We all knew this day would come. Given the shift the economy has taken to being more idea-driven it is about time the government gave intellectual property its due. The Bureau of Economic Analysis (BEA) is responsible for calculating the Gross Domestic Product (GDP) of America. The GDP is probably the single most important number that reflects the state of the economy. To draw a parallel, if you are a country and the BEA is a thermometer then your temperature reading is the GDP.
The concept of GDP was developed back in 1934 by Simon Kuznets in a time when our economy was run on industry. Long term assets included things such as factories, land, tractors and the like. On the 31st of July, the BEA added research and development, royalties, creative works and other similar intellectual property as long term investments on par with physical assets while calculating the GDP. We consider this a big win for intellectual property. Pop star Justin Bieber has a net worth of around $130 million. That is a tidy sum, most of which would be album and concert ticket sales and those elements are considered while calculating the GDP but the actual process of song writing and the expenditure that goes into it are not. Not until the 31st of July, that is. Yesterday the BEA started to include expenses made on research and development, artistic endeavors and creative assets while calculating the GDP. This will give around a 3% boost to the GDP. That is over $400 billion generated by intellectual property alone. To put things in perspective, it is equivalent to the GDP of South Africa. Yes, let that sink in.
Realistically though, this increment in the GDP does not have any real consequence in terms of improving the current economic state of people. Even though the GDP did not reflect it earlier, we still felt the effects of intellectual property in our everyday lives. What it does do though is enforce the notion that we bear witness to the changing economic climate. Countries do not run on industry alone but ideas. This change will make people more aware of the importance of intangibles. Hopefully, they will strive to protect their intellectual property as much as they would their other assets.
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