Accounting for Human Capital & UBI in the Current US Crisis

Comparison of 2013 US – Financial, Real, & Human Capital Reserves

This thread is in response to the exigent liquidity needs resulting from the covid-19 crisis and the pre-existent work for a Universal Basic Income on the part of @USBIG, the @Income_Movement, @AndrewYang & the #YangGang, myself, and others.

Covid-19 is but a symptom of a much deeper crisis that has been festering for the past 40 years involving the denigration of the US and world economic public sector. The current timely call for a UBI by these parties and others is an attempt to deal with this crisis. However, as currently being voiced, it is but a band-aid. It is encouraging to find the subject of humanity elevated, but without a technical analysis of the structure of capital for policy application – human, real, & financial – we will be spinning our wheels.

Such analysis is beyond the content of this thread, but that content can be accessed at the following link to my recent website which contains a 2014 working paper with this analysis as ‘The Browser Economy’ .

Analysis of Valuation Constraints on Global Growth
Optimization conditions occur when the ratio of Intermediate to Final Goods & Service Production equals the ratio of Final to combined Total Goods & Service Production (World Bank Sources)

The analysis is of two parts. First, expenditures for final consumption of goods & services as a % of total GDP is studied for global and various domestic economies for the period from 1960 to 2013. The study indicates an equilibrium & optimum is achieved when the ratio of capital & intermediate goods production to final consumption goods & service production equals the ratio of that final consumption to total GDP, a ratio of 61.8%. The inverse is the intermediate expenditures rate, i.e. for new and replenished capital, as a % of total, which as indicative of overall growth of an economy suggests a policy target of just over 38.2%.

Verifying this theoretical ratio, the global final consumption rate ranged from 58.3% to 60.5% since 1960, so the global range for capital expenditures has been near optimum at 41.7% to 39.5%. For the US, however, this capital ratio has fallen steadily from 38.8% (1975) to 31.5% (2013). This 7.3% reduction and under-capitalization in GDP in the flows to the stock or asset valuations of the national sector accounts means that expenditures for maintaining capital, private and public, trended below optimum starting in 1982, reaching 6.7% below by 2013.

Structural Changes in Sector Stocks and Flows – 1975 to 2005 to 2013
Private and Public Sector changes over time in relation to Policy (US Fed Sources)

The second part of this analysis is of the US Fed figures for flows and stock, over that time period, with a focus on the years 1975 before supply side public policy, 2005 in the run up to the housing and credit default swap crisis, and 2013, the year of this study. These years were selected to compare the flow & stock changes of sector & account structure over time and across sectors & accounts with respect to each year, as resulted with the effects of global supply side thinking from 1975 to 2005 & 2013 and from 2005 to 2013.

The analysis shows the fallacy in the supply side program, which proposed that deferring of tax flows to public capital needs would direct that flow to private capital investment that would ultimately create those needed public flows via growth. It never happened. Instead, related competition from global markets created wage pressure and automation, removing recompense for long term care from the pay of any abundant skill set available for employment in the free market, resulting in a commoditization of that skill set. Whether the intention of that program was optimism or greed, it lacks understanding of money and of capital, since pricing necessarily reflects the market value of real capital and the maintenance of human capital, which commoditization of labor cannot provide.

Accounting for Human Capital (HC) – Market vs Non-Market Valuation
Explicit market valuation by historical & forecast monetary transactions versus Implicit market valuation of equivalent economic activity absent monetary transaction

Capital, Latin for head, indicates the true capital of an economic system, capitalist or socialist, is the intelligence of individuals at creative work & play in their capacity to produce goods & services of utility and value for themselves or other individuals in exchange for pay, work, or gratis. Human capital can be valued as the sum of the market price and, in the case of transaction-less production, the implicit price equivalent of all goods & services estimated as being made by or exchanged on behalf of a human being over a lifetime; this includes all familial & custodial nurture, care, education, unpaid productive work, retirement, plus market transacted work product from cradle to grave.

The following figures should make this clear, based on ‘The Browser Economy’ referencing Michael Christian, ‘Human Capital Accounting in the United States, 1994–2006’, June 2010, Survey of Current Business, US Department of Commerce, Bureau of Economic Analysis. As the analysis of this study indicates, the per capita market value of human capital is ¼ of the total value of the available productive human capital, so that ¾ of the total value is not reflected in the US Federal Reserve flows or stock in sector accounts. As indicated in this link, the value of human capital is 10 to 20 times the real capital, 100 to 200 times the thin veneer of financial capital, and 100,000 times the value of gold.

Market Human Capital Valuation of the Private Sector
Personal Income as earned compensation from all sector sources for private consumption and investment and as market valued human capitalization including Private Sector safety net facilities.

This does not mean the human capital value of everyone is the same, just as the length of life or set of skills of every human is not the same. The market valued human capital for the US in 2013 averaged approximately $1M per person, while obviously ranging widely across the population. This means ¾ of the total US human capital value is not determined by market transactions, but by the inherently established public sector quality of life implicitly valued at $2.3M per capita in 2013. This is something few individuals, including economists, realize. This means capital flows distributed for the maintenance of human capital in the form of a Universal Basic Income are essential and should be seen as essentially normal in a market economy, for the establishment of a public safety net from cradle to grave.

Non-Market Human Capital Valuation of the Public Sector
Universal Basic Income as public sector dividend funding for private consumption and investment and as non-market valued human capitalization including Public Sector safety net facilities.

This public safety net is sufficient to properly fund public childcare and education, a public medical system, and public retirement, without curtailing full rights to a privately funded safety net of the same three features for those who desire and can afford it. The increase in market value of human capital from 2005 to 2013 is $99.85T or an average of $12.5T per year which can be assigned to the private sector. For comparison as to scale, GDP in 2005 was $13.1T, in 2013 was $16.8T. The increase in non-market valued human capital from 2005 to 2013 is $232.6T or $29.1T per year, which should be allocated as public human capital to every US individual, population of 305.8 million over 8 years, averaged per capita to an annual appreciation of $95,000.

This clearly shows the empty concerns about the public debt as well as concerns about a reasonable UBI to sustain a decent quality of life and a public safety net for everyone. People with capital equipment and resources, private and public, must still make stuff to consume, but funding should not preclude a UBI. With current evaluation of this appreciation, a flexible UBI of $1K to $4K per month is feasible. In keeping with the above capitalization ratio, a discussion is suggested of stipulation of payee directed capitalization, human, real, or financial, as a portion of a UBI. The same logic with respect to human capital applies to other nations, provided the effects of valuation resulting from the implementation of UBI on foreign reserve requirements and assignments in global capital markets, private & public/sovereign, are addressed.

Tools for further Discussion

I had just gotten the website, which includes some of my other interests, up and running right before covid-19 hit, and have since redirected my efforts to a FileMaker designed, UniServEnt Basic Income App, for download. A graphic slide presentation of the data from The Browser Economy is available in that download along with a spreadsheet for iPad or iPhone for comparing user definable data under policy conditions of taxation, borrowing, or direct UBI fiat funding.The interested reader is encouraged to download the app and provide feedback. It is my intention to generate more in depth discussion of these matters outside of Twitter. I can be found at LinkedIn and at the website .

More than donations of limited private funds to those in dire need or the congressional action currently being discussed, we need policy discussion of a fundamental nature for a modern flexible monetary system involving finance of a UBI and preservation of human capital.

Such an initiative from 2016, posted on the website at can be viewed and serve as an initiation of discussion. Please become involved. Your interest is encouraged.

On a totally tangential, yet still related topic, for anyone with an interest in a rethinking of fundamental physics and its possible applicability for development of a clean energy source for environmental integrity, I would direct the interested reader to .


“Household final consumption expenditures as % of GDP”, Source: World Bank national accounts data and OECD national accounts data files,

“US GDP and Wealth Comparisons 1975, 2005, 2013”, Source: Z.1 Financial Accounts of the United States, Federal Reserve Statistical Release, September 18, 2014, Historical Annuals, 1975-­‐1984 and 2005-­‐2013,

“Human Capital Accounting in the United States, 1994-­‐2006”, a report by Michael S. Christian, published by the U.S. Department of Commerce, Bureau of Economic Analysis,