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|Date: 2022-07-07 Page is: DBtxt001.php bk0001030|
The Basic Concepts of True Value Metrics
Progress Is More Happiness
Different from the pursuit of wealth
The Founding Fathers of the United States saw fit to write about “pursuit of happiness” but they did not make mention of any of the common measures being used today to describe economic performance like profit or GDP.
It is likely that they recognized that there were many different versions of happiness … that happiness was subjective, and would depend on many different elements.
In TVM, happiness is a big part of the value profile … more important than either money profit or money wealth per se.
Profit and GDP not good measures
The business community uses profit as its main measure of success, and probably has done since the beginning of human history. But profit ignores the value flows associated with the business that impact community and society. Modern accountancy has become very sophisticated about the reporting of profit and the business world as a whole understands the metric and all the reporting associated with it. Maybe this is less true for the general public, and there are unfortunate distortions in the reporting of profit caused by laws, rules and regulations that make it possible to report inappropriately. Taxation rules, for example, are one area where distortions get incorporated into profit reporting.
In the modern era an important proxy metric for progress has been growth, and the dominant measure of growth is the economic metric Gross Domestic Product (GDP). This is a dangerous metric for society and the planet if ever there was one since it is based on the idea that more is always better. GDP has little to commend it as a measure for progress, except, perhaps that it is has a long history and is an reasonably easy metric to compile and publish, though it can be argued that even this is wrong because of the corrections and adjustments that are now incorporated in the measure to account for anomalies.
Progress is NOT more and more and more
Progress in quality of life is NOT more and more and more, but enough of some things and access to all sorts of other things. Quality of life is made up of many different sorts of things … some is “stuff” … some is services … some is intellectual … some is spiritual … some is emotional. Beauty is positive … ugly is not. Friendship and love are positive … hate is not.
Happiness … Quality of Life
People have needs … and wants
More people, more need
Basic needs must be satisfied at a minimum level in order for the poor to live … and far too many people are dying because even these basics are unachievable. Quality of life is a mix of needs and wants … a mix that is not at all uniform between individuals and cultures … nor indeed among different age groups within a culture. The diversity of needs and wants that constitute quality of life makes quantification more difficult, but not impossible.
Needs originate with people … no people and there are no needs. The more people there are the more needs there are.
There are some basic human needs ... the basics that are needed for survival. Beyond that there are other needs and wants that define who we are and how society recognizes progress and status. TVM recognizes that there is a difference in the value of a small amount of potable water required for human survival ... and the multi-gallon flows of water associated with high end flushing water closets and showers ... not to mention watering the lawn and washing the car!
More is good until basic needs are satisfied. In a shortage economy, more is a reflection of better … but the global “North” produces more than it “needs” and more merely means that there is a bigger surplus. In a shortage economy, a bigger crop means that there is less shortage, and people are able to eat more and be in better health. In a shortage economy … more is better.
Needs are not the same as wants … though more and more a money focus society is trying to convert wants into needs. The purpose of advertising is to create demand … wants that feel like needs.
TVM includes information about needs in the metric framework ... including needs associated with the very poor, needs associated with the high consumption middle class and the commerce associated the very wealthy.
Perhaps as many as 2 billion people are struggling to meet their basic needs for food, water, sanitation, shelter and clothing. Healthcare and education are highly desirable but in most cases beyond the means of the very poor.
For TVM, a better question is about the activities that result in abject poverty and what are the needs that poor people have so that (1) they may survive; and (2) they may progress.
Middle class quality of life
Most of what might be thought of as middle class needs are merely wants ... but they are the driving force of the modern consumption economy. There is a big service industry that has the singular job of convincing ordinary people that they “need” all sorts of things that are profitable to provide ... and are really not needed at all. In fact the consumer would be better off if much of what they are buying was never produced.
The conventional wisdom for many decades has been that socio-economic success is about the achievement of a middle class life style ... like the Americans. The problem with this is that middle class consumption using the American model cannot be achieved without rapid loss of the earth's natural wealth. With only 5% of the worlds population achieving this level of consumption ... natural resources are already stressed and it is difficult to imagine what will happen if 50% of the population were middle class .
For the global middle class, it is imperative that needs are redefined so that the ultimate is not simply “more and more” but something that reflects more quality and less quantity … more happiness less “stuff”.
Luxury ... not needs at all
The world has a super-rich class and though small in number they can buy whatever they want using money from their very deep pockets. This big buying power supports a big luxury sector. Much of the commerce associated with the luxury sector does not satisfy need at all ... but serves high end wants ... more the satisfaction of ego and confirmation of elite status in society!
Broad-based progress is possible
Progress out of poverty
There is far more poverty than there should be.
Out of a total world population of more than 6.5 billion, it is estimated that more than 4.5 billion are poor and hungry. In a world where global surplus production is now possible, the fact of so many poor and hungry is a global disgrace. The decision makers and the leaders of society … corporate, government and the economic elite … should be ashamed of themselves.
Better and better quality of life is a reasonable goal … but better cannot merely be more and more consumption of goods and services and more and more accumulation of money wealth, but must be more and more of value creation and the accumulation of what might be called “value credits”.
Over the past century some people … relatively few … have been able to benefit from the abundance that has become possible because of advances in technology and in consequence productivity. But many more have continued to struggle to satisfy basic needs .. and the absolute number of people now poor and hungry is more than two decades ago … more than five decades ago.
The prevailing money accounting metrics of economic performance suggest that there has been socio-economic success … but this is only partially true. Way too many people are in situations where quality of life is totally unacceptable. In order to improve performance … the first step is to get the metrics that measure the right things in the right way.
Change the way the game is scored … and you change the way the game is playedAggregate demand
Aggregate demand is a big metric in the modern money economy … aggregate demand is the driver of corporate business volume, which improves profitability which in turn makes stockholders happy. But what does aggregate demand do for society as a whole. In some situations more aggregate demand would be a great indicator of progress out of poverty … in other economic situations more aggregate demand may well end up facilitating more obesity. There is a difference and the metrics should be very clear which is which.
When community needs are satisfied by the community buying things, the community economy is on its way to being sustainable.
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