PROGRESS AND PERFORMANCE
There is a lot to say about progress and performance, but while there has been progress over the
last two centuries and the last few decades, the progress for people … everyone … has been very
modest compared to the amazing progress that there has been in knowledge and the power of
technology. Some people have become very wealthy using the power of technology, but a very
large number of people have been disadvantaged by technology and the way decisions have been
made to manage the global socio-enviro-economic system. Worse progress has been made
without taking into consideration the related damage to the environment.
When looked at from the perspective of profit and financial wealth, there has been progress, but
this progress has been made at the expense of both society at large and the environment. The
economy of the United States has produced substantial growth of financial wealth over the past
fifty years … and indeed 200 years … but it has done so at the expense of society which has
progressed very little in recent decades and the environment where degradation is accelerating.
The United States has the most inefficient economy in the world when considering the
relationship between quality of life (as measured by GDP per capita) and the degradation of the
environment (as measured by CO2 equivalent emissions)
ISSUES … thousands of issues
There are thousands and thousands of issues that need to be addressed, and while many of the issues are well understood, rather little has been done to do what is needed to solve the problems that are known about. Though there is more knowledge than at any time in history, and more education, and more communications there is a dangerous lack of understanding of how the socio-enviroeconomic system actually works and the things that need to be done to address systemic problems. Arguably, the management and governance systems are more suited to the 19th century than the 21st.
FOUNDATIONAL POSSIBILITIES
Knowledge
The amount of knowledge in the world is growing rapidly and accelerating. This is potentially very good, but maybe not. The management of knowledge is very primitive and not significantly different in the modern world than many centuries ago.
Ideas
There are many, many ideas and the possibilities are huge, but there are constraints. One of the
worst is that good ideas that are just about doing good for society or good for the environment
are starved for funds, while anything that is going to make financial profit no matter how
obnoxious in other respects, gets funding!
Technology
The advances in technology that have occurred in the last five decades have been impresive, and the advances are accelerating in technical terms.
The key challenge is how best to use these technologies in a constructive, beneficial and sustainable way.
Knowledge, research, education
The amount of knowledge, research and education going on today around the world is at an all
time high. This should be a foundation for progress, but there must also be all the other elements
of an enabling environment for progress to be made, and these are often absent. Worse …
increasingly research is only funded where profit is possible, leaving other important research
opportunities unfunded!
Technology, materials, computer science
Knowledge in itself has little value, it only becomes valuable when it is applied to improve
tangible things … technology, materials, computer science and all the engineering derivatives
that are possible.
Enabling initiatives
Good ideas can become good initiatives, but they will only succeed if they are adequately
resourced. There are many good initiatives with good ideas, good people and no funding,
especially projects that will do social good or environmental good, but are not going to produce
profits. Conventional funding for good projects does not work, and cannot work with the
prevailing singular focus on profit performance. (See later in this paper … page ?? )
SOCIAL ISSUES ... IMPACT ON PEOPLE
Local, National and Global
The global population grew from 1.7 billion people in 1900 to 7.1 billion in 2014. The majority
of the world's population now live in cities with populations exceeding 10 million people and
there are projections that more than 80% of the population will live in urban areas within the
next few decades.
Nevertheless, quality of life for people still depends to a large extent on what goes into making
the local community a quality community.
Much of the data collection and comparative analysis of the socio-enviro-economic system has
had a focus on country or national level performance. This simplification has been practical but
the results not very useful. People live in a community that exists in a country and without the
community level understanding the analysis falls apart!
Jobs, low wages, unemployment
There are more people needing income from work than there are jobs needed to make the things
people need. Much of this structural unemployment comes from new methods of production and
increased productivity, and some is from the growth of production in previously agrarian
societies.
Poverty
Too many people are in poverty … in both rich and poor countries. The reasons are very different
and solutions difficult, but far too little progress has been made over the past 50 years to
eliminate chronic poverty.
Hunger, malnutrition, ill-health
Too many people are hungry, have malnutrition and are in ill-health. While many people are
living longer healthier lives, there are still many people who die young from malnutrition and
preventable diseases. There is food insecurity and there are dysfunctional healthcare systems.
Religion / Culture
There has been religion and culture in every human society for all of history. They seem to be an
essential integral part of society. Modern materialism appeared to replace some of this, but it
seems that religion and culture endure in spite of other changes. They need to be better
understood in order that they are a power for good rather than for evil.
Social risks
The lack of jobs, the rates of poverty, the amount of inequality, migration and cultural differences
are all stresses on social cohesion. Political leadership does not have any simple answers because
there are none. Discontent is growing and in many places, accelerating. This is an existential
threat to a peaceful world.
Civil war, physical destruction
There has been far too much civil war both in the distant past and in recent years. The value
destruction associated with physical destruction is not accounted for in the costs of war, but is
massive.
War, violence, human destruction
With war, there is massive destruction of human capital … death and disability result from war
and violence. Value destruction of human capital is huge and not accounted for. Too much, the
loss of human life is ignored unless it is the death of someone close … but all life lost has
someone close … and nevertheless the value destruction gets ignored!
ENVIRONMENTAL SUSTAINABILITY
Local Cause gives Global Effect
The origin of all environmental pollution is local, but many of the bad effects are realized beyond the local area.
For example: water is polluted at a point source where toxic chemicals are dumped into a stream, but the impact of these toxins flows down the stream through the whole of the watershed and eventually into aquifers and/or into the ocean.
Local sources of pollution
For example: plastic containers are very convenient for the distribution and sale of drinks and food but most of their disposal is simply to discard them in the easiest of ways, which usually means simply into the natural environment where they eventually move into streams and rivers and into the oceans.
For example: some gases emitted into the atmosphere cause acid rain downwind from the point source, other gases add to greenhouse gases that result in warming everywhere around the world.
High consumption / Inefficient processes
Production processes are various point sources for much of environmental pollution, but the
amount of production is directly correlated with the amount of consumption. The driver of the
problem is consumption, and the design of the products and processes that serve this
consumption.
NATURE'S CONTRIBUTION
Sun
To the extent that energy is essential for everything, the sun has a central role in everything as the ultimate source os all energy on earth. Without the energy emanating from the sun, planet earth would not be a liveable place.
Land
Land is a very important element of the environment. Increasingly, there is a shortage of land as
human population increases. The importance of land in enabling ecosystem services has not been
appreciated, and in this regard there has been massive degradation.
Biodiversity
As human populations encroach on land and natural ecosystems, more and more plant and
animal species are at risk of extinction.
Deforestation
The loss of trees in order to supply hardwood, and to expand agricultural production from palm
oil to beef is ongoing and profitable while intensely damaging to global climate stability.
Sea level rise / Sea temperature rise
Climate change is real and Arctic and Antarctic ice is melting at an accelerating pace. Sea level is
rising slowly but surely, as is the sea temperature. More and more coastal flooding is going to
happen … and some has already started.
Extreme weather
The increase in temperature means that there is much more energy in the environment, and in
turn that means there will be more and more energy in the storms. Storms do happen, and they
will be more and more extreme.
Pollution
Companies are interested primarily in profit and single use plastic packaging is very profitable,
but terrible for the environment. Companies use water in their processes to produce profit, but
post production waste water costs money to treat, so more profitable to dump into a local stream.
Pollution has a cost to society, but little cost to the companies that make the products that
pollute!
ECONOMIC BENEFITS AND EQUITY
Economic Risks
Macro-economic risks are not well understood and policy driven by political ideology is
extremely dangerous. The banking crisis of 2008 was contained by injecting trillions of dollars
worth of extra liquidity into the global banking system. The banking system is more stable now a
decade later, but other elements of the socio-enviro-economic system are increasingly unstable
with potential for collapse.
Corruption
Corruption is profitable … and as long as profits are more important than anything else, there
will be corruption. Corruption is wrong, but corruption is a win-win for all of those engaged in
corrupt practices. Corruption will not end until the world gets serious about punishing ALL the
participants … on top of more transparency, accounting and accountability.
Inequality
The problem of growing inequality has been evident for some 40 years or even more, yet policy
makers have done almost nothing to address the problem. (see corruption above!). Economists
have described the problem over and over again, but nothing has been proposed to fix the
problem. (See later in this paper … page ?? )
Money / Currency
Money is an essential part of an economy, but modern money wealth is being treated as the most
important goal of economic activity when it really is not. Money cannot be either the engine of
the economy or the fuel, it is an essential lubricant. Rethinking money / currency needs to be a
priority of economic thinking.
Markets / Intangible Value
Fifty years ago the value in capital markets was not significantly different from the value of
tangible net assets of corporate balance sheets … but financial engineering over a long time has
changed this so that now intangible assets dominate, social inequality is out of control and the
environment badly degraded.
BETTER METRICS TO OPTIMIZE RESULTS
Wrong assumptions
Economists, academics, politicians and others have made a lot of wrong assumptions about how
the socio-enviro-economic system actually works. Part of this is because of the way the
performance of the system is measured. More does not always mean better.
Corporate performance
Investors and business owners have a legitimate interest in business performance, but the
assumption that a good business performance correlates to good social and environmental
performance is just plain wrong. Corporate performance is not only about the generation of profit
and financial wealth, but also about the impact the operations are having on quality of life for
society and the impact the operations are having on the sustainability of the environment. There
are strong measures for financial performance but essentially nothing for impacts on society and
the environment.
All the other actors
There are many other actors besides those that benefit directly from corporate profit
performance. There are the customers of businesses, and the suppliers and the neighbors of
businesses … and the employees. The relationships between these many actors is complex and
the idea that what is good for profit is good for all the other actors is invalid.
Non-linear relationships
There is a linear relationship between standard of living and consumption in a poor economic
setting, but in richer more mature economic this linear relationship breaks down and worse more
consumption correlates strongly with more damage to the environment.
What about happiness?
What about happiness and all the other many intangibles that make life worth living. Merely
having more 'stuff' is not what life is really all about. Friendship and beauty have huge value but
are ignored by conventional prevailing metrics.
What about environmental damage?
Profit is a key measure of corporate performance and the valuation of stocks, but on its own is
also very dangerous because key issues of social progress and environmental performance are
ignored. As long as profit is the dominant metric, the performance of the socio-enviro-economic
system will be compromised. Better metrics are essential.
PEOPLE
Understanding potential
Merely being better than before may not be good enough. For example, the power of technology
is enormous, but the progress of society is quite modest. Technology has been used almost
exclusively to improve profit performance, but almost not at all to make the world a better place.
Yes … the world is a bit better … maybe … but compared to what is possible, not so much!
Nice people … the 99%
Most people are nice people, but that does not 'make the news'. When people are angry, there are
usually powerful reasons which leadership is ignoring. Building on the goodwill of nice people
can make all the difference in the world.
CHOICES
Better metrics … TVIA, other
Existing conventional metrics are old and obsolete, but better metrics are possible and indeed
essential. As Peter Drucker, the management guru has said: 'You measure what you manage' and
accordingly it is essential to measure the right things. Corporate profit, GDP growth and stock
prices are not sufficient to get the most desirable outcomes for the global complex socio-enviroeconomic system.
Better goals … SDGs, etc
Better goals, like the MDGs and the SDGs are steps in a good direction … but goals and
commitments without the essential follow-through do not get to the results that are needed.
Metrics are an essential complementary piece, not to mention the mobilization of investment resources to implement meaningful initiatives.
Eliminating and Avoiding Constraints
Good ideas, good projects often fail to achieve their potential because there are quite small
constraints that make success difficult if not impossible. Identify and eliminate constraints and
big progress can be made at relatively low cost.
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