COMMENTARY

Peter Burgess

Thank you folks for your great ideas to help and promote the Occupy Movement. Obviously money helps but other actions and contributing effort is very meaningful, and for many more practical. We all know something is very wrong with the global profit economy, and I would suggest one of the issues is that money profit and GDP growth are the only measures of performance anyone in finance, economics or anything else has ever been taught. Listen to Bloomberg News, CNBC and the rest and you will see the problem. We all know that quality of life is not just about money, it is much deeper than that. It has many dimensions, most of which are ignored in conventional performance metrics. I have been agonizing over this issue for a very long time and have attempted to put together something that will be better. I call it TrueValueMetrics (TVM) ... meaningful metrics for a smart society. The concept is to expand the GAAP accounting framework to include value as well as money. and to make a place in society the key reporting entity, not the organization. In this structure and organization is 'in' society not 'on top of' society. Value is everything that goes into quality of life and the sustainability of society and the planet. It is subjective and it is difficult to quantify ... but there are techniques for this that are relatively simple. A key accounting concept is the relationship between a balance sheet and the profit for a period. In TVM there is the same concept. As I see it the 'purpose' of all economic activity is to sustain and improve quality of life. In TVM, State of Quality of Life is like a balance sheet at any point in time for a place. Progress is 'valueadd' which is like profit, but using a value construct and not just money. As in money accounting where the change is balance sheet is also profit, the change in state of quality of life is also 'valueadd'. Performance is how much resources are consumed in order to generate 'valueadd'. When we use TVM value thinking when looking at Goldman Sachs we can see profit, but are we able to see valueadd. I certainly have difficulty finding it. When we look at an organization like Doctors without Borders I cannot find much profit, but I can easily find valueadd, When I look at a place with a good school, I cannot find profit, but I can find valueadd, A community that is safe, and a community that is respectful and has a nice small police force has a better state than a community that has violence, confrontation and needs a huge aggressive police force. You get the idea. There is a lot more. If we can put value in play as a metric of performance .... the next step is to start a process that makes the capitalist market economy evolve into a new value market economy #NuVME. There are a lot of philanthropic funds already in existence but they are not using particularly helpful metrics and there is no effective 'market' that give them support in the way the profit economy gets support. Note I am not anti-capitalist ... but cannot see how a capitalist market economy is ever going to get to grips with the huge problem of global poverty and the massive backlog in essential infrastructure and under-educated and under-healthed people on our planet. Technology is good enough to handle all the production we need, but we have no mechanism to get critical economic activities financed. These ideas have been evolving for a very long time ... I think they are pretty sound, but I am sure better minds than mine will be able to (1) improve the concepts and (2) make them practical on top of 2011 technology. My computering started way before Jobs and Gates came on the scene ... and while I have tried to keep up it is now a race that I acknowledge I am losing. The concepts remain valid ... the right platform might make the ideas fly. Peter Burgess @truevaluemetrics