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Growth is perhaps the most important metric in the modern economy, but it is a very bad measure of economic and social performance for many reasons. More does not mean better. Quality has value as well as quantity. In a shortage environment more does mean better, but that does not hold when there are endemic surpluses. A more does not mean better when there are constraints such as those that are posed by environmental issues. The system is complex and better metrics are needed in order to get the best possible results.

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  2. 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 describe the extremely complex socio-enviro-economic system that we live in, and how better metrics will make this system work better. TRUE VALUE ACCOUNTING
  3. 3. GDP GROWTH The dominant metric in economic analysis revolves around the idea that economic growth is good … that GDP growth will result in a better socio-economic outcome. TRUE VALUE ACCOUNTING
  4. 4. YES … in low income economies, quality of life improves as GDP increases. Where people are short of the basics, more is better. TRUE VALUE ACCOUNTING
  5. 5. … but this idea is invalid in countries where inequality grows and most of the increase in GDP accrues to a rather small economic (or political) elite. TRUE VALUE ACCOUNTING
  6. 6. … and in high income societies, using GDP growth as a proxy for improving quality of life in high income economies has been more and more unreasonable since the 1970s. TRUE VALUE ACCOUNTING
  7. 7. In the United States since the 1970s GDP growth has increased the wealth of owners at the expense of workers … see this graphic: TRUE VALUE ACCOUNTING
  8. 8. SunSun BOP Financial Capital Human Capital Man Built Capital Natural Capital Sun SunSun EOP Financial Capital Human Capital Man Built Capital Natural Capital Sun Productivity -v- Wage Compensation TRUE VALUE ACCOUNTING
  9. 9. PRODUCTIVITY Productivity has improved in an amazing way over the past century. Productivity determines what can be produced with available resources. As a result of improved productivity there are enough products to support a high standard of living. TRUE VALUE ACCOUNTING
  10. 10. WASTE An economy that is driven by the idea of GDP growth is prone to increasing production while paying no attention whatsoever to the problem of waste. More consumption, even associated with more waste, gives economic growth … but what impact on the environment? TRUE VALUE ACCOUNTING
  11. 11. The modern money system must have economic growth to remain viable TRUE VALUE ACCOUNTING
  12. 12. … but the natural system cannot support GDP growth indefinately TRUE VALUE ACCOUNTING
  13. 13. A major change in thinking about economic priorities is essential ... TRUE VALUE ACCOUNTING
  14. 14. Quality of life should be the top goal … without increasing the quantity of product (goods and services) TRUE VALUE ACCOUNTING
  15. 15. … while maintaining nature's ecosystems TRUE VALUE ACCOUNTING
  16. 16. Investing in a better world should be the priority … better lives, better products and better processes. TRUE VALUE ACCOUNTING
  17. 17. Better metrics are needed so that impact on people and impact on planet (environment) are measured as rigorously as profit and money wealth TRUE VALUE ACCOUNTING
  18. 18. A very large commitment to technology is going to be required to achieve a better world … but it is possible, and a huge opportunity for investors. TRUE VALUE ACCOUNTING
  19. 19. Impact investing is going to be a critical part of the capital market over the next few years. TRUE VALUE ACCOUNTING
  20. 20. TRUE VALUE ACCOUNTING Peter Drucker, a well known management guru famously said: “You can't manage what you don't measure”
  21. 21. An important step is to develop and deploy a better system of metrics, True Value Accounting is such a system TRUE VALUE ACCOUNTING
  22. 22. 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: FEEDBACK is welcome. Please email to Peter Burgess … … with a catchy phrase in the subject line so that it gets attention, and please identify the specific slideset(s) involved. TRUE VALUE ACCOUNTING
  23. 23. THANK YOU Some links and contact information: Email Peter Burgess … Peter Burgess LinkedIn profile Link to website Link to navigation to other resources: TRUE VALUE ACCOUNTING