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depreciation. That implies that it includes all free growth of the larger factor. And these huge flows would figure to be uncorrelated. Depreciation of either factor is a steady drag on growth, while free growth is revealed in the charts and tables as a bucking bronco which might be double-digit positive one year and double-digit negative the next. No wonder that national accounts cannot reliably tell good years from bad. Another distortion in the Y=I+C equation is the undue prominence given to consumption. Physical capital, in most views including mine, is only a third to a fifth of total including human capital. Human capital is the lion’s share. Pure consumption is most of consumption, in my view, but not all of consumption. If the factors grow in mutual proportion, then, the ratio of total capital growth to pure consumption will be much higher than of net investment to all of consumption. That explains, I think, why national accounts have reported not a single year of negative net product in any of the eight countries since inception. Balanced portfolios report negative total returns every few years. So would net product, were it not dominated artificially by the steady positive of consumption. It is as if a portfolio dominated by investment grade bonds were taken as representative of a realistically balanced portfolio. Solving the Age-Wage Puzzle I will now try to solve a feature that troubled Ben-Porath and has troubled many economists since. I call it the age-wage puzzle. Age-wage profiles are published reports comparing pay earned by all working ages at the same time. Since all cohorts (same-age sets) are compared at once, as in a family portrait, age-wage profiles do not show effects of technological growth over time. They show effects of age and experience alone. What appears is that pay or wage rises steadily until retirement or near it. Meanwhile human capital is present value of remaining lifetime pay, and shrinks steadily as approaching retirement and mortality leaves fewer future paydays to discount. Most students of human capital including Ben- Porath reason that self-investment must end when time left for recovery in higher Chapter 2: Fast Forward 1/06/16 13 HOUSE_OVERSIGHT_010953