MANY CAPITALS
ECONOMIC CAPITALS
INTANGIBLE CAPITALS
FINANCIAL GOODWILL, ENABLING ENVIRONMENT, KNOW-HOW, IP, GOODWILL, REPUTATION, RULE-OF-LAW, SECURITY, ETC.
|
Knowledge / Government / Rule of Law / Ethics / Culture / Security
|
CREATED INTANGIBLE CAPITAL ... OVERVIEW
The monetization of intangible capital explains how so much financial wealth is now recorded in the numbering of world performance.
One of the benefits of True Value Impact Accounting is bringing some clarity to the role that INTANGIBLE CAPITAL is playing in the progress and performance of the socio-enviro-economic system. It is increasingly apparent that the growth of intangible capital has enabled inequity in important ways.
In its essence, intangible capital is created by the gap that arises when the discounted thinking about the future of things is bigger than the current state of things.
Because conventional numbering about the economy is based mainly on financial analysis, things like financial goodwill in the balance sheet of companies is very visible and very large, and at the same time, all the existential risks for the future of society and the planet, like massive social disruption, large scale war, climate change, etc are being ignored because they are not being numbered.
|
FINANCIAL GOODWILL
The intangible value recorded in the balance sheet of an enterprise.
|
Financial goodwill is a construct used in financial engineering to maintain the integrity of a financial balance sheet. Goodwill arises when a company purchases the equity of another company at a price that is more than the net assets on the puchased company's balance sheet.
Goodwill in accounting is an intangible asset that arises when a buyer acquires an existing business. The goodwill amounts to the excess of the 'purchase consideration' (the money paid to purchase the asset or business) over the total accounting value of the assets and liabilities per the books of account.
The graph shows how the proportion of goodwill for the companies in the S&P500 has increased over the period 2003 to 3013 which was already up considerably over the previous three decades. This makes portfolio investment for 'real' development progress more and more difficult ... one of many systemic constraints on better socio-enviro-economic performance.
|
FINANCIAL FICTION
Forty Years of Accounting Fiction
|
There has been a tectonic shift in the foundational thinking of accountancy that goes back more than 40 years, This is the shift from accounting for cost to the accounting for value.
It is a subject avoided in polite accountancy conversations ... but it is a reality, and very convenient for those with power and influence in business and politics.
The press has not helped. They are incredibly sloppy in most of their reporting confusing and conflating the words price and cost using the words interchangably as if they are the same thing!
|
FINANCIAL FICTION
How can huge 'intangible value' be the modern reality?
|
And, of course, the answer is that it can't!
But that is how the business economy has been operated for the past four decades.
Post WWII there was an economic boom driven in large part by the need for post-war rebuilding. This was supported by substantial public investment funded by taxation.
I remember well my own personal experience with taxation in the UK in the 1960s. I was training to become a Chartered Accountant in London and did some of the 'grunt work' on the tax returns of some wealthy industrialists who were paying in excess of 90% in taxation of their incomes to the UK government. At the time, the equicvalent rate in the US was lower ... but still over 80%. A=nd this was not on earnings of billions, but 'only' millions!
What were tax rates of 90% have been reduced to under 30% and people wonder why it is that government cannot pay for essential services in investment without durring at a deficit.
I am appalled at the lack of factual knowledge within the general public ... a problem that starts with an unacceptably week education system and a disfunctional media that is nore about amusing the adult public ... and making money ... than it is about informing the public in a responsible manner.
|
KNOWLEDGE / INNOVATION / INTELLECTUAL PROPERTY
KNOWLEDGE ENABLES BETTER MAN BUILT SYSTEMS AND STRUCTURES
MODERN KNOWLEDGE IS AMAZING - BUT COULD BE USED BETTER
|
Knowledge is the result of study, research and learning. Knowledge is a critical enabling factor for the efficient functioning of the modern enviro-socio-economic system. Knowledge has increased very rapidly in the past century, and there are massive amounts of new knowledge every day. The challenge is to use this knowledge in the most valuable and positive way for the benefit of society, This has not been the experience over the past fifty years, and has to change. There is a huge amount of knowledge now compared to the past, and it is growing exponentially. The question is whether or not knowledge will be used for good or ill.
Knowledge can be used for GOOD or BAD ... this is determined by the decision making processes that are in place. Recent history is that knowledge has been deployed mainly in order to maximize profit performance and rather little for value performance.
|
REPUTATIONAL VALUE ANALYSIS
Published by the Reputation Institute
|
The Global RepTrak® 100 is a study that the Reputation Institute conducts annually to measure the reputation of the world’s 100 most highly-regarded and familiar global companies in 15 countries. Included firms must meet the following qualifications:
1) Have a significant economic presence in the 15 largest economies
2) Have an above average reputa)on in its home country
3) Have global familiarity over 40%
While this is interesting it is only half the story. There needs to be as much publicity given to companies with 'bad' reputations because it is these companies that are doing damage to society and to the environment.
But is is worse ... many of the companies that are doing social and environmental damage are 'private companies' with very minimal public reporting requirements that are able to pperate with minimal official oversight!
|
ENABLING ENVIRONMENT
GOVERNMENT / TAXATION / LAWS / REGULATION / INSTITUTIONS / SECURITY
|
Knowledge / Government / Rule of Law / Ethics / Culture / Security
|
|
|
Navigation to -->
|
MainNav
|
SlideNav
|
|
|
ENABLING ENVIRONMENT
GOVERNANCE / LAWS, RULES AND REGULATIONS / TAX REGIME / GOVERNMENT INCENTIVES / SECURITY / COMPANIES / INSTITUTIONS / ETC
|
GO TOP
|
|
|
GOVERNMENT
|
|
GOVERNANCE - FRAMEWORK OF LAWS, RULES AND REGULATIONS
Society has had laws, rules and regulations for thousands of years. These are needed, but they should be efficient and fair and not gamed for the benefit of powerful special interests.
|
Open L0700-CIC-Government
|
|
SAFETY / SECURITY
SAFE ENVIRONMENT / SAFE PRODUCTS / SAFE STREETS / NATIONAL SECURITY
|
|
POLICE / LOCAL SECURITY
|
|
|
|
LOCAL SECURITY
Police, courts and prisons are part of local security ... but culture and attitude on the part of everyone are even more important.
|
Open L0700-SI-POLICE
|
|
|
MILITARY / INTERNATIONAL PEACEKEEPING AND SECURITY
|
|
|
MILITARY / INTERNATIONAL PEACEKEEPING AND SECURITY
Police, courts and prisons are part of local security ... but culture and attitude on the part of everyone are even more important.
A competent and strong military is important ... but competent, strong dimplomacy is even more important.
|
Open L0700-SI-MILITARY-INDUSTRY-COMPLEX
|
|
|
JUSTICE
|
|
JUSTICE
The US Supreme Court building / The Justices
|
| |
|
PLACE
Commercial buildings
|
| |
|
PROCESS
Hot strip mills producing coils of sheet steel
|
Site Navigation
MANAGEMENT METRICS
Effective management is an essential component for robust progress
|
|
