TVA p3-01 WHY SOCIETY NEEDS BETTER METRICS

True Value Accounting
WHY SOCIETY NEEDS
BETTER METRICS
File: MDIA-p3-01-1-WHY-151102.odp Peter Burgess (c) All rights reserved
TRUE VALUE ACCOUNTING

CONTEXT
This slideset is a Work-in-Progress
and will be updated from time to time.
It is part of a series that aims to
enable better metrics for the complex
socio-enviro-economic system that
we all live in. Metrics are powerful,
but they must be the right metrics.

The GOAL is to design and
deploy a system of metrics for
management that accounts for
impact on people and planet as
rigorously as double entry
accounting accounts for money
transactions that impact profit
MULTI DIMENSION IMPACT ACCOUNTING

Corporate profit performance
over the past fifty years has been
impressive …

GDP growth over the past 50
years very strong …

But labor income over the past
fifty years … not so good.

And environmental issues getting
worse … not better.

This is an unsustainable
trajectory for our complex global
socio-enviro-economic system

SOCIO … PEOPLE
ENVIRO … PLANET
ECONOMIC … MAN BUILT CAPITAL

Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPSOCIO - PEOPLE

Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPENVIRO - PLANET

Sun
BOP
Sun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOPECONOMIC – MAN BUILT CAPITAL

The balance between PEOPLE,
PLANET and PROFIT is most
likely unsustainable …

The following slides reflect what
has happened over the past
millions of years …

YELLOW:
The PEOPLE piece … Human Capital (NC)
DIRTY BROWN:
The ECONOMIC piece … Man Built Capital (MBC)
GREEN:
NATURE, ENVIRONMENT … Natural Capital (NC)
COLOR KEY

Hum
an
Capital
Man
Built Capital
Natural Capital

Trajectory to disaster!
This must be changed
to this …

PEOPLE progressing
MBC* efficient
PLANET healthy
* Man Built Capital … Man Built Structures and Systems

For the past 50 years, using
conventional metrics, the system
has optimized for performance of
FINANCIAL CAPITAL but while
ignoring everything else ...

ECONOMIC GROWTH 1970 to 2011
CORPORATE PROFITS ...
GDP …
LABOR INCOME ...
3,600%
1,500%
1,100%

According to Federal Reserve data,
wages and salaries as a % of GDP
has declined steadily since 1970

In the 1950s and 1960s wages and
salaries were gaining moderately
while profits were declining. Since
the 1980s profits have increased
strongly while wages and salaries
have been decreasing as a share of
GDP.

Robert Reich … former Secretary
of Labor in the 1990s … shows pay
rose with productivity until 1969
and then it didn't ...

Since 1950 world PER CAPITA GDP
has grown more rapidly than at any
previous time ...

… but this is an average that does
not mean very much …

Rich countries and rich people
have increased their income and
wealth much more significantly
than poor countries and poor
people as these data for the USA
and the UK show ...

… but the metrics are not getting it
right …

The growth in GDP for the USA
over the period from 1945 to the
present has been phenomenal …
but the HAPPINESS of Americans
has deteriorated in this time.

Corporate money profit performance over
the past fifty years has been impressive

The growth in GDP also has a
strong correlation with increasing
stress on planetary resources and
the environment.

The growth in global population is
not as serious a problem as the
growth in GDP …

THE CHALLENGE …

There has been an amazing
improvement in productivity over
the past 40 years … and almost all
the benefits derived from the
increases in productivity have
accrued to owners.

This is what Business Schools
teach … and they do it very well.

In order for the socio-enviro-
economic system to be optimized
for people and planet and profit, an
improved system of metrics is an
absolutely essential prerequisite.

… and this is what Multi Dimension
Impact Accounting (MDIA) is all
about.

REMINDER
This slideset is A WORK-IN-PROGRESS. It will be
upgraded periodically. It is part of a series of more than
100 slidesets. Navigation to these is available here:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=N1-Slidesets-p3
More about the True Value Metrics initiative is at:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav
FEEDBACK is welcome. Please email to Peter Burgess …
peterbnyc@gmail.com … with a catchy phrase in the
subject line so that it gets attention, and please identify
the specific slideset(s) or webpage involved.

THANK YOU
Some links and contact information:
Email Peter Burgess … peterbnyc@gmail.com
Peter Burgess LinkedIn profile
https://www.linkedin.com/in/peterburgess1
Link to TrueValueMetrics.org website
http://www.truevaluemetrics.org/
Link to navigation to other resources:
http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=list0100-MainNav#1

TVA p3-01 WHY SOCIETY NEEDS BETTER METRICS

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