Burgess COMMENTARY

Peter Burgess

You Manage what you Measure. Attributed to Peter Drucker When you change the way the game is scored, you change the way the game is played. There are 3 sections: People; Man Built Structures and Systems; Nature and Natural Resources. CAVEAT: This is a VERY complex system; Single bullet big solutions will always fail; Multiple initiatives addressing ALL the problems identified will enable progress. THIS IS WHAT THE MATHS SHOWS! HUMAN CAPITAL ... PEOPLE For people, there are: The people at the Bottom of the Pyramid; An increasingly large and affluent middle class of business people, professionals and employees; and A very small but rich and powerful elite with substantial ownership interests. The PURPOSE of all economic activity is to enable an improved Quality of Life and Standard of Living for PEOPLE. More MONEY and more STUFF has been the proxy for a better quality of life and standard of living. This has been one of the drivers of the Western style consumer economy. MBSS Man Built Structures and Systems FINANCIAL CAPITAL; PHYSICAL CAPITAL INSTITUTIONAL CAPITAL KNOWLEDGE CAPITAL SOCIAL CAPITAL Man Built Structures and Systems Organizations of government; Organization of the private sector; Laws, regulations and systems of justice; Cities and urban infrastructure; Buildings: housing, offices, factories,etc; Plant and machinery; Transport infrastructure; Water and sanitation infrastructure; Communications infrastructure; Education infrastructure; Health infrastructure; KNOWLEDGE Technology and production processes NATURAL CAPITAL Nature and Natural Resources RESOURCE DEPLETION; ENVIRONMENTAL DEGRADATION; ECOSYSTEM SERVICES; SUN … the ultimate source of energy Nature and Natural Resources Minerals; Fossil fuel energy; Land; Water; Air; Biodiversity; Animals; Fish; Forest; Ecosystem services; Habitat. The Sun The Sun is the source of ALL energy The sun plus nature's processes enables everything. We use the easy energy stored in fossil fuels, but do not yet know how to use the energy of the sun directly in a really efficient way. This can come … Financial Capital The money dimension of the economy. This is a 'man built construct', and, as such may be changed in the interest of a greater good. People … Human Capital … STATE Quality of life is a function of: The Individual What has happened in the past What are the possibilities for the future What is happening right now Quality of life is a function of many things: Genetics Personality traits The family environment The broader circle of friends and community Knowledge from education Knowledge from experience Personal wellness Access to food and water Access to shelter Access to goods and services Security Financial wealth Job opportunities and income People … Human Capital … FLOW Basic needs are: Food Water Shelter Basic stuff A better quality of life requires: Access to health services Access to education Funds to pay for things Wealth or income from a job to provide funds Security Access to spiritual support A strong family A circle of friends A community that enhances QoL The critical constraints are: Time … only n hours per year Health / energy / capacity of the individual Institutional Capital Government Sector The Ministries of the Government The Public Lands The Public Infrastructure Laws, regulations and justice Security Education Health Private Sector Businesses … large and small Capital markets Production processes and equipment Enterprise logistics Communications Education Health Institutional Capital … FLOW Government Sector Government sector is mainly funded by taxes From time to time government transfers public assets to private ownership in exchange for money Government is also funded by borrowing from private capital markets Private Sector Private sector is mainly funded by revenues from sale Of products (goods or services) Money from revenues pays for operating costs of business This money pays for wages This money pays to purchase material inputs This money pays for energy inputs This money pays for process equipment This money pays taxes to Government This money pays profits to owners Knowledge Capital Government Sector Government sector has paid for a large amount of the research that is the foundation of modern knowledge. e.g.; Military Space Health From time to time government transfers research knowledge to the private sector; Major research universities largely funded by government. Private Sector Private sector research is funded in large part by grants from the government sector; A large part of knowledge is not available for general use because of the role of patents and intellectual property law; The business model for exploiting knowledge capital has focus on money return on investment, with no performance metric related to the potential for social and environmental good. Physical Capital … Infrastructure Government Sector Government sector has built a huge amount of infrastructure: Roads and bridges; Seaports and airports; Military facilities and systems; Government buildings; Urban transit systems. Government sector owns major assets: Land; National parks are reserves; Mineral assets. Private Sector Private sector has also built a large amount of infrastructure: Railroads; Factories and industrial facilities; Communications infrastructure. Housing; Distribution infrastructure Retail.