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DUBAI, United Arab Emirates

The Saudi prince who owns a double-decker "flying palace" and recently raised his bet on Citigroup lost $4 billion in the past year, according to a published report Sunday, showing that even the ultra-rich are getting pinched by the global financial crisis.

The pain is relative, of course. Prince Alwaleed bin Talal remains the world's richest Arab with a net worth of about $17 billion as of Dec. 2, Dubai-based magazine Arabian Business reported in its annual ranking. That is nearly twice as much as the second-richest on the list, but a considerable drop from the $21 billion the magazine said the prince was worth a year ago.

Arabian Business said it based its figure on a direct review of the prince's holdings and a face-to-face meeting with the man who's been dubbed "the Arabian Warren Buffett."

An official at Kingdom Holding Co., Alwaleed's investment company, did not immediately respond to a request for comment.

Alwaleed last month announced he would raise his stake in ailing banking giant Citi to 5 percent from less than 4 percent. The move has failed to significantly boost the bank's share price.

The Saudi royal's controlling stake in Kingdom Holding, which invests in well-known companies such as computer maker Apple Inc. and Rupert Murdoch's News Corp., accounts for nearly $8 billion of his wealth, the magazine said.

Alwaleed also owns Middle East media company Rotana Holding, and controls more than $3 billion worth of real estate, including a 124 acre personal resort complete with a private zoo.

And then there's the Airbus A380 "superjumbo" jet Alwaleed bought and had outfitted for his personal use. It's valued at $330 million -- a little less than the price tag for his other two jetliners combined.

No. 2 on the list with $9.6 billion is Nasser al-Kharafi, a Kuwaiti businessman who holds the Middle East franchise for chains such as KFC, Hardee's and Pizza Hut. He's also the largest shareholder of Krispy Kreme Doughnuts Inc.

Another prominent name on the list: the Bin Laden family, which makes its money in the construction business. Arabian Business puts the net worth of the clan, which has tried to distance itself from its most notorious member, at $7.2 billion -- good for seventh place.

Altogether, the magazine said the world's 50 richest Arabs lost a combined $25 billion amid the global meltdown, much of it since the end of summer like investors elsewhere.

"The surprise is how much money everyone has lost," Anil Bhoyrul, editorial director of Arabian Business publisher ITP Executive Publishing Ltd., said in an interview. "The list we published is a lot different than the list we originally put together only a few months ago."

The war between the intangible and tangible sectors of the U.S. economy is over—and intangibles have won. Since the economy went into recession a year ago, the industries producing or distributing physical or tangible goods—including construction, manufacturing, retail trade, and transportation—have lost an astounding 1.8 million jobs. That includes a decline of 260,000 jobs in the much-beleaguered auto industry and its dealer network, and a drop of 300,000 in residential construction employment.

Meanwhile, the intangible sector, which includes such industries as education and health care, has received far less attention than autos and housing. But since the recession start date of December 2007, the intangible-producing industries have gained about 500,000 jobs.

In fact, today's troubles in autos and housing are indications of a long-term shift: The U.S. economy, in part because of globalization but also because of the nature of knowledge-based growth, has been moving toward producing outputs that have long-lasting effects but don't have a solid and visible forms. One such intangible produced by the education system is human capital, which is another phrase for the long-term value of education. Another important intangible is intellectual capital, which is the accumulation of scientific knowledge, business and financial knowhow, and artistic accomplishments. Finally, the U.S. is spending heavily on building up health capital. That's the dollar value of a person's lifetime health, according to David Cutler, a Harvard University economist and a key adviser to President-elect Barack Obama.

These intangibles—critical for today's knowledge-based economy—are not well measured by the gross domestic product figures produced by the Bureau of Economic Analysis. However, intangibles do produce jobs. Consider the last business cycle, which ran from March 2001 to December 2007. Over that stretch, health and education alone added 3.5 million jobs, roughly 63% of all the net jobs produced by the economy. Altogether, the intangible sector accounted for about 75% of job growth. By comparison, the tangible sector, led by manufacturing, lost some 1.8 million jobs over the same period.

A Fine Line?

Of course, this division between the tangible and intangible sectors is a bit messy in practice. Some manufacturing companies, such as Intel (INTC) and IBM (IBM), are big producers of intangibles in the form of research and technological knowledge. Oil companies, which are dedicated to the tangible act of drilling for crude, also invest heavily in the intangible knowledge of where to find the oil. At the same time, the intangible sector is not immune to the downturn. Publishing is losing jobs, as newspapers, magazines, and book companies wrestle with the shift to digital formats. And finance is experiencing big job losses, which will only accelerate in the coming months. Education and health-care spending, meanwhile, is tied to state and local budgets, which are likely to crater without help from the federal government.

But at least so far, the intangible sector, notably health care, has remained remarkably buoyant. In September 2006, I predicted that 30% to 40% of all new jobs created over the next quarter-century would be in health care. That long-term forecast turned out to be an understatement in the short run. Since that story was published, health care has added roughly 800,000 jobs, while employment has declined sharply in the rest of the economy.

For Obama and his incoming Administration, the question is whether the shift to intangible production is a sustainable economic strategy over the long run. Better education, improved health, and more research are clearly necessary to be globally competitive. But it's not clear yet whether a country such as the U.S. can afford to let all its tangible industries shift abroad. That's why Washington is grappling with the knotty problem of spending billions to save the domestic automakers. But Americans who want jobs have no such dilemma. For them, intangible is the way to go.

Mandel is chief economist for BusinessWeek.