If the crowning achievement of 20th-century economics was constructing a national income statement, the crowning achievement of 21st-century economics should be a national balance sheet
Here's a tale of two equations that represent human exchange. The first is the standard macroeconomist's recipe for an economy:
Y = C+G+I+NX
It says: output equals consumption, plus government expenditure, plus investment, plus net exports. Now here's a crude approximation of what eudaimonia might look like:
W = N+F+I+H+S+E+O
It says: real human welfare equals natural capital, plus financial capital, plus intellectual capital, plus human capital, plus social, emotional, and organizational capital. Not all these kinds of wealth are created equal; I'd suggest that higher-order wealth, to the right, is scarcer, stickier, more enduring, and more productive.
The first equation might be said to neatly represent the industrial-age paradigm of business: the implicit question it answers is maximizing the volume of output or "product." But the second answers a very different question. It's our economy's real balance sheet.
The Bureau of Economic Analysis calls GDP "the crowning achievement of 20th century economics"--and it is not overstating the case. It single-handedly allowed America to begin optimizing its economy for a then-compelling definition of prosperity: industrial output. GDP is an income statement for an economy--to use my auto allegory, a rev counter. But a balance sheet is like a speedometer. It tells us whether our effort--our busyness--is actually getting us anywhere.