As we all know – because we’re told interminably – wealth is grossly and unfairly distributed at present. And here’s a story that nicely illustrates why our measurements of wealth are entirely, wholly and completely wrong. To the point of being complete argle bargle rather than anything useful said about the world around us. For we don’t count human capital at all.
Martin Sheen’s gone and spent all his money on the soccer world cup for the homeless. Hey, why not, they’ll have a bed in the sportmen’s dorms for a bit at least, right? He says this has swallowed so much of his cash that he’s got to go back to work:
The actor Michael Sheen has said he will have to take on more roles again after giving “everything” away to charity. Sheen, 50, revealed he used his own savings to ensure this year’s Homeless World Cup in Wales went ahead when funding fell short during the planning stages. The Frost/Nixon star, who appears in the Amazon Prime show Good Omens, said he has “earned good money” during his Hollywood career and felt he had to “put it all on the line” to make up for the shortfall. “We got into a bit of a state so I essentially put everything I have into this,” he told BBC Radio Five Live on Tuesday. “I figured, if I’m not prepared to give it all away… what am I doing? I’m just a hypocrite.”
So, let us take this at face value – not that any of us should of course but let’s just pretend. He’s blown his entire £2 million on the World Cup. Great. So, he’s got to go back to work. And we all think he’s going to be on £7.25 an hour at Starbucks along with the other arts graduates, do we?
Err, well, no, of course not. Being friends with Peter Morgan is worth something (alack, we disliked each other at school), being a trained actor that people would like to employ has its merits. That is, Sheen has a significant amount of wealth in himself. What we call, in the jargon, his human capital. Say, his actual ability as an actor, the network of contacts a career has given him. Absolutely none of us think that he’s going to earn less than a few hundred thousand a year even if he does get stuck in B Movies about politicians.
That few hundred thousand a year not in fact being, in any rational calculation, his labour earnings. Rather, there’s some amount of labour earnings there, sure, plus a vast great whopping chunk of capital earnings from his human capital.
And guess what? We do not count human capital in any of our calculations of capital nor wealth. Further, such human capital is a vastly larger portion of total capital than the financial capital we do count.
Michael Sheen can be counted, now he’s no cash, as having no wealth. Which is the way we do count things. That Michael Sheen is going to be on 10x to 50x the median wage as he goes back to work means he’s rich, wealthy. Meaning that any system of wealth measurement which disregards such human capital is simply going to be wrong, isn’t it? Which is where we are at present in our measurements of the world.