Here’s a fascinating factoid for the day and a point to ponder in the casino debate, from Michael Mandel et. al in Business Week (h/t Jonah Goldberg)…

What you may not realize is that the government’s decades-old system of number collection and crunching captures investments in equipment, buildings, and software, but for the most part misses the growing portion of GDP that is generating the cool, game-changing ideas. “As we’ve become a more knowledge-based economy,” says University of Maryland economist Charles R. Hulten, “our statistics have not shifted to capture the effects.”
The statistical wizards at the Bureau of Economic Analysis in Washington can whip up a spreadsheet showing how much the railroads spend on furniture ($39 million in 2004, to be exact). But they have no way of tracking the billions of dollars companies spend each year on innovation and product design, brand-building, employee training, or any of the other intangible investments required to compete in today’s global economy?
Machines and buildings were counted as future-oriented investment, but spending on education, training, and R&D was not. No attempt was made to judge the social utility of expenditures. For example, the $6 million cost of building the Flamingo Hotel, the Las Vegas casino opened by Bugsy Siegel in 1946, was tallied as an investment. But AT&T’s funding of Bell Labs, where the transistor was invented around the same time, wasn’t even included in GDP.

In other words, the government’s system of economic statistics is likely to count a casino as a better investment than a new pharmaceutical research center, if the casino is in a big enough building!