ECONOMIC PERFORMANCE 1970s to PRESENT
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ECONOMIC PERFORMANCE 1970s to PRESENT has been very good for owners but much less good for those who work for a living. It is not at all clear yet that those in leadership positions and those with power understand that this trajectory is completely unsustainable and is creating a number of existential threats that are growing with time. True Value Accounting is being designed so that the system of metrics will be able to get to grips with everything that needs to be done to make the world a better place
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ECONOMIC PERFORMANCE 1970s to PRESENT
- 1. ECONOMIC PERFORMANCE 1970s TO PRESENT File: ECONOMIC-PERFORMANCE-1970s-TO-PRESENT-160805.odp Peter Burgess (c) All rights reserved TRUE VALUE ACCOUNTING
- 2. 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. TRUE VALUE ACCOUNTING
- 3. Since the 1970s, the economy has been good for owners, but not so good for workers. TRUE VALUE ACCOUNTING
- 4. The following graphic shows something about the perception of value in the modern economy: TRUE VALUE ACCOUNTING
- 6. There was a time when tangible assets were important … the light gray segment … land, buildings, machinery and equipment, etc. TRUE VALUE ACCOUNTING
- 7. But stock prices … the bright red segment … have become less and less correlated with the tangible assets of companies. TRUE VALUE ACCOUNTING
- 8. And intangibles … the light brown segment … have increased reflecting more and more M&A and the purchase of such things as intellectual property. TRUE VALUE ACCOUNTING
- 10. It was back in the mid-1980s that I started to observe that the biggest cost in modern business was profit … and since then this characteristic of the economy has become even more of an issue. TRUE VALUE ACCOUNTING
- 11. Greater productivity reduced the cost of making things … but maximizing profits increased the cost of buying things! TRUE VALUE ACCOUNTING
- 12. Owners of assets have done very well over the last 40 years. TRUE VALUE ACCOUNTING
- 13. This has not been matched by much quality of life improvement for those that work to pay their bills. TRUE VALUE ACCOUNTING
- 14. Productivity has increased but wages have not TRUE VALUE ACCOUNTING
- 16. Productivity has increased but wages have not TRUE VALUE ACCOUNTING
- 17. TRUE VALUE ACCOUNTING Peter Drucker, a well known management guru famously said: “You can't manage what you don't measure”
- 18. We measure profits We measure stock market prices We measure GDP growth TRUE VALUE ACCOUNTING
- 19. Profits, stock market prices and GDP growth are in the 24 hour news cycle every day of the year. TRUE VALUE ACCOUNTING
- 20. … not so much quality of life, and depletion of natural resources and degradation of the ecosystem and the environment. TRUE VALUE ACCOUNTING
- 21. CEOs and investors understand NPV … net present value … of the flow of future profits TRUE VALUE ACCOUNTING
- 22. … but they do not use the same rigor in valuing future risks, especially existential risks like climate change and social disruption that will arise from structural unemployment. TRUE VALUE ACCOUNTING
- 23. Conventional accounting has been very effective in helping to manage for business profit performance, but less so in accounting for externalities. TRUE VALUE ACCOUNTING
- 24. True Value Accounting is based on the concepts of conventional accounting, applying them to ALL the issues that are important … multi dimension … multi perspective … about everything TRUE VALUE ACCOUNTING
- 25. … to get things better, then we had better start to measure the right things … and in the right way. TRUE VALUE ACCOUNTING
- 26. 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-SlideNav-for-TVA More about the True Value Metrics initiative is at: http://www.truevaluemetrics.org/DBadmin/DBtxt001.php?vv1=n1-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. TRUE VALUE ACCOUNTING
- 27. 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 TRUE VALUE ACCOUNTING