In a recent article entitled, ‘The wealth of nations’ (Business Standard, April 12), Shankar Acharya, one of India’s most respected columnists, applauds the research into the new wealth of nations and notes that two recent studies have focused on national wealth broadly defined as wealth which includes estimates of human capital wealth, as opposed to just financial wealth as popularised by Credit Suisse and Oxfam.
Acharya mentions two studies as new in the genre of wealth estimations: “Surjit Bhalla’s thoroughly engaging and provocative The New Wealth of Nations” (TNWN) published in November 2017 and, Acharya goes on to add, “more recently, in January 2018, the World Bank published its “The Changing Wealth of Nations 2018” (hereafter CWN), the bank’s third (and most comprehensive) attempt at estimating national wealth accounts in a series dating back to 2006”.
In TNWN, I state that “investment in education is well recognised as the major or primary investment for most families in the world. This investment is in an asset, and one that yields a constant flow of income, that is, acquisition of education is acquisition of wealth. Yet, given this importance, and given the constant outpourings of despair in the media about severe wealth inequality in the world, there are not many studies which estimate the wealth contained in educational attainment. Indeed, there isn’t a single study that provides estimates of education wealth for different countries and different years. Later on, I state: “A preliminary estimate of the wealth distribution contained in education is the primary purpose of this chapter.”
In CWN, the World Bank authors claim that they are “the first” to publish estimates of education wealth”. In the foreword they state: “For the first time, explicit estimates of human capital, which is the largest component of global wealth, are provided.”
Is it possible that the World Bank authors of CWN were clueless about TNWN? Not that it matters, but I do know many of the staff at the World Bank, and was a staff member, in Washington DC, for 14 years (1978-1992). The TNWN book was published by Simon & Schuster and was formally reviewed (and blurbed) by three distinguished and well-known world economists — Montek Ahluwalia, Raghuram Rajan, and Martin Wolf. It has been in discussion and circulation phase since July 2017. Starting November 2017, the book has been the subject of discussion on Indian television, and many reviews of the book have appeared in print, including some by leading foreign experts on education, for example Lant Pritchett of Harvard University.
There are a large number of similarities in my work and that of the World Bank. The number of countries covered is large: I cover 108 countries based on the publicly available Barro-Lee data on educational attainment; the World Bank bases their estimate on not publicly available household survey data for 143 countries, 1995-2014. I provide estimates of education wealth for the world for the period 1870 to present, and forecasts up to year 2030. My estimate of the share of education wealth in total wealth is 56 per cent; the World Bank share is 64 per cent. I believe that their estimates of the share of human capital are too high; they can easily believe that mine are too low. But that is where the debate should be, and the World Bank had a great opportunity to start the debate. But for reasons of false pride, they apparently chose the “me-first” route.
Given that my book was published well before the World Bank study, it stands to reason that the Bank should have done two things — refer to my work, and suggest why their work is more accurate and/or significantly different than mine. At a minimum, the Bank should have acknowledged, at least in the foreword, that a recent study has been published (and that they are not the first!). But it did not do anything of the sort. What is that line from Julius Caesar: “Upon what meat doth this our World Bank feed. That it has grown so great? Age, thou art shamed!”
One additional point. I worked on the World Bank 1991 report, The Challenge of Development, in 1991. The internet was barely available, and the team had an army of research assistants to comb through the literature so that we were aware of the prevailing research, learn from it, and give credit where credit was due. Apparently not so with the arrogant and ostrich World Bank of 2018.
The dictionary definition of plagiarism is: “The practice of taking someone else’s work or ideas and passing them off as one’s own.” I had an idea, expressed publicly over the years, that the wealth estimates were flawed because they did not include the important contribution of wealth embodied in education. In an article, “Tax data and Picketty inequality” (IE, January 23, 2016), I stated: “First things first. Wealth, as defined by the CS report (Credit Suisse report on financial wealth), is the ‘value of financial assets plus non-financial assets (principally housing) owned by individuals less their debts’. Given that human capital is a major wealth asset for most individuals in the world. this is a rather glaring omission. It is likely that if education was included as wealth (why not?), the results will not be as drastic, and therefore less ‘saleable’, as the ‘rich are getting richer, poor are getting poorer’ polemical CS and Oxfam conclusions.”
Let us be clear as to what is “new” about the idea of education wealth. It has been known for centuries that wealth is the discounted flow of income. It has been known, at least since Becker’s pioneering work in the early 1960s, that education yields an extra flow of income and therefore, human capital is wealth. There is published work (and cited in my book) of human capital wealth and its relationship to total factor productivity, for example R E Manuelli and A Seshadri, ‘Human capital and the Wealth of Nations’, American Economic Review 2014.
What is marginal, and new, in The New Wealth of Nations is an estimate of world education wealth comparable to the estimate of world financial wealth a la Credit Suisse. The World Bank claims in their report (and if it does it once, it does it 11 times!) that it is the first to provide explicit estimates of human capital, which is the largest component of global wealth.
As I have shown above, this claim by the World Bank is patently false. Just a little google check, by one of the army of research assistants that the scholars at the World Bank would have informed the authors, and the institution, that their estimate was not the first (not by at least two months).
What does the behaviour of the World Bank, and its authors, reveal? What we can be sure of is that the Bank practised the art (and sin) of deliberate ignorance. It continued the “not so scholarly” traditions of Western scholars to ignore scholarship from elsewhere even when it is right under their nose. It also shows there is extreme arrogance in their boldness of making false claims, that is we are the first study, repeated ad nauseam in the report. This arrogance may stem from the knowledge that the WB finances research by other scholars, who it believes may be too reticent to call their bluff (lie).
The above three facts we can be sure of — deliberate ignorance, false claims, and arrogance. Does it add up to plagiarism in the case of my book? The stealing of an idea is plagiarism — but I have left a question mark, so the reader can decide for herself.