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growth theory says such restraint doesn’t happen. Data say the same. I apply the same idea in next generation theory. My 3.5% is a rough estimate. What counts is the generation length. The length was probably higher, and the rate lower, before medicine and sanitation lowered mortality rates, and let two or three births per couple meet the need for population replenishment. The cash flow or pure consumption rate modeled at 3.5% might also vary for reasons other than changes in the generation length. My charts show the pure consumption/total capital rate as higher in the middle part of the twentieth century as people drained capital reserves to keep up consumption in times of world-wide depression. I’ll say more about these reserves. First Interpretation Next generation theory says in effect that R. A. Fisher’s version of the generation length, not Petty’s primogeniture version, gives the period of production of total capital. We would miss the point if we focused on the period production of human capital separately. Total capital is our means of lineage survival. This reinforces my theme that human capital does not mean humans. It means skill sets priced at present value of foreseen cash flow. Skill sets are not enough for lineage survival. We also need things. We should not fall into the trap of surplus value theory, which had been taught by communists for decades before Karl Marx joined their ranks, in supposing that skills make things. It is only half the truth. Skills plus things make skills plus things as the generations repeat. Nor should we make the mistake of supposing that the generation length begins and ends uniquely from birth to birth, so that the remaining period of production grows shorter over adult life and the time discount rate steeper. The period of a cycle is the same at any point. The young, simply by maturing, are already investing in their Chapter 7 Petty’s Idea 2/3/16 21 HOUSE_OVERSIGHT_011080