Commentary
Richard Harris observes that 'The moment you tried to measure something (maybe an asset, maybe a civil war) by a single number, it’s unlikely to lead you to any useful conclusions.' and I have to agree. The short exchange below addresses the question of transparency and markets, specifically in commercial real estate, which is a part of the economy, and in some places a very important part. The dialog alerts me to the danger of make data simplistic, and therefore somewhat dangerous and subject to misinterpretation.
Peter Burgess

On 04/01/11 4:30 AM, Richard Harris wrote:

Like others inside and outside the “real estate industry”, I would like to see greater transparency in the operation of the marketplace and, in particular, the availability of greater financial and performance data relating to single assets.

Many will have a different view of the transparency they would like to see (through) or may still believe that we have quite enough of it already.

The debate continues and, now on CREOpoint, we have launched The TRANSPARENCY iForum to facilitate the exchange of ideas.

www.creopoint.com/profile/TheTransparencyiForum

Please visit the Forum, become a friend and leave a comment. And if you have any papers or research on the subject, please feel free to include them in My Discussions, which will enable readers to download and comment.

Best wishes

Richard

- Hide quoted text - LinkedIn Peter Burgess has sent you a message. Date: 4/01/2011 Subject: RE: Taking time to talk Transparency

Dear Richard

There are huge problems with modern (capital, commodity, carbon, super, etc) markets but solutions are not easy, especially since material changes will have substantial impact on market valuations, and therefore perceptions of wealth!

If history is anything to go by, transparency will be talked about, but not very much will get done. New rules may try, but new loopholes will make the effort meaningless.

I argue for a systemic change in dataflows about society. Expecting people and organizations to report data that weaken their competitive position cannot work. Rather there need to be metrics about the what the public see of the person or organization, and this should be the basis for market understanding.

I have done money accounting most of my career, and it is very powerful, but also very private. I look at society all the time, and have views about what I like and do not, what works and does not. I imagine so do most everyone else. Were this to be aggregated we would have an interesting image of what is going on in society.

Trends ... or trajectories ... from the past to the present to the future are all important. They should not be used as the basis for spin reporting, but to help understand important things. Young people may have a deep understanding of modern technology, but less understanding of the big trajectories that (a) made the technology possible, and (b) may or may not result in worthwhile use of the technology.

You ask about 'greater transparency in the operation of the marketplace and, in particular, the availability of greater financial and performance data relating to single assets.' and I would like to see this, but also transparency about all sorts of huge economic value flows that are underneath the radar like, for example: drug trafficking, human trafficking, arms trade, corruption and kickbacks, restraint of trade issues, repression and torture, etc. etc.

I believe modern technology and value accounting can come together to be a new platform for socio-economic accountability.

Recently it was estimated that the pro-democracy disruption in Egypt was costing the country $300 million a day in lost GDP. My value accounting question was what value the freedom that 90 million Egyptians would get if the protests were successful! Depending on the assumptions and the methodology the $-value of freedom could well be upwards of $3 trillion, while the GDP cost of the disruption (for say 100 days) would be around $30 billion. That sounds like a bargain!

When every economic transaction is thought through not only from the money business profit perspective, but also the value flows, I would expect a lot of the big decisions to be made in ways that get way better social outcomes!

Sorry this is quite long ... but your question touches on huge issues.

Peter Burgess truevaluemetrics.org @truevaluemetric peterbnyc@gmail.com

Richard Harris richard@living-planit.com to me show details Apr 1 Images are not displayed. Display images below - Always display images from richard@living-planit.com

Thanks Peter,

I’ve just been reading Jeremy Rifkin’s Empathic Civilization (well the beginning and the end) and I would agree with him (and you) that things and folk are all joined up. The moment you tried to measure something (maybe an asset, maybe a civil war) by a single number, it’s unlikely to lead you to any useful conclusions.

The great thing about commercial real estate though (I hope) is that the use of very limited data to describe very complex objects has been carried to extraordinary excess, and the survival of valuation as the lingua franca of decision making now depends upon the “political” support of a series of institutions and quasi-institutions (IPD, RICS, INREV, Moody’s, CBRE ...). My theory depends upon the beliefs that commercial real estate is a) in denial and b) slowly imploding. When the cost of its information infrastructure becomes unsustainable, it will either grind to a complete halt or abandon some of the witchcraft and start sharing the truth, the whole (well some of the) truth and nothing but the truth – and not just about the financial stuff, if we press hard.

I’m not expecting to make a great impact on the planet, but I would like to sort out a few issues in my own backyard. Most owners of commercial real estate still believe that they have more to lose by revealing the facts about their holdings, than they have to gain from operating in a more transparent marketplace. I think they’re wrong and I’d like to find out who agrees with me.

… which is the point of The Transparency iForum. Now that you’ve joined CREOpoint, I’d be very pleased if you posted something on it, either as a discussion or as a comment. Maybe what you wrote in your note to me.

Thanks again and best wishes

Richard