material terms - would be an annual "wealth census," giving realistic "pictures" of the material wellbeing of different groups based on percentage of GDP. Right now, of course, the greater amount of GDP is clustered around the upper 1% of the population - which might explain why no country on earth carries out a wealth census, annually or otherwise. It would cause a revolution.

One way to ensure that there is not a violent revolution but (much to be preferred) a peaceful and prosperous revolution, is to implement a "Capital Homesteading" program. Capital Homesteading would, by conservative estimate, allow a baby born today to accumulate approximately half a million dollars worth of assets by age 65, which would generate after-tax income of about $50 thousand - not to mention

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