TVA p3 00 CONCENTRATION OF ECONOMIC POWER

CONCENTRATION
OF ECONOMIC
POWER
TRUE VALUE ACCOUNTING
File: TVA-p3-00-CONCENTRATION-OF-ECONOMIC-POWER-151120.odp Peter Burgess (c) All rights reserved

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.

CONCENTRATION is good for
PROFITS …
MULTI DIMENSION IMPACT ACCOUNTING

BUT … how good is concentration
for SOCIETY (people) and the
ENVIRONMENT (planet)?

Great fortunes have been made
by entrepreneurs who have
managed to concentrate the
industry and monopolize their
markets …

John D. Rockefeller
1839 - 1937 … who built
the Standard Oil monopoly
in the late 19th century

Bill Gates … who built
the Microsoft operating
system monopoly in the
late 20th century

Strong anti-trust legislation was
passed early in the 20th century
in the USA and Europe … but all
of this seems to be less effective
in the past few decades than it
was a century ago …

From the perspective of investors
it seems that bigger is better …

From the employee perspective
bigger usually means that the
employee is simply a smaller cog
in a bigger machine …

From the environmental
perspective bigger usually means
that the damage is bigger, and
often also means damage is more
remote and away from prying
eyes …

Investors are represented in the
very big organization by a Board
of Directors and the C-level
management who understand the
relationship between profit and
investor satisfaction …

Many very big companies will not
tolerate Union representation for
their employees …

Very big global supply chains
facilitate a 'race to the bottom' for
worker remuneration, benefits
and even workplace safety …

Accountability has been
compromised by concentration …
it is easier to hide bad practices in
a very large organization than in
one that is small and relatively
simple.

Accountability has also been
compromised by concentration in
the assurance (audit) industry
which is now dominated by very
few large firms … and worse,
these firms also earn substantial
fees from various forms of
consulting.

Accountability is compromised
further by a system of accounting
and its associated rules that only
works for investors, but not for the
other stakeholders in the modern
global socio-enviro-economic
environment.

VERY BIG does enable economies
of scale … most of the time … but
not all of the time … and this can
be good for PROFIT.

VERY BIG also means less
competition which is good for
PROFIT but bad for PEOPLE …
the consumer.

VERY BIG also means more RISK

VERY BIG companies usually
have the data to optimize for
maximum profit … but few are
organized so that they are able to
optimize for minimum risk … and
especially risks that impact on
society and the environment.

How many companies make 80%
of the world's aircraft?

How many companies distribute
80% of the world's grain?

How many companies produce
80% of the world's oil and gas?

How many companies represent
80% of global Internet traffic?

How many companies dominate
in the Internet segment of the
economy?

Concentration is very good for
companies (profit) and investors
(stock value) … but there is no
accounting for how bad this same
concentration is for society
(people) and the environment
(planet).

I like this quote from Adam Smith
… writing in the 18th century.

Sun
Economic Foundations
Sun
BOP
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun SunSun
Financial
Capital
Human
Capital
Man Built
Capital
Natural
Capital
Sun
EOP

… nothing wrong with market
based capitalist economics if this
is the foundation … but very
much wrong when performance is
ONLY about making maximum
profit.

Big … concentration … is not bad
per se … but very bad when it is
used simply to make more profit.
Being big and efficient with good
impact for all components of the
socio-enviro-economic system is
fine …

… and for this to become the
norm, it is essential that
conventional accounting is
enhanced to include impact on
society (people) and environment
(planet) as effectively as it exists
for organizational performance
(profit)

A FINAL OBSERVATION …
History seems to suggest that
bigger is better when an industry
is emerging … but when an
industry has matured, being big
may mean lack of agility and first
step towards failure.

The issue of concentration will be
addressed in the various SECTOR
specific sections of the TVM-MDIA
initiative.

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 00 CONCENTRATION OF ECONOMIC POWER

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