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Burgess Manuscript Navigation
Management Information
Essential to Support Progress and Performance
of the Global Socio-Enviro-Economic System.
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Chapter 5
Activities ... Consuming Resources and Producing Values
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A modern standard of living has become possible because of the many activities that are used to convert resources into goods and services that have value to consumers. Better metrics must show how these activities should be optimized for social, environmental and economic performance.
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A Multitude of Activities
Very little is simple. Most everything is a result of a huge number of activities.
Creating Values
The purpose of economic activity is to create value.
There is accounting when there is a sales transaction for goods and services transferring from the producer to a customer / consumer. This transaction takes place at a price. The transaction only takes place if the value to the customer is more than the price to the customer.
Consuming Resources
Most economic activities consume resources. There is a supply chain from the initial extraction of natural resources to the entity producing goods and services. The supply chain may have many tsages or be quite short, but the issues are the same.
Value Destruction
Most activities have a component of value destruction was well as value creation.
Most conventional financial accounting does not account for value destruction associated with production in a rigorous manner. If the money transaction is small, that is all that gets into the accounts and financial reporting.
Early in my career one of our company's suppliers had very low costs associated with its chemical waste disposal. It turned out that they had accepted a waste disposal bid from the lowest price vendor ... but it turned out that this vendor was simply removing the chemcial waste from the plant in a tanker truck and then during nightime simply leaking the waste chemicals onto the highway during the cover of darkness. Low money costs, but really high environmental and potential social costs
Productivity
Advances in technology has resulted in very high productivity with respect to labor inputs. Most of the goods and services required for a basic standard of living for everyone could probably be produced using perhaps just 20% of total workers. 80% of workers are simply not needed to satisfy basic needs within the conventional economy based on money price transactions.
Value without Price
There is, however, a very large part of quality of life that is not based on money price transactions, but on a very different value proposition. What one might describe as the 'caring' economy reflects value adding that may or may not involve the exchange of money. Caring for children and caring for the aged and infirm are good valuable things to do, no matter whether or not there is an exchange of money.
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