“We need data on total-factor productivity.”

“Measuring only the productivity of workers, whether blue—or white—collar, no longer gives us adequate information about productivity. We need data on total-factor productivity.

That explains the . . . popularity of Economic Value-Added Analysis (EVA). It is based on something we have known for a long time: What we generally call profits, the money left to service equity, is not profit at all and may be mostly a genuine cost. Until a business returns a profit that is greater than its cost of capital, it operates at a loss. Never mind that it pays taxes as if it had a genuine profit. The enterprise still returns less to the economy than it uses up in resources. It does not cover its full costs unless the reported profit exceeds the cost of capital. Until then, it does not create wealth; it destroys it. By that measurement, incidentally, few U.S. businesses have been profitable since World War II.”