Burgess Manuscript
COMMUNITY ACCOUNTANCY
COMMUNITY IS WHERE WE LIVE OUR LIVES
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Chapter 1-1
The Historical Context
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5000 years of very slow progress ... until very recently
There was very little change for several millennia, but in the recent past incredible change.
We are no longer in a world where shortage and hunger are endemic ... and insoluble. Rather we have a
planet where there is the possibility for everyone to be out of poverty and enjoying a reasonable standard
of living ... but there are systemic issues that make progress impossible for as much as half the world's
population.
Though some take pride in the progress as measured by stock market valuations and personal money
wealth ... others are looking at the continued high levels of poverty, hunger and disease, and the vast
amount of waste that characterizes modern society.
Recent performance ... huge missed opportunities
Achievement over the past fifty years has been pathetic compared to what they could have been ... what should have been!
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Why is this? How is this?
The progress and power of science and technology has been far more than expected ... it is amazing ... it is accelerating ... it offers huge potential. But why has science and technology not translated into a much better quality of life, not only for a relatively few, but for the multibillions that still live in abject poverty around the world.
Achievement is so much less than what might have been expected ... there is something terribly wrong and it is not clear what it is that is wrong. There is a systemic failure of some sort ... and one bit of this failure is the lack of suitable metrics that show what is being successful and what is not.
50 years ago ... great expectations
50 years ago, in the 1960s, development expectations were very positive.
A lot was changing ... the economic power of the United States was at a peak ... WWII had been won ... Europe was rebuilding.
The European colonial empires were ending ... in good part because the old European powers no longer had the financial resources to sustain them. But there was also a prevailing view that independence was going to result in a new and better global society.
The expectation was that the NORTH would progress and that the SOUTH would start to catch up.
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Expectation
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Realization
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The realization is that the NORTH has had success and the SOUTH has largely failed.
The north has doubled its wealth every decade for the past five decades. Rich get richer ... poor get poorer. The south has lost wealth every decade for five decades.
There are some successes ... and the lesson from this is that there could have been much wider success if the governance, the leadership and the system had been effective.
The result is failed development with about half the population of the planet in poverty, hungry and diseased.
The NORTH has done better than the expectation due to amazing scientific and technological progress. The SOUTH reflects the tragic impact of failed development.
We know enough to have had some successes ... the fact of failure suggests something is terribly wrong. Compared to where we could be ... where we should be ... we have failed. There is an obscene amount of poverty, hunger and disease and leadership does not seem to be much capable of making material improvements.
Today's development expectations
The north is going to have a difficult future because of an approach that depends on unsustainable
consumerism and unfriendly global partnerships.
The south has no leverage to change anything
This will play out with a new geopolitical balance of power where the old economic predominance of the
United States and Western Europe is overtaken by China, India, Russia and powerful new alliances
involving raw materials and energy producers.
As population increases and as aspirations are dashed and hopelessness increases there will be more and
more instability and insecurity.
Or is there a better way ... the north has all sorts of possibilities with well intentioned global cooperation.
The south has huge capacity in terms of human resources and raw materials but needs well intentioned
global cooperation to make these abundant resources productive and valuable.
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Most Likely
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True Potential
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A better development paradigm is not more money spent the same old way ... it is one where the
legitimate hopes and aspirations of the multi-billion people in poverty can start to be fulfilled.
Science and technology have huge potential. But this knowledge needs to be mobilized for social good not simply to maximise profit for investors with little or no benefit going to others.
People have a huge potential for doing good ... but the framework for this must be established.
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WHAT IS WRONG? SYSTEMIC DYSFUNCTION
Taken as a whole ... there is systemic dysfunction
The background to development of Community Accountancy is that experience suggests that there are
many things wrong ... and a portfolio of possible interventions to improve what is being accomplished.
While there is very good science and technology that could be deployed for the benefit of society to
achieve better socio-economic performance this is not being done. Why not and what to do about it?
The progress of development has been much less than was expected 50 years ago ... not because science
and technology does not exist ... not because the world is short of wealth and knowhow ... but because
there are constraints.
The constraints to success and rapid progress are many ... institutional, traditional, cultural,
governmental, etc., etc.
Community Accountancy identifies some of these and helps get them addressed.
Progress and performance has been constrained by something ... or many things ... that add up to systemic
dysfunction.
Community Accountancy aims to put data about community economics into a balance sheet ... and see
what are the constraining factors ... and how they can be removed so that the community progresses.
The problems are many. No one silver bullet will make much of a difference on its own. The easily
recognized problems fall into a number of groups:
- Systemic dysfunction,
- Inaccessible data,
- Chaotic complex structure,
- Decline of professionalism,
- Value destroying dynamics.
Wrong modes of interaction
The main interaction between north and south over the past several decades has been “official” through
government and institutions like the World Bank, the IMF, UN, bilateral government agencies, etc..
Private NGOs and family remittances were small. This did not work well ... the structure has been
dysfunctional and the result has been failed development.
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A better situation ... less official interaction and much more private and people to people interaction.
There have been changes ... but there is resistance by established organizations that do not want to have a
diminished role. And there is the role that grand corruption has had on progress facilitated by the large
official flows of relief and development assistance and the benefits arising from favored official
treatments.
Wrong way information flows
Information flows ... too much North to South. The present state of affairs is for a vast effort to flow
information to educate and inform the south ... based on the idea that north knows and south does not. In
fact the north has relatively data, even though a vast amount of analysis is done ... with conclusions that
may well be without merit. And a large pool of data in the south is almost totally ignored ... even though
it would be very useful to inform decision making.
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A better state of affairs would be for the North to get much more data from the South ... and to get the
information into an organized form where it can be easily used for analysis. The North can add value to
the data by adding in what the North knows in terms of science and technology and access to financial
resources ... And the South can add further value by giving feedback about use of resources and the
results being achieved.
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INACCESSIBLE DATA
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Lots of Data ... Mostly Inaccessible
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Organization type: What data and what they do with data
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How accessible to the public
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Projects
Collect data to justify the project and get funding. Collect data for M&E and a report
to funders. At the end of the project the data is archived ... and effectively lost for
ever.
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Very low
No data put into the public space ... why
bother ... worse, it may serve to show the
project made little of value even though
it cost a lot.
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NGOs
Collect data and write reports and proposals to attract funding. Publish financial
reports required by regulatory agencies ... typical a minimum requirement that shows
very little beyond very broad classification.
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Very low
No data flows into the public space ...
none of the data accessible for analysis.
Data used to strengthen position in the
industry.
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Government Agencies – South
Most data collected in the country goes to the government in one form or another ...
but is rarely used in a productive manner, and is not usually easily accessible ... if it
is accessible at all.
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Very low
No data flows into the public space ...
none of the data accessible for analysis.
Much data treated as secret.
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Scientific Research Institutions
Data collected circulates within the scientific elite, but rarely outside academic
circles. Reports are prepared that help maintain grant flows and satisfy donors.
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Very low
No data flows into the public space ...
none of the data easily accessible for
analysis.
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Academic Institutions
Some academic institutions are well funded for data collection, but the data collected
seems to be used for limited goals including PhD production and for analysis that
supports career development and grant flow maintenance.
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Very low
No data flows into the public space ...
none of the data accessible for analysis.
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Individuals
Data collected and used for work being done by the individual, whether this is work
being done in an individual capacity, or for a project or organization.
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Very low
No data flowing into the public space ...
however, many individuals would like to
share the data so that it becomes public
access data but no easy low cost vehicle
for this.
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Corporations
Data collected is used by the corporate staff to do analysis and internal reports that
show performance and progress. Used by the corporation to show how much of
social value is being done, even where what is being done is very tiny relative to the
scale of the main corporate operations.
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Very low
No data flows into the public space ...
none of the data accessible for analysis,
but some material used for public
relations by the corporations.
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Government Agencies - North
Government agencies have collections of data ... but most of the data are protected
from public access . When data are made accessible to the public there are usually
major deletions that make the data worthless.
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Very low
Almost no data flow into the public space
... and almost impossible to access for
independent analysis.
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Multilateral Agencies
UN, World Bank and all multilateral agencies have huge collections of data, but
little of the data are able to be used in effective ways for analysis except within the
system.
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Very low
No data accessible in the public space ...
but huge amount of material is published,
most of which cannot be independently
validated.
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COMPLEX CHAOTIC WORLD
Complex
Every organization has some function that has costs and uses resources ... but not always producing
anything of value. With a complex structure and multiple steps the eventual beneficiary does not get
anything like the full value of the money allocated.
Also chaotic
It is a chaos ... nobody is accountable for anything the way things are presently organized ... everything
relies in the “market” creating balance, the media providing transparency and government providing a
workable legal framework! But it does not work ... and most of the world's population is paying a high
price for this chaotic dysfunctionality.
There is no systemic dataflow from community up ... and for all practical purposes the system of
management in the relief and development industry has all the power of “pushing on a piece of string”.
Chaos ... cover for crooks
But who would want the chaos to be managed.
The chaos has proved to be a goldmine for the participants in the industry ... with little or no concern for
performance and near zero accountability. The “do-gooder” mindset made accounting and accountability
activities that got in the way of doing “good work” ... never mind that in reality it also served as a cover
for gross corruption, incompetence and thievery of all sorts.
Chaos can be managed but it needs to done with commitment and the system has to be complete ... there
can be no holes in an accounting system any more than a bucket with holes is any good for carrying
water!
Complex structure
In 2005, Save the Children UK highlighted the complex structure of the relief and development industry
and showed how complex the fund flow was from funding sources to those in need. While they made a
good point, the situation was was really very much worse, as shown below.
In the first graphic there are 9 sets of organizations or structures between the funding and the community
level households. The first graphic has the flow from top to bottom. The second graphic has the same
entities organized from left to right ... with donor sources on the left and the ultimate beneficiaries on the
right. It does not look anything like as complex ...
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Most Likely
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True Potential
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width = 405 height = 306 >
The graphic below is an enhancement of the left to right image ... with many more of the institutions,
agencies, etc. included. The structure on the donor side has hundreds of organizations ... with functions
that overlap, work in parallel and work in series. The structure on the south side is also complex.
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DECLINE OF PROFESSIONALISM
History repeated
The decline in professionalism in the latter part of the 20th century has something in common with the
decline of the craft guilds as the industrial age took hold. Hopefully the same profit maximization driver
that helped to bring quality back into the equation for production processes might also bring back quality
and social ethics back into the professional space.
Accountancy
The decline in professionalism might be the most pronounced in the accountancy area. Fifty years ago there was a professional pride, especially among Chartered Accountants, that seemed to transcend everything. Getting the numbers right according to sound principles of accountancy was all that mattered. The idea that the client could change the numbers to suit themselves was not part of the equation.
It was not much after this that I realized that accountancy was going down a steep
slippery slope. Rather than having a simple set of principles the profession was
migrating to rules ... and these rules could help turn one set of numbers into a better
set of numbers. The rules would have been a good idea to help clarify the principles
... but as an alternative to the principles, they were a disaster waiting to happen.
Having rules that supersede basic fundamental principles is not a good idea ... but
that is what drives accountancy today.
What is especially disturbing is that the views of professional accountants are absent from public policy
debates over important issues ... yet keeping score is fundamental to performance. If there is nobody
keeping score, there is not much point in being in the game ... with terrible impact on society.
Law
A framework of law is essential to a functioning society ... but it does not need to be statutory law. There
has been law since ancient times ... a some good law has a very long history.
But the modern legal profession seems to have become both a solution and a problem. Much of the abuse
in society is not unlawful, though it is clearly not right ... and this distinction has become more and more
blurred over the years. Many lawyers are good people doing good things for their clients so that justice is
served ... but not all lawyers are in this mode. Lawyers are well paid to figure out how the corporate
world can get round society's laws with the single objective of avoiding cost and increasing profit ... and
at the expense of society.
Banking Laws to protect credit card users were enacted by New York State at the
urging of Banking Commissioner Muriel Siebert during the 1980s. Twenty years
later there is no credit card company in the United States that is covered by these
laws ... because there are ways round them so that credit card users can be abused
with hardly any limits. Its not unlawful!
The legal profession may be concerned about the state of the profession ... but their voice is very muted.
Every legislative session, the law gets bigger ... but hardly ever gets better.
Education
Education ... learning is critical for a successful tomorrow ... but the profession of education has been
replaced by the business of education, much to the chagrin of the professionals of education. The
emergence of “fast food” was unpopular among gourmets ... and now there is a similar “fast learn”
segment in the education sector. It will serve for a little while ... but it will be useless for the longer term.
Professional educators understand the complexity of teaching and learning ... but they have been
sidelined. The metrics are not working ... and to a large extent the money and the resources are beig used
ineffectively.
Health
The science is amazing ... but the economics are a disaster. Health is another sector where the business of
health has been separated from science and professionalism. The predominance of money metrics makes
it very difficult to optimize medical science for socio-economic benefit and the result is a chaotic monster
that costs a lot and sometimes is wonderful and sometimes is either inadequate or absent. There is need
for reform that builds on the best and systemically addresses issues that constrain scientific excellence
and cost effectiveness.
Banking
Banking was a profession ... or a near profession two generations back. There were less law governing the
way banks operated, but there was more clarity and understanding of the important role the bank and the
banker played in the functioning of the community and the broader society. Banking had a responsibility
to be sound ... more than it had a responsibility to be profitable.
Ministry
Ministry should not be overlooked ... the spiritual dimension of the human condition is powerful and
really is central to optimizing the quality of life. But the professional aspect has become weak ... too
weak. The professional ministry that brings spiritual value back into the quality of life equation is
something that has importance.
Military
In much of history the military have been in possession of great power ... and have used this to provide
security for society ... and provided a professional service. But not always. From time to time the military
have used their power to take over the governance of society, almost always with bad consequences.
There has often been justification for the military becoming the supreme power in a country ... but
without checks and balances it has almost always ended up with bad outcomes.
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