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exponentially to become all of cash flow at the end. This completes the explanation
of age-wage profiles as we see them. Pay is all human depreciation at the end.
What I Thought Once
Chapter 6 will compare accounting for human capital to accounting for a firm. Pay,
in this analogy, is the worker’s revenue. The firm deducts outside operating costs of
labor and supplies to leave gross realized output. The analogy for human capital
would be maintenance consumption enabling life and activity. But I don’t deduct
this in reaching the workers’ gross realized output (gross realized work) because |
take it as part of the net output we intend in itself rather than a cost in return for
what we intend. I see adult consumption as mainly Schultz’ pure consumption
exhausted from the universe of capital, including human capital, in satisfying our
taste for adult survival.
Opinion is divided here. Some economists have treated the maintenance
consumption that keeps workers going as new investment in human capital for the
sake of higher pay in future. Some in the 18 century expensed it, like maintenance
in the firm, as a cost recovered in keeping up the worker’s revenue (pay) now,
rather than invested for later. I did that for years. I now treat it as recovered neither
in pay now nor pay later. Even though we couldn’t earn without it, | count it in pure
consumption exhausted in satisfying tastes for survival.
When! thought it was recovered in pay and work products, up to about five years
ago, I realized that human depreciation could not also be. There would be nothing
left for pure consumption except Mill's “unproductive consumption” neither
replacing nor maintaining human capital. That would stand biology on its head.
Biology is precisely about replacing and maintaining us. Unproductive consumption,
for which there seem to be parallels in other species, is something biology has yet to
justify. It cannot be the unique taste satisfaction that behavior reveals.
Chapter 2: Fast Forward 1/06/16 17
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