Full text: Capital Gains, Pension Funds and the Low Savings Ratio in the United States

not be better to regard them as income in the accounts, since they 
share essential features of income: They can be consumed without 
: The 
borrowing, leaving the capital intact; and if they are not 
consumed they are invested in financial assets. This statement has 
to be qualified insofar as the purchasing power of money changes; 
it is only the "real" capital gains i.e. those which go beyond 
the amount of inflation which can be consumed while leaving the 
capital intact. But these admittedly unpleasant problems of 
adjusting for inflation are not peculiar or new. They occur in the 
assessment of net profits as well and could not therefore be a 
reason for not dealing with realised capital gains in the 
accounts.We shall assumelin the following for simplicity that there 
is no inflation. 
The questic What is the place of the realised capital gains 
in the national accounts? They result from the sale of goods which 
are irreproduceable but which from the business man's point of 
view are capital, an asset. The concept overlaps with the 
positional goods of Fred Hirsch (Hirsch 1976 ). Tibor Scitovsky 
has been acutely aware of the need for special attention to this 
class of goods. He argues that positional goods are different from 
ordinary consumption since they do not directly induce 
reproduction and do not give rise to a multiplier. They are more 
like saving than consumption. But the positional goods which 
interest us -in the present context such as land are not considered 
consumption, they are simply disregarded by the national accounts. 
The argument (SNA 1968 ) is that when land is traded the seller 
receives what the buyer pays and the flow accounts are not 
directly affected. If for example the purchase is financed by 
credit the money lent by the banks to the buyer comes back to them 
through the account of the seller.

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