Date: 2024-11-21 Page is: DBtxt003.php bkTVM009030800
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Burgess Manuscripts
TrueValueMetrics ACTION INFORMATION FOR ALL OF SOCIETY Metrics about the State, Progress and Performance of Society, the Environment and Economy Metrics about Impact on People, Place, Planet and Profit |
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Chapter 3
THERE ARE WAYS FORWARD 3-8 STOP VALUE DESTRUCTION The sector perspective should not be ignored ... ... ... |
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The history of the world is one of tension between different parties, and some sort of equilibrium that results from the relative strength of the various parties. In the modern world this translates into those with power and influence being ablt to 'win it all' whil;e those without power and influence get nothing or not very much. In the environment where money profit dominates and economic activities are optimized for money profit maxi,ization, relatively little attention is going to be given to anything else. Whether or not there is value destruction as a result of corporate business activities is of no concern. In most of economic history things like environmental dmanage, social discontent, worker health and similar externalities have not been a part of the main economic and financial metrics. They are however, major issues with grave consequences. What is the value destruction when an oil company decides to invest in resource exploitation in Country A. First some soverign rights to the reosurce are sold to the oil company. How the oil company gets to buy these rights is a complex matter, with little transparency. The reason for lack of transparency is fairly obvious and widely understood ... but nothing gets done about it. Initiative like the US Foreign Corrupt Practices Act from the 1970s and more reccently initiatives like Publish What You Pay have made little different to the established order of things.Note that within a typical country like Country A the right to exploit natural resources like petroleum have been expropriated by the State from local communities essentially at the expense of traidional indegnous peoples rights for which rule of law has never mattered very much. Fast forward, the oil company extracts the oil, transports it, refinesi and markets it and as a reuslt has revenues and costs. When the accountants add up the revenues and deduct the costs the company is left with a substantial profit. If we look at the money profit balance sheet of the oil company, the oil company is better off than it was before by the amount of the profit. However, if we look at the balance sheet of the place ... Country A ... the situation is not so favorable. Before the company arrived Country A had a natural resources that was in the ground and available for future exploitation. Usually this is not valued with any rigor even though it is a resource that took millions of years to develop and cannot every be replaced. The amount paid for the rights to explit and deplete this resource is tiny compared to the value of the resource, and the balance sheet of the country is worse off after the oil company's intervention than before. This is a big issue |
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