Something I came across today - Hartwick's Rule of intergenerational equity!

 

It sounds complex but it basically says that where a resource-abundant economy fails to fully reinvest the proceeds of the sale of those resources it will deplete its total capital and run into negative savings.

 

For example: extracting and selling oil amounts to running down the capital of a country, unless the receipts are fully reinvested in financial, physical, environmental or human capital. This would in effect be 'reinvesting' the proceeds of the non-renewable resources thus providing 'resources/returns' for future generations.

 

Interesting when you think about the path the UK has been on over the last few decades and the hole we're in now! But also precisely the reason why some of the Middle East and Asia are absolutely rolling in money!

 

I thought it was interesting anyways...:p

Pretty much the same as the banks issuing themselves enormous bonuses when they have heaps of cash and then the next year reducing pension funds when they don't.