We typically think of assets as hard goods….things, but we know that some assets may be intangible. For example, your savings in a bank or your portfolio are not tangible. They are sheets of paper or printouts that represent to some degree hard assets. Other assets are not typically included in one’s balance sheet such as education, talent, skills and ambition. I have included some other descriptors for assets that are not generally included on the net worth ledger of a nation.
When one examines the real value of a country, there are some classifications of assets that rarely are manifested on the plus side of the balance sheet. “Known potential” is the class of valuable resources that are, as yet, untapped, but do have a clearly defined and measured potential for contributing to the national economy. Oil deposits, gas pockets and coal veins are representative of some of the known potential that we have in the United States…on land and in the water. Within the National Park Service are thousands of acres of land that might be developed for agricultural production as well as for the exploitation of energy and mineral resources. Another known potential is the 15 million or more unemployed people in the United States whose labor and innovative skills could be much better used than they are at the present time.
“Unknown potential” refers to resources that have not yet been calculated but whose potential could be significant if the right technology or extraction methods were employed. Desalination of seawater is such a resource…not just for drinking, but for irrigation purposes. If such a technology were to become feasible on a large scale, many acres of semi-arid and desert lands could be used for food and fiber production. In addition to the technological challenges, the development of the system would have to be concerned with recapturing of spent water. So, the potential does indeed exist although the means for realizing its full value is not yet available. Wind and solar power are at a similar stage. While energy can be reaped from them, they lack storage capacity, cost effectiveness and reliability before they can be considered as bona fide sources. The potential is great, but more and better technology must be achieved before any of these potential sources can be consistently used.
Exploited assets are those resources that have been identified and reworked to create value. No resource, natural or human, has any real value unless it can be utilized to increase its inherent worth. Oil, for example, is merely a messy black liquid, but when refined it produces plastics, diesel fuel, gasoline and other by-products which function to fuel other industries as they create, construct or assemble items of value for the economy. Likewise, land has no intrinsic value unless it can produce food, fiber or provide other means of enhancing life. The exploited assets, therefore are those that are presently being used to increase value and economic activity.
Inaccessible assets are those that may exist in quantities great enough for meaningful use, but either for natural reasons, technological reasons or political reasons are not presently available. Vast quantities of geothermal power are trapped within the Earth, but we have not yet developed the means to exploit it on a grand scale because of natural barriers and technological deficiencies. Another inaccessible resource is children (at least in Western cultures). True, in some subsistence and emerging economies, children play an important role, but in most developed Western systems, the political consensus is that children are not considered integral members of the work force.
What is the purpose of this column? My goal is to illustrate that despite our current economic woes, we are a nation of vast resources. If our government would stop its punitive regulatory and taxation policies, many of our human and natural resources would be unleashed to produce products and increase the value of raw material. If government would cease its direct intervention and control of several vital deposits of exploitable resources, the private sector could transform them from potential to actual contributors to the nation’s economic activity. In addition, the development of many of our potential resources would increase the need for labor thus better utilizing the untapped human resources who are currently idle.
Government does not produce anything. All government activity is a drain on the economy … not a contributor. When government consumes 25% of the generated economy (GDP), funds become limited for economic activity that increases value. The two-edged stiletto wherein government places the knife firmly into the back of the nation is when government controls, regulates or limits resource development and when government consumes an inordinate portion of economic wealth. Our nation is not poor because we have a large cache of resources, but because of too-large government involvement, our economy is performing poorly. Government is non-productive and antithetical to generating value and wealth. Under our present economic circumstances, we cannot afford to have government control our wealth. Their consumption of the labor and productive power of the people places our potential for prosperity in peril. Government’s busy-body over regulating and rulemaking severely undermines the economic capacity of the nation. When Big Government is a player, the gap between prosperity and poverty looms large.
