Giving Voice to Value ... Aspen Institute Center for Business Education

Dear Colleagues

Value needs to be central to a meaningful set of metrics for a smart society. It is therefore encouraging when the more well known institutions take up the challenge of trying to put value into the mainstream. This what seems to be going on with an initiative of Yale University and the Aspen Institute Center for Business Education to upgrade business education with a component called "Giving Voice to Value"

The fits very well with the conceptual framework of Community Analytics where the most important metrics are associated with value ... albeit, a not very easy idea to address in a simple fashion and not easy to quantify. But for all that it is very important. Here is the note recently sent to the principal researcher and author of the upcoming book on "Giving Voice to Value"

Dear Dr. Gentile

Giving Voice to Values: the How of Business Ethics ... I am sorry that I missed your visit to New Jersey February 19th ... but I hope I will be able to "catch up" in due course

The state of socio-economic metrics in the broadest sense of these data is, in my view, a shambles and an absolute disgrace. Why do I say this?

Science and technology has progressed over the past 50 years, and I would argue that the technology to do data acquisition and to do analysis is a million times more powerful now than at the beginning of my career.

I learned about metrics as an engineer ... in thermodynamics, in hydraulics, in structures, in mechanics, in control theory. Subsequently I learned economics ... and accountancy ... and how metrics is done in these areas. Putting all this together worked very well for corporate profit planning and measuring corporate performance ... but did not work very well for society as a whole. Because corporate profit, stock market prices and GDP growth are pretty much the only measures that are talked about ... it is no wonder that society has "gone to hell in a hand-basket!".

Your subject ... Giving Voice to Value ... is exactly at the center of Community Analytics (CA) which is the methodology that has emerged from my rather long experience. But I think there is probably one thing that is fundamentally different between the work you have done and what we have done. In our view socio-economic performance is not an "add-on" to corporate metrics, but at the core of the community. Our measures start off from the community perspective and reach into the corporate activities as far as they are allowed. The goal is a society that is progressing ... and the corporate entity may or may not be a part of the equation ... but the community is always in play, and its metrics are the ones that matter.

I hope this makes sense to you ... the idea that you are doing the "value" thing is exciting. I hope I can learn something from what you are doing.

Sincerely

Peter Burgess
Community Analytics (CA)
http://communtyanalyticsca.blogspot.com

Biometrics Smart Card

The following is from a blog called "Theworldbankunveiled's Blog ... Hello world!"
http://theworldbankunveiled.wordpress.com/2009/09/09/hello-world/#comments

The original posting was in the Uncategorized segment by theworldbankunveiled on September 9, 2009. The following is the original post.

1 – The World Bank and Transparency: A Perspective

As the author of a new book, The World Bank Unveiled: Inside the Revolutionary Struggle for Transparency, I recount my dozen years inside the institution. I examine a number of aspects of the organization that range from its culture and bureaucracy to its day-to-day activities. Among the key questions the book analyzes is the meaning of transparency inside the Bank. In fact, my experiences suggest it means different things to different internal stakeholders and that these sensibilities are often conflicting and reflect a vast array of backgrounds. For example, in recent years the Bank merged a knowledge sharing mantra into a culture that horded information and it implemented greater disclosure measures that were often viewed by external observers as rhetorical flourishes.

When he left the Bank in 2005, former President James Wolfensohn said transparency reduces corruption, reduced corruption leads to better governance and better governance increases development. Transparency, he believes, is the key. But history suggests the Bank’s management believes transparency is something that should apply to its clients and other external stakeholders. Its enthusiasm regarding the internal application of transparency seems less than robust. Consider the following:

It has a long history of reluctance toward releasing documents external observers believe are central to helping foster development.

When its staff has gone public with views that counter the Bank’s traditional orthodoxy, they have been dismissed. Nobel Prize winning economist Joseph Stiglitz and William Easterly are two prominent examples.

In 1997, as part of its Strategic Compact reorganization, the Bank began to recast itself as a “knowledge bank.” It has not been a success because the cultural instincts of the institution favor information hoarding rather than knowledge sharing. The World Bank Institute, the branch of the institution charged with implementing knowledge sharing, is a pedagogical unit that promotes fostered learning. Former Bank economist David Ellerman’s insightful paper, Helping People Help Themselves: Toward a Theory of Autonomy-Compatible Help documents how fostered learning creates client dependency which diametrically counters knowledge sharing.
The World Bank Unveiled offers numerous other examples. But much more importantly are the perspectives of others who have worked inside or outside the Bank. This blog post wants to encourage others to share their own experiences and stories …

I made a comment in response to this post as follows

Peter Burgess said, on February 2, 2010 at 7:45 pm
Dear Colleagues

I did my first World Bank assignment in 1978. Prior to this I had had 20 odd years of professional and corporate management experience. My first impressions were that the World Bank was doing important work, and doing it wrong, and in a way that was not making the best use of scarce resources for development. In subsequent years I tried to influence project design, and the whole project cycle so that it would be more effective … but met with extreme resistance. Part of my training included auditing … and when it becomes difficult to get answers, you know that there is something that is being hidden. In the case of the World Bank group there are many things being hidden, with these three of considerable importance (1) a complete failure to address the issues of corruption in all its manifestations (2) a failure to measure the performance of the projects and to take steps to improve performance; and (3) a failure to look inward at the high cost and poor performance of the World Bank as an organization, as well as the high cost/low productivity of staff.

Unless you have worked outside the relief and development sector, you cannot appreciate how poor the World Bank performance has been for several decades! There have been critics for a very long time, but rather little reform of any significance!

Sincerely
Peter Burgess
Community Analytics

and in due course my long time colleague in Chennai, India responded as follows:

Kris Dev said, on March 25, 2010 at 5:34 pm
Well said, Peter. We are partners in corruption elimination in the Transparency and Accountability Network (TrAcNet). I had written an article some time back, of which you know. But for the benefit of others, i am copying it here:

A prescription to end corruption
Unique identification of every citizen will help kill the corruption malaise in developing economies

Kris Dev,
ICT & e-Gov Consultant, Manthan Awardee for e-Inclusion & Livelihood Creation

What ails the under developed and developing nations? Reply: corruption leading to self perpetuating poverty. Reason: lack of honesty & transparency. Result: lack of accountability for sustained growth. Economy is divided between rich & poor; the rich are growing richer and the poor are growing poorer. The poor cannot afford essentials such as food, clothing, shelter, health, education and social security. The division is so sharp between communities, while a rich family can afford to spend Euro500 per week on food items, a poor family of the same size can hardly spend Euro5 per week.

Does this mean all citizens living in a poor nation are poor? Well the answer is a ‘NO’. The wealth in a under developed/developing nation is skewed. Almost 80-90% of the wealth of the nation is in the control of say 5-10% of the population. The majority of the population hardly has access to any wealth and live in abject poverty.

One of the biggest factors is ‘Corruption.’ It is the cancer eating into the vitals of the society. It has permeated into all facets of life, affecting the poor and voiceless. Today, the common man with no money or muscle power, cannot think of getting any thing done in the developing world, without having to pay bribe.

Global institutions such as World Bank, IMF, and UN must enjoy legitimacy from their member countries and the international community. They must be responsive, with the interests of all members, especially the smaller and poorer, being taken into account. The governance of these institutions must be flexible, must respond to new challenges, national priorities and specific circumstances.

A scathing report from the Independent Evaluation Office (IEO) of IMF highlights the lack of transparency and accountability in IMF. The IEO measured governance along four dimensions – effectiveness, efficiency, accountability and voice – and against three standards – the Fund’s own governing documents, other international organisations, and private & public-sector corporations. The report finds accountability and voice are the weakest features of the Fund’s governance and these weaknesses entail risks to the Fund’s legitimacy, which in turn has a bearing on its effectiveness.

If this is the situation with global institutions, we can well imagine what would be the situation with national and regional institutions. No wonder they abound in corruption of all sorts and get away with it. Then, how do we get over this corruption mania? One sure way would be to plug all the leakages in the system. This cannot be done without active support of the governments and its citizens. A unique identification of every citizen is the primary requirement. With the advent of ICT tools, every citizen can be uniquely identified from birth to death using unique identification methods such as fingerprint, iris, hand vein geometry and DNA linked to their ID, name, photo, etc.

A Multi Purpose Biometric Smart Card for every individual and organisation linked to a money account and a e-Tool to link every citizen and service provider/public authority including the vertical and horizontal hierarchy of governance can be used as a single window of transactions for G2C, G2G, B2B, B2C, etc. If the transactions are thrown open, then total transparency and accountability can prevail, as envisaged in the Right to Information Act.

Healthy citizenry can be created by covering all aspects of citizens from birth to death such as health, hygiene, housing, education, employment, expenses, consumption, savings, social security, et al, based on genuine physical transactions and not ghost transactions. Thus corruption, money laundering, arms trade and terrorism can be eliminated and all round peace and prosperity can prevail as every one would feel good that no one can cheat any one and all have equitable opportunities to contribute and grow.

Originally published in 4Ps Business and Marketing Magazine – A Plan Media Publication, New Delhi, India – Special Feature – COLUMN CITIZENRY – A prescription to end corruption – Unique identification of every citizen will help kill the corruption malaise in developing economies http://www.4psbusinessandmarketing.com/17072008/storyd.asp?sid=2112&page….

The challenge that Kris highlights is about a core constraint to development ... which might be obviated to some extent by effective use of technology. Corruption is a big problem that originates with the rich and powerful and has influence at all levels of society ... but good accounting and control systems can go a long way to addressing the problem.

Peter Burgess
Community Analytics (CA)

Effective recovery for Haiti ... people or machinery?

Dear Colleagues

In almost any conversation with an American contractor about the debris in Port-au-Prince, Haiti after the earthquake there is an observation that there are not enough heavy pieces of construction equipment. The point is usually made that several thousand additional pieces of equipment are needed to get the debris cleaned up.

I am not sure this is the issue. My understanding is that the trans-continental railroads in the USA and Canada were built in the 19th century a long time before heavy construction equipment was available ... lots of people with pick-axes and sledge-hammers did the work ... and this included a lot of tunneling through the rocks of the Rockies. As a summer-student in 1960 I worked on a construction site in Montreal and was given a wheel-barrow to move gravel and concrete around the site ... hard work, but I got a pay-check.

The biggest priority in Haiti in the post earthquake rescue, relief and recovery has to be:
(1) ... saving life
(2) ... immediate access to basic needs: food, water, shelter, sanitation, health services ... and associated support logistics
(3) ... setting up a path to recovery: establishing economic activities based on what needs to be done.

It was an urgent matter to make the transport infrastructure functional because without this it would have been impossible to give access to basic needs. Clearing debris from roads was an urgent matter ... but clearing debris from what will be building lots is not as urgent. In fact the work to be done should be considered for what it contributes to local wages more than anything else.

If there can be 100,000 people put to work breaking concrete so that there can be movement to a debris processing site ... then there will be a substantial wage payroll and families will be able to start purchasing what they need for the family. This buying power can be the driver of recovery.

The official relief and development assistance (ORDA) community operates with a "welfare" mindset. This requires ongoing injection of money to support everything. A recovery plan that is based on getting wages into the economy does not need as much external funding. In fact the difference between the welfare based approach and the wage based approach can be as much as a factor of 10.

Where speed is of the essence ... machinery is the way to go. Where the goal is optimum socio-economic development progress, then the focus on people and their remuneration is the way to go.

I have asked a number of people who work in the private sector whether this makes sense to them ... and everyone has agreed that it is the way to go. Nevertheless, I do not expect the big contractors and the high-profile leaders of the Haiti rebuilding initiative to embrace these ideas. It has not been a popular strategy going back to the early 1960s when I first worked on a World Bank construction project that planned on using a huge quantity of imported equipment and almost no labor in a developing country with abundant unskilled labor. The World Bank got it wrong then ... and the Haiti experts look like they will get it wrong now!

Peter Burgess
Community Analytics (CA)

Promising CO2 Scrubber Made From Ingredient in Hair Conditioners

The following was posted on March 26, 2010 by Magnolia Afable on a specialized LinkedIn blog:

A new technology that uses aminosilicones, a product found in hair conditioners and fabric softeners, has proven successful in removing 90 percent of the carbon dioxide from the simulated flue gases created by coal-fired power plant Read more at chloregy.com

My response to this is that it seems that science has many answers to the problem of greenhouse gases ... but industry has next to zero interest in getting from academic science to applied science.

Why is this?

As a believer in "efficient market economics" the answer is that the profit driver of the market gets the wrong answer for society as a whole. Why should an industry care if the cost of pollution is not taken into account. If the methodology of Community Analytics (CA) was being used there would be a very different perception of the performance of the industry.

Peter Burgess
Community Analytics (CA)

Relief and development ... is anything really going to change?

The following was posted on the High Impact Philanthropy Blog at the University of Pennsylvania
http://blog.impact.upenn.edu/2010/03/26/weekend-wrap-up-stay-awake-for-the-quake-and-other-happenings/#comment-294

“The Quake” is a thoughtful, exhaustive exploration of the unnaturally deadly disaster and spiraling humanitarian crisis that threatens to confound the largest global relief effort in modern memory. It features an exclusive interview with Partners In Health founder and long-time Haiti advocate Paul Farmer where he states:

“This is an opportunity to rethink how aid works and how we, the most powerful country in this part of the world, can work with our oldest neighbor. So I think all that possibility is built into this tragedy.”

Secretary Hillary Clinton, Prime Minister Jean-Max Bellerive and Former President and UN Special Envoy, Bill Clinton are also interviewed. Former President Clinton: “The Haitians have been abused by outsiders, neglected by outsiders, helped, but in a paternalistic, ineffective way by outsiders. They’ve engaged in self-abuse. They’ve had all kinds of problems. And they wanted finally to seize control of their own destiny.”

You can get a sneak preview of “The Quake” at www.pbs.org/frontline/haiti where you will find embeddable videos and more information.

I posted the following (slightly edited) response:

I am responding to the note about “The Quake” and the observation quoted from an interview with Dr. Paul Farmer, founder of Partners In Health and long-time Haiti advocate that: “This is an opportunity to rethink how aid works and how we, the most powerful country in this part of the world, can work with our oldest neighbor. So I think all that possibility is built into this tragedy.”

Bottom line the activities of the international relief and development assistance community are moving along very well worn tracks. There are plenty of people including myself who have a lot of experience and know something about the field of international relief and development. The problem is that what needs to be done is at odds with the people who are in control of the system … as Muhammad Yunus has observed: “When poor people are working for long hours seven days a week and still remain poor … there is something wrong with the system”.

In my experience it is not just one thing that is wrong with the system, but many things. It is amazing how much money is disbursed to do so little in the international official relied and development assistance field … my estimate is that most things are costing around 10 times as much as they should be costing … but who knows about this? Nobody … and why? Because there is no accountability that is worth a damn and because the metrics of cost effectiveness and cost efficiency are either not in place or not working.

And getting value for money? Nobody knows about this because … again, the metrics about this are not in place or not working. There is rampant leakage of resources … and hardly any accounting and financial checks and balances. For some reason nobody seems to be very interested in getting strong financial controls in place … including the actors with good reputations ... which leaves an open field for bad actors.

Why this aversion to accountability … which includes as far as I can see Partners in Health? Either they do not know how to have effective accountability or they do not want to control the resources effectively! Neither are good reasons. Accounting and accountability are handles internally behind a veil of secrecy ... whatever happened to transparency?

The area of progress and performance metrics is in sad disarray … but it need not be. The technology and the concepts are available … I think people know how to do it, but the will to do it is absent. This is going to carry over into the planning and implementing of the rebuilding process. Analysis of the socio-economic dynamics of rebuilding seem to be absent from the process of planning … and this sets the stage for a lot of money doing rather little. In the past, in Haiti, the creation of a lot of national debt has produced very little of progress out of poverty … what is different this time?

Peter Burgess
Community Analytics (CA)

The issues are deep and complex ... but the way development has been done over the past fifty years has not worked, and, as Dambisa Moyo of Zambia writes in her book "Dead Aid", there has to be a better way. The problem is that a different way does not automatically mean a better way. The draft plan being circulated at this time does not seem to have any clarity about how best to get an optimum outcome from the funds being made available ... and that is a fairly clear indication that there are going to be performance issues as the program goes forward.

I would like to be optimistic, but I am not. I have tried to communicate with Partners in Health, but it is not easy ... like impossible. At some level I understand this ... but it means that only insiders are having their say!

Peter Burgess
Community Analytics (CA)

Too big to fail ... and worse

Dear Colleagues

It is now common to hear discussions about various organizations, mainly in the financial sector, being too big to fail. As a practical matter the issue of too big to fail is only one aspect of a way bigger problem ... big causes a problem when there is a failure because there is concern about a ripple effect and the failure of the (banking) system as a whole. Actually ripple effect should in this circumstance be modified to read tsunami effect!

But there is a bigger and quieter problem. Concentration of economic power means that markets do not work efficiently ... instead the market starts to be a place where those with economic power are able to game the system, and when this happens there are lots of losers, most of whom cannot fight back.

Very big is celebrated by those that do the business valuations that drive stock market movements ... and as long as corporate profit and stock market valuation are dominant metrics of economic performance ... big is going to be the focus of corporate business behavior.

Big has advantages ... being a big multi-national facilitates making product in low cost areas and selling in high price areas and growing profits, and this grows stock market valuation. What it does to socio-economic value is not part of the equation. Something that is not measured might as well not exist!

What is wrong with this? Answer ... a whole lot! The situation is an economic train-wreck in progress and a long way from over!

Many multi-national corporations have become bigger than many national economies ... but they really do not exist anywhere except as a legal fiction that morphs depending on what suits the corporate agenda at any time and place. The description "multi-national" no longer is a good name for these corporate behemoths ... they are really supra-national ... with no real citizenship and a home location that makes it possible to report the maximum of profit. These supra-national monsters do not need a corporate conscience ... it gets in the way.

Society needs to address this problem in a smart and meaningful way. The problem is getting bigger all the time, and will stay getting bigger until there are some fundamental changes in the way the metrics are done. It will take a long time to change the way corporate profit reporting is done. In any event, corporate reporting is only about money revenues and costs and profit ... while society has much more comprehensive interests. Profit may be maximized by moving jobs to low wage areas ... but is there anywhere that social costs of these disruptions reported? For all practical purposes they are ignored.

The best outcome for society is frequently at odds with the optimum business model for profit maximization. In general these relationships are quite complex, and difficult to legislate or to achieve through regulation. But there can be a reasonable outcome to these complex questions when there is reporting both from the corporate perspective about profit and from the community perspective about value ... this is a market based solution that works ... but it only works if the data are sufficiently complete and both profit and value reporting are widely communicated.

While it is difficult to predict the outcome of market based solutions ... value reporting from a community focus will likely result in more favorable prospects for small and medium scale enterprise than in a system where the only metric is the corporate profit. Community scale business brings local value into play in a way that the supra-national company rarely does ... even though the supra-national looks good using conventional money profit accounting.

Initiatives like www.moveyourmoney.org are sending a message that people like the idea of moving from the supra-national banking sector banks to community banks. The same sort of message has to be brought to bear on all the products that come from supra-national supra-sized enterprises unless they are able to show that their value proposition is on a par or better than local scale business.

The discussion in the USA about regulating the "too big to fail" banking sector is only the tip of the problem. Regulation is a weak response to the problem ... rather a fundamental revamp of the way the metrics are done needs to get done.

This is, of course, the case for Community Analytics (CA).

Peter Burgess

Haiti and losing an opportunity

The following exchange from Facebook

Peter Burgess
The Haiti relief and rebuilding plan for the next 3 years has a projected cost of around $11.5 billion. It would be interesting to see an accounting breakdown of labor, material, equipment, overhead and profit for this money! It would also be interesting to see the associated analysis of where buying power and economic activity is created as a result of these expenditures

Jean Feldere Moise
What would you do Mr. Peter in a situation like this one. Now, if in fact developer of Burj Khalifa, and Downtown Burj Khalifa had announced the Dubai fountains will cost of AED 800 million in the USD its about 218 million. Then I have to assume that 11. 5 billion should change entirely Haitian situation in itself.

Peter Burgess
The real big performance question in respect to Haiti is how much of the $11.5 billion of activity will be paid to Haitian people for their work. If people are paid for their work ... then every single need that they have can be paid for by them ... and only a rather modest amount of money has to be mobilized to have a huge impact on the socio-economic performance of Haiti. HUGE!

The potential for making a huge impact on Haiti's future is at hand ... but the opportunity will be lost if the classic deal-making behind closed doors. But if the people of Haiti can be engaged there can be an amazing repositioning of the country for a prosperous future.

Peter Burgess

What is sustainable society?

Dear Colleagues

What is sustainable society? This is a key question, and a good answer is that it is a society where quality of life will be as good tomorrow and in the future are it is today. Sustainable development is when the quality of life improves over time.

This definition has some of the characteristics of the question "What is a profit?" that was asked of Sir Henry Benson, a Chartered Accountant in an English Law Court some fifty years ago. After due deliberation Sir Henry answered that "A profit is the difference between two balance sheets".

Progress in development is the difference between two balance sheets of the community ... where the balance sheets are all the good aspects of the community netted by the bad aspects. The good and the bad are the values associated with different aspects of the community.

Most mines are not sustainable. By definition they extract the minerals from the ground, and the activity of mining reduces the amount of mineral in the ground. Each depletion in the resource is a step towards the end and therefore is unsustainable.

Timberlands may be sustainable or not. Too many forest exploitation projects are based more on immediate profit rather than sustainable profit ... or sustaining value. Old growth usually generates profit that is good, but way less than the diminution in value. A continuum of new growth and harvesting that creates profit and does not diminish value is sustainable.

Fisheries are sustainable when the seasonal replenishment of the fish population is as big as the seasonal catch. The profit in one year is maximum when the catch is a maximum ... but the value loss resulting from the future collapse of the fishery needs to be taken into account.

Sustainability ... is an important idea. Because it is important it should be measured. Suitable metrics are an integral part of the Community Analytics (CA) system.

Welfare is not sustainable ... but welfare may be valuable. This concept applies to individuals, to communities and to organizations. All economic activities should be value adding ... where an economic activity is profitable but not value adding, there will be, at some point, an economic dislocation. In its essence this is what has happened in the global financial sector (which became all too apparent in the period 2007/2008).

When the dynamics of an economy are well understood it is possible to do more with less.

In the current Haiti rebuilding plan there is an approach that may be described as almost 100% welfare in an amount of $11.5 billion. Some of these funds will go to support sustainable activities ... but most will be merely the spending of money to do activity where the value metric is little understood. Sustainable is when there are surplus producing activities ... where the value creation is bigger than the cost or more precisely, the value consumption. If the Haiti rebuilding plan were to be restructured around an optimization of value adding from resource use, maybe there could be results that would be an order of magnitude better!

Peter Burgess
Community Analytics (CA)

Raising money is active ... accountability is not!

Dear Colleagues

I think everyone on the planet is getting fund raising e-mails from the NGO community so that they have more money for Haiti. But hardly any of these organizations are sharing any information about the use of these funds and how these funds are contributing to the ongoing relief and rebuilding process. I have sent a lot of messages along the following lines to these organizations ... with no response at all!

Dear XXX

As a matter of basic accounting ... there are plenty of funds already in play ... but hardly any of the funds being used very well. Please may we address this matter as well as merely getting more money.

The good organizations are not doing accountability ... so how might one expect the bad organizations to be doing it.

Peter Burgess
Community Analytics (CA)
http://communityanalyticsca.blogspot.com

There is bit of encouragement ... not much ... but the UN has done a lot better job of compiling information about the money raised than in the past emergencies. There is no credible information about performance and the use of the funds ... but this information about money raised is a start.

Sincerely

Peter Burgess

The Haiti emergency and accountability

Dear Colleagues

It is very disappointing that the accountability aspect of the Haiti emergency is following the same old same old pattern.

While there has been a very positive global response to the appeal for assistance ... the way the resources mobilized has been used is about as opaque as it can be. All the emergency organizations ignore all communication about accountability ... both those that are good and those that are bad. How do you tell one from the other. Both are able to publish stories ... but there is no ability to check anything.

In my early career I did audit work ... and when you cannot get information, there is usually a reason ... and the reason is usually pretty bad. My guess ... and I cannot prove this because no data are forthcoming ... my guess is that most of the well known names in the international official relief and development assistance (ORDA) industry are, if not corrupt, extremely inefficient ... same for the well known NGOs ... same for the well connected contractors.

All of this conjecture could be handled with just a modest amount of transparency and some quite basic information about how money was used and the value of the activities. The idea that these data do not exist and very large sums of money are being used is really appalling. Very large sums of money seem to disappear ... and big contractors and suppliers of emergency goods and services seem to get well remunerated. In my youth much of this remuneration would fit into the category of "profiteering".

There are tools to make sense of all this ... in fact this is part of the reason why Community Analytics (CA) was developed.

About 10 weeks after the disastrous earthquake in Haiti ... I now regard the accountability of the global emergency response to be nearly a 100% failure. I am very disappointed.

Peter Burgess
Community Analytics (CA)

Addressing corruption

Dear Colleagues

A friend sent me the following On 03/23/10

Peter, in the Handbook I mentioned there is a big chapter 19 on Mitigation the risk of corruption. It refers to your business of audits etc. Some www.transparency.org/publications/publications/other/procurement_handbook
http:go.worldbank.org/RPHUYORFIO and
http:go.worldbank.org/0HHI4LODL60
www.pefa.org/pfm_performance_frameworkmn.php
www.unodc.org/documents/corruption/publications_toolkit_sep04.pdf
www.u4.no/helpdesk/helpdesk/queries/query85.cfm#1

My brief response follows

Dear XXXX

I have not read this latest tome from transparency international ... but one of the reasons they have made so little progress in the work of reducing corruption is that they are using tools that do not work. If the car engine does not work ... painting the car won't help very much. The problem with corruption is that people make a lot of money very easily ... doing an audit to show that the money has gone does not solve the problem, though you might know more about the problem.

A good accountant ... of which there are very few these days ... knows that to solve the corruption problem you have to have good accounting which included systems of financial control so that it is very very difficult to get your hands on the money! When you have strong control systems the money does not disappear in the first place ... and a lot of the problem goes away.

Why we have not done this in several decades is because (1) a lot of people you would not expect are corrupt; or, (2) a lot of people are a lot more incompetent than you would expect. Neither of these is good. The financial dimension of the official relief and development assistance (ORDA) industry is an absolute disgrace and leadership should be taking some responsibility for this

Peter Burgess

In the last 50 years the power of technology to handle data has improved perhaps by as much as a millionfold! But the use of data for accountability and to make corruption very difficult has hardly moved at all. This is ridiculous and may only be explained by the easy money that a lot of people are making from the maintenance of corrupt systems.

Peter Burgess
Community Analytics (CA)

Cost and value in education

Dear Colleagues

Education is one of the most important value propositions in society, but it is rarely made a part of the dialog about funding education.

Take the two cases of (1) a child who gets 20 years of good education and ends up as a graduate of a top undergraduate university and then a graduate school and (2) a child who never goes to school and at 20 years old remains uneducated and illiterate. The "value" of the two situations is clearly very different. In the one case it is reasonable to expect an average annual remuneration that adds up over 40 years to (say) $4 million and in the other case the total might be just (say) $40,000 or maybe much less.

The cost of education is significant ... 20 years at $10,000 a year adds up ... but is only $200,000 compared to a very much bigger "value"

But if the costs of delivering education are worked on so that they reflect local costing and local values ... the costs may be quite modest ... and yet the value can still be substantial.

Educators and policy makers need dialog about the behavior of cost and the behavior of value so that a system can be designed in a way that there may be financing that is sustainable rather than merely some form of global welfare. Bottom line is that money for education is needed in the early years and the value is realized many years later. Money invested today to fund the costs does not realize value until 20 years later ... but it is worth doing.

How can education investment be funded ... who pays back the investor? A possibility is that a family should be responsible for the pay back. It should be easy to get an education, but the commitment has to be that the family that benefits is responsible to financial pay back some two decades later. Done well, this works. Without something like this most children in poor countries are going to be left behind ... not to mention an increasing number of children in formerly rich countries.

Please comment on this ... the value proposition is clear ... but how to actually organize a structure that will allow this to happen may not be easy!

Peter Burgess
Community Analytics (CA)

Middlemen have been a problem throughout history

Dear Colleagues

Middlemen have been a problem since the beginning of time ... but the scale of the problem has escalated in the last couple of years to new heights. The behavior of money-lenders has been an issue since ancient times ... usury was regarded as a very bad thing ... and in Islam the idea of charging interest was banned completely. Modern banks do not seem to "get it" that the role of banks is a rather modest service in the economy and not in any way central to anything.

While modern banks have learned to "play games" so that they report profits, and in turn think that they deserve huge bonuses ... in reality most of the banking activities do almost nothing of value. Most of the work of a bank is ... at best ... a zero sum operation, which means that the profits of one bank are a loss in some other organization. In other words society is going nowhere courtesy of bank profits.

Sometimes a bank can "move the players around" in a corporate reorganization, or a merger or acquisition ... but in most cases the fees earned are high in relation to the underlying value adding that is going on. At best what is going on is that there is an ability to monetize value more easily ... but rarely is there much basic value adding.

I would like to debate bankers about value and profit ... in large part because I think it would show that the typical banker is not much in tune with the idea of value at all!

Peter Burgess
Community Analytics (CA)

To improve socio-economic progress needs behavior change

Dear Colleagues

I wrote the following letter to a list that is mainly in Kenya and Uganda in response to a conversation that started by talking about hunger and poverty in rural areas. The focus of Community Analytics is about people who live in communities ... because it is only when people become engaged that socio-economic prosperity can be achieved. This is from me:

Dear Colleagues

I am not sure how local people determine priorities ... and whether spending by the government supports development or constrains development.

I was in Lesotho at one point in my career and a very profitable agriculture business had been identified ... growing asparagus for the international market. FAO started a program and subsidized some farmers to set up to grow the crop and these farmers were happy. The rest of the farmers then waited for FAO to come up with the next subsidy ... but FAO never had the money. Farmers were waiting on a "hand-out" when in fact they could have borrowed from the banks (which had a lot of surplus money) and got into business and grown the national business 100 times over.

I have seen variants of this in all sorts of different places.

And I really cannot understand why agriculture ... growing food ... in Africa is not a booming sector. I think part of it is that easy imported food (which helps to keep the country bankrupt) is cheaper in the market than local grown food. There is something wrong with the metrics when the incentive is to be eating imported stuff that is bankrupting the country while farmers are essentially unemployed and not able to grow food to keep the population well fed.

I realize there are issues with rainfall and drought ... but I do not hear of initiatives to introduce meaningful community scale modern irrigation (drip feed).

I do not pretend to be an expert in agriculture ... but the society and policy makers seem to have landed in a place that makes no sense ... in large part because the analysis of agriculture using money accounting leaving out the metrics of social value gets things wrong.

Peter Burgess
Community Analytics (CA)

I was surprised at the responses which includes these:

Hello Peter and all

I will agree with what u have mentioned in your mail. When it comes to farming the community never view it as an entreprise that should be able to employ someone. Its something that u do on the side of your other duties. People cannot put to cost the amount they spend in buying foodstuffs that they can grow on their own in their small kitchen gardens.

The corruption in government has also not made it any better as there are people bent on reaping from the food imports in one way or another. Its a pity that many young people in Kenya or rather in my local community would leave very prime agricultural land next to river sources to go and seek formal employment instead of working on the farms. People have been so conditioned that u complete any level of education and move to look for employment no matter what it is.

This is why we have so many slums in our cities.

The greatest challenge is for us to change our attitude about so much and view agriculture in a different perspective.

and the following from the UK

Hi Peter,

Your account rings so true!

We used to have a neighbour - charming bloke - who had been in Africa for his business and used to lament the lack of effort of many of the Africans he knew

This gave us the impression that he was racist but now, after trying to get people to start their own business so many times, I know it is a fact.

One can come up with all sorts of reasons but when I offer a long term, nil interest, loan to anyone willing to outline their plan and find no-one interested I know we can't just blame the past colonialists for present problems.

The good news is that there will be positive change when people understand (1) that there is a problem; (2) what the problem is; and, (3) that the problem can be fixed. Some of us are of the opinion that it is going to be possible for people in communities using the resources of communities to have great socio-economic progress with some quite modest changes. What is problematic is that great wealth has been accumulated by people who have gamed the system in various ways and now have a big role in maintaining what is essentially a failed status quo.

As Dr. Muhammad Yunus says from time to time "When poor people work long and hard and remain poor, it is because there is a systemic problem". The power of decision makers to maintain the inequitable status quo is part of this systemic problem.

Sincerely
Peter Burgess
Community Analytics (CA)

A message to an international NGO

Dear XXXXXXX

As someone who has done my fair share of field work during my career that included 20 years of professional and corporate management experience and more in the official relief and development assistance (ORDA) industry I am absolutely disgusted at the state of accountability and the state of socio-economic metrics about progress and performance. As Dambisa Moyo has said about Africa ... "60 years and a trillion dollars" ... and not very much to show for it.

I have been working for some time to formulate a system that is presently referred to as Community Analytics (CA) which repositions metrics so that they are meaningful for a smart society. Business accounting is good for money ... but something else is needed as well so that there is a clear understanding of value flows. The ORDA industry has very weak metrics and accountability. This has been highlighted yet again by the recent disaster in Haiti. Nobody up to now has stepped up and talked about the accountability dimension of their efforts ... beyond using "stories" to justify more fund raising.

How much money has been raised ... how much socio-economic value has been created? Does anyone have this information ... and if not why not.

To repeat ... I am absolutely disgusted at the state of accountability and the state of socio-economic metrics about progress and performance. In my experience "what gets measured gets done" ... and I would observe that if you change the way the game is scored you change the way the game is played. We need to change the way metrics are done in the ORDA sector ... and as soon as possible.

Who is going to be leading the industry?

Sincerely


Peter Burgess
Community Analytics (CA)

What not-for-profits and charities deserve your money?

Dear Colleagues

The question "What not-for-profit organizations and charities deserve you money?" is a pretty basic question. The answer would be very easy if there was a universal application of CA style value accounting, but with the prevailing GAAP style money reporting, the data are not adequate.

The media circus around the Wyclef Jean initiatives for fund raising and support for Haiti in the aftermath of the earthquake is symptomatic of the underlying problem. A colleague wrote:

On Sat, Mar 13, 2010 at 7:49 PM,
http://www.news-gate.info/celebrity/wyclef-foundation-pays-mistress/

All this mess is going on while COMPETENT AND EFFICIENT grassroots organizations personnel have to use their own cash to fund worthy initiatives. Our society is so STAR-crazed that these situations are bound to happen all of the time. It takes so much work before I can get the first sponsor... they just poured 61 million dollars into this Yele mess... The gentleman from CA in HEDR is so right when it comes to accountability issues with these celebs and large NGOs, while we work with our nails... That is a SHAME!

Another colleague replied. with the following:

Peter's point I think is more about how efficiently the money gets spent. Like stocks, charities typically are rated by their financial numbers or by qualitative characteristics such as corporate governance -- or both. Unlike stocks, charities have no single measure akin to business profit to determine successful performance. "Charities start to game the system, and we have a death spiral toward zero fund-raising costs,"
http://online.wsj.com/article/SB122963299671419401.html

There have been a string of news stories questioning Wyclef's financials. He responds with PR campaign about how much he cares about his people. The PR is effective in raising money, because not a lot of people check the financials.
http://www.charitynavigator.org/
http://www.bbb.org/charity-reviews/national/
http://www.charitywatch.org/
http://charityguide.org/volunteer/charityratings.htm
http://www2.guidestar.org/
http://www.forbes.com/2003/11/19/charityland.html
http://images.forbes.com/downloads/pdf/invguide03.pdf
Some data is dated, and as mentioned earlier can cripple start-ups.

Actually what you shared is relatively trivial on the scale of what's going on.
http://www.charitywatch.org/articles/feedchildren.html
Some other "charities" are paying their top executives in the $ millions.
http://www.charitynavigator.org/index.cfm?bay=topten.detail&listid=8
That's legal legitimate, but there's people making donations who can barely make ends meet, and they think the money is going to a good cause.
http://www.consumeraffairs.govt.nz/scamwatch/

There's some "charities" in which damn near all the money goes to the people who raise the money.
http://www.charitynavigator.org/index.cfm?bay=topten.detail&listid=28
http://www.charitywatch.org/articles/Op_False_Charity.html

When we look at the charities that are doing the best job, some great names are conspicuous by their absence.
http://www.charitynavigator.org/index.cfm?bay=topten.detail&listid=23

Some good charities have bad apples inside.
http://www.ministrywatch.com/
http://www.ministrywatch.com/pdf/MWDA_Gifting_Elite_Activity.pdf

My colleague is demonstrating that the issue of performance in the not-for-profit and charity field is for all practical purposes not being handled ... and that the CA approach is very much needed. In fact, the emergence of intermediaries like Charity Navigator and others may be facilitating the empowerment of low-performing organizations because it is so easy to "game" the system and get a good ranking even when it is not truly deserved. On the other hand, small organizations doing important and valuable work, especially overseas are completely of the radar and unable to be part of the "system". The CA methodology has the potential to change this ... but new paradigms are never easy to deploy. Stay tuned ... it will get done!

Peter Burgess

Where does wealth come from?

Dear Colleagues

This very quickly gets to be a very uncomfortable question ... because very little wealth is actually created. If I am becoming "wealthy" most of that wealth is merely being moved from some other owner of this wealth to me ... in most wealth transactions, the wealth creation turns out to be zero-sum at best, and in many transactions the wealth gain by one party is offset by wealth losses that are substantially larger by the other parties.

Trying to make sense of the huge profits being recorded by some of the high profile financial center institutions ... Goldman Sachs, J.P.Morgan Chase, Morgan Stanley et al ... and it becomes fairly clear that their business model is little more substantial than the science of the great alchemists of an earlier age. All of their "trading" profit is offset by someone else having a trading loss. What is somewhat scary is that we are aware of the scale of the profits because they are concentrated, but we are less clear about where the offsetting losses are located.

Eventually losses come to light. The sub-prime fiasco eventually came to be seen as a zero-sum situation, but it took time. The hyper profits of the mainstream banking community during the housing boom and easy mortgages eventually were offset by losses when silly appraised values and silly creditworthiness assessment turned into the reality of the sub-prime crisis. Nobody did their job, but in the end many people pocketed wealth while a very much large group of people lost wealth.

In Iceland, the foolishness of the Iceland bankers and their banking partners in places like London and New York has resulted in the people of Iceland ... every person in Iceland that is ... losing wealth while a few bankers gained wealth. The banking community still does not seem to "get it" that the economic model they are using is fatally flawed, and while they are recording profits and being very satisfied at their performance, the underlying economy around them has been gutted.

It is not yet clear whether sovereign debt in general will turn into a new bubble and financial crisis ... but it is entirely possible. Walter Wriston, a former CEO if Citibank regarded sovereign debt as a great asset class because the earnings were good and the borrowers "could not go bankrupt"! His law was correct ... but his reality was not!

What we now call wealth and have on the record in money terms has all come from somewhere. Much of it has come from exploiting natural resources in some profitable way. The system of accounting that we use records the costs incurred to extract value from the resource, and then takes into account the revenues earned and computes profit and equates that to a wealth increment. The diminution in the natural resource by its exploitation is not taken into account. This stupidity is the norm ... and, of course, has been the norm throughout the industrial era. It made the industrial era seem very profitable ... and made the wealth creation look good ... but the reality is very different.

Obviously mining and petroleum companies are looking a lot more profitable than they really are if the resource consumption was accounted for in the profit calculation. But there are many parts of the global economy where the costs exclude the damage being done to the broader society or the commons. Community Analytics (CA) is starting to address this so that there may be a better understanding of what needs to be done to improve quality of life and have this sustainable.

What emerges from CA value analysis is that quality of life is not only about material consumption, it is much more about material investment and the enjoyment of being more than merely the enjoyment of consuming. While value is subjective and therefore difficult to treat simply ... it is important. It is not easy to quantify value ... but it can be done in a meaningful way. CA is in the process of doing this and will share this quite soon.

For the moment, the question is "where does wealth come from?" ... and the answer is that much of what is thought of as growing wealth is offset by others who have lost wealth ... but that there are opportunities for real wealth creation when a smart society improves its real performance. Science and technology ... knowledge and know how ... may be used so that there can be improvement in the quality of life with less use of available resources, and in fact society may evolve so that resources increase while quality of life improves. This is not phony wealth derived from the maths of monetary economy ... but something that is very tangible and measured using a construct like CA value!

The business media ... Forbes, Fortune, Wall Street Journal, Business Week, Financial Times, Economist, Bloomberg and all the rest ... do not seem to want to challenge the way the metrics of modern society have failed. The professional accounting bodies and the mainstream of academic economists seem to be going with the flow. People like Professor Muhammad Yunus and a growing number of concerned people are asking good questions about the system of money profit measurement and "what happened?". In time CA might give these people the answer.

Peter Burgess

e-Governance Initiatives for transparency and accountability

Dear Colleagues

This message from my colleague Kris Dev in Chennai is a good introduction to LifeLine to Business (LL2B) and the global Transparency and Accountability Network represented in the USA by Tr-Ac-Net Inc. which also has developed the Community Analytics (CA) initiative.

Fwd: e-Governance Initiatives for transparency and accountability
From: Kris Dev
Sun, Mar 14, 2010 at 1:53 AM
To: The Sunlight Foundation

Hi,

I visited Sunlight Foundation and Transparency Corps websites. Your mission "The Sunlight Foundation uses cutting-edge technology and ideas to make government transparent and accountable"

It is rightly stated by Sunlight Foundation, "... to accomplish it, we've created a non-partisan, non-profit organization based in Washington, DC that focuses on the digitization of government data and the creation of tools and Web sites to make that data easily accessible for all citizens. It's a simple concept, but it's a very big job, and we are working with you to meet the challenge on every front.".

Transparency and Accountability Network (Tr-Ac-Net) is a loose knit global organization to create Community Centric Sustainable Development using the principles of Transparency and Accountability. We are working on this idea for the last 3-4 years globally.

Tr-Ac-Net is a global initiative and is co-founded by Peter Burgess from New York and myself. We have members from Asia, Africa, Middle East, Americas, etc.

I am from India; I have lived and worked in North / Latin America. I am presently an e-Gov Consultant based out of India.

I read in your contact page: "Have an idea for how to make Transparency Corps better? Have a task related to government transparency that the Transparency Corps community could solve? Want to learn more about Transparency Corps or have a brilliant thought to share? Send us a note here, or email tcorps@sunlightfoundation.com directly. Send us a note. We love new people and ideas!"

Is Transparency Corps only limited to USA or can its initiatives be extended to the world? If it can be extended to the world, we have an opportunity to work together, collaborating with TrAcNet. I find you have people in your team with Indian background.

I would like to introduce to you Life Line to Business (LL2B), a member of Tr-Ac-Net and an e-Governance Organization that has developed and implemented e-Administration e-Platform for e-Governance, a web based, platform neutral, paper less communication and work flow solution developed using open source tools (java, jboss, postgresql all running on Linux).

The tool has the provision for self customization by the user organization and can help to create the entire geographic branches, the functional departments, positions and officials for G2C / G2G / B2B / B2C communications.

It helps to integrate the working of the entire vertical and horizontal hierarchy of any community or organization and introduce transparency and accountability. It can also help to create unique identity for every citizen and help track the communications. Mobile phones can be integrated into the application for seamless communication. It can help to organize easy archival and retrieval of records.

e-Administration Tool was selected for the 'Innovations 2009' (Ideas in practice) Award for implementing 'e-Administration: e-platform for e-Governance' (certificate attached). The award is instituted by Indian Institute of Technology (IIT) Bombay Alumni Association, Pune Chapter, India and The IndUS Entrepreneurs (TiE), Pune Chapter, India.
(http://www.iitbombay.org/chapters-and-events/pune , http://www.innovations-pune.com/ and http://www.innovations-pune.com/2009).

e-Administration initiatives are covered in many newspapers/magazines, as detailed below:

1. The Business Standard, Mumbai - 'With e-Governance, admn takes a virtual leap in TN
http://www.business-standard.com/india/news/with-e-governance-admn-takesvirtual-leap-in-tn/186941/

2.The New Indian Express http://www.newindpress.com/NewsItems.asp?ID=IET20040705124325&Page=T&Title=Southern+News+%2D+Tamil+Nadu&Topic=0&aDate=7%2F6%2F2004
3. Case study presented in Digit Magazine November 2004 is as follows:

IT Cuts Red Tape - To many, e-Governance and a paperless office are Utopian ideas. Not for the Tamil Nadu government's IT Department, which uses software to create a transparent transaction process - "The biggest advantage of e-Administration is that it enables us to view, at any stage, the status of a pending file... This way work flow is simplified" - K. Appuswamy, General Manager, e-Governance, Tamil Nadu.
http://geotourism.changemakers.com/files/digit_nov04_digital%20business_%20case%20study.pdf

4. The Hindu, Metro Plus, Chennai on "Paperless or less paper?" on Saturday Jan 08, 2005 can be seen at http://www.hindu.com/mp/2005/01/08/stories/2005010802070100.htm

5. The Hindu Business Line Monday, Sep 06, 2004, Chennai, Tamil Nadu, India
eWorld - E-Governance - Take those files away - Raja Simhan T.E. raja@thehindu.co.in
http://www.thehindubusinessline.com/ew/2004/09/06/stories/2004090600020100.htm

6.The Budget 2004-2004 address to the State assembly of the Lt. Governor of Pondicherry::
http://pondicherry.nic.in and http://www.pon.nic.in/open/depts/finance/lgspeech2004.pdf

7. The "Journal of Orissa Information Technology Society" in the Case study on: "ICT and e-Gov" - Quarterly progress Report (April - June 2003) at http://www.oits.org/bulletin/bltn0412.pdf.

8. The customized e-Platform for the Industrial Guidance Bureau of the Government of Pondicherry, India, implemented with technical support from Life Line to Business (LL2B), Chennai, was evaluated for the Best IT Implementations of the year 2007 in the Government Sector by PC Quest, a Cyber media publication.

PC Quest June 2007 issue has rated 250 enterprise projects - 'The Ultimate Guide to IT Implementations in India' has evaluated the Best IT Implementations of the year 2007 in various sectors, with 'Analysis of Who is Deploying What in IT', 'Tech & Trends in IT Implementations' and identifying 'Top 10 Challenges in Deploying IT', by an independent jury'.
http://forums.pcquest.com/itimplementation/june_2007-30.html

In addition to the above e-Governance activities, our pro-poor grass-root initiative of unique Identification of poor for tracking benefits extended to poor, won the “Manthan-AIF Award 2006” for creating “India’s Best e-Content” in the category of “e-Inclusion and Livelihood” out of entries from 25 states in India for “Biometric Tracking of Payments under NREGA” in remote parts of rural India (http://www.manthanaward.org/section_full_story.asp?id=507). The award is given under the framework of the World Summit Awards.

Implemented unique biometric identification and tracking in rural India for e-Governance for poverty alleviation. The biometric initiative was covered in a number of newspapers and magazines. A few of them are as follows:

Villagers get digital identity - Biometric tracking gives a tamper proof identity to villagers http://www.indianexpress.com/news/aids-counsel-a-call-away/21904/2

Bihar shows smart card way to cleaner rural job scheme - http://www.indianexpress.com/story/33365.html

The 'BSC' of Identity - A Biometric Smart Card Device can be a fool-proof ID for citizens, says this ICT Consultant - http://www.thehindubusinessline.com/ew/2007/03/19/stories/200703190

ID Cards get smarter - http://www.business-standard.com/common/news_article.php?leftnm=10&...

4Ps Business and Marketing Magazine - A Plan Media Publication, New Delhi, India - Special Feature - column citizenry - A prescription to end corruption - Unique identification of every citizen will help kill the corruption malaise in developing economies http://www.4psbusinessandmarketing.com/17072008/storyd.asp?sid=2112&page....

'Biometric Smart Card' – article published in: 'Information Technology in Developing Countries' newsletter of the International Federation for Information Processing (IFIP) Working Group 9.4 titled Social Implications of Computers in Developing Countries. Previously supported by agencies like COMNET-IT, Malta and IDRC, Canada, the newsletter is now published on the web by the Centre for Electronic Governance, Indian Institute of Management, Ahmedabad.

The newsletter carries articles on IT applications in developing countries which have created a socio-economic impact, evaluation of national policies on IT and telecommunications sectors, and paradigms to understand the impact of IT on development. Relevant conferences announcements, and reviews of conferences and books are also carried in the newsletter. The readership mainly consists of IT professionals, academics and administrators concerned with IT policy. The newsletter has to its credit a legacy of over 10 years of print publication, reaching 750 individual subscribers and 45 libraries in 40 countries. Past issues can be accessed through the WG 9.4 homepage.
http://www.iimahd.ernet.in/egov/ifip/oct2008/oct2008.htm and http://www.iimahd.ernet.in/egov/ifip/oct2008/kris-dev.htm.

Smart Voter-IDs needed - http://www.business-standard.com/india/news/geetanjali-krishna-smart-vot...

I thought the above may be of interest to Transparency Corps / Sunlight Foundation.

I am marking a copy to Peter Burgess. We await to hear from you,

Best,
--
Gopalakrishnan (Kris) Devanathan,
President & CEO,
Life Line to Business / Life Line to Citizen,
Chennai, Tamil Nadu, India.
email: krisdev@gmail.com
URL: http://ll2b.blogspot.com
Ph: + 91 98 408 52132 / 1 (206) 274 1635

Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. … Article 25 of the Universal Declaration of Human Rights.

"A quick evaluation of the progress we have achieved in the last 20 years shows that in the area of poverty alleviation, we have not done enough. History will judge us harshly, unless we seize the opportunity to do more." - Archbishop Njongo Ndungane, President and Founder, African Monitor.

Practice is better than precept.

While much of the work on transparency for the past 15 years or so has been publicity about the problem ... the work of Tr-Ac-Net, LL2B and Community Analytics (CA) has been to develop and deploys ways of making transparency the norm for global socio-economics.

Peter Burgess

Market capitalization ... and perpetual motion

Dear Colleagues

The importance of the market economy has been promoted without much of a challenge for 30 years ... President Reagan in the USA and Prime Minister Thatcher in the UK must take some of the blame! But so also must the academic community that taught only half of what should have been taught.

The Wall Street quants love the market model for creating profit and money denominated wealth because they are able to report profit without ever actually having to "do" anything. This is about as sound as the science of alchemy in the Middle Ages ... or the viability of perpetual motion.

At the end of the 1980s Bill Gates was reported as being a very rich man because his stock holding in Microsoft was valued at a very large number ... but the value of the stock based on market capitalization was a multiple of the cumulated earnings of the company. In this the wealth of Bill Gates was a multiple of what had ever been earned. This is an interesting reality ... or is this a ridiculous misrepresentation.

This morning the Apple company is starting to take orders for a new product, the iPad ... and the market capitalization of the Apple company is huge ... bigger than the market capitalization of the BNSF railroad, and other well known companies. This is symptomatic of the profit focus stock market pricing model that ignores the value adding dimension of a company's performance.

With this sort of market economy, the allocation of resources is optimized for profit, but not optimized for value ... and in the end, the economy crashes. This happened with the dot.com bubble, then with the sub-prime housing market bubble, and then again ... almost ... with the complex instruments of the financial system.

So far this last bubble has been sustained by an economic and financial establishment ... together with some in the business and political community ... that has every reason to keep the bubble from bursting. But it will deflate ... maybe by good people managing a paradigm shift ... or simply by a catastrophic crash.

What needs to happen for a managed paradigm shift is for the metrics of society to reflect not only the money profit elements of the economy, but also the value elements which are presently not included in any of the news babble that determines stock market sentiment.

The value idea has been in play in academic circles for decades ... but careful isolated from the real world of money and the various markets that are built on multiples of profit. This needs to change ... and the time for this change is now!

Peter Burgess

Trying to contact Partners in Health (PIH) ... about planning and accountability

Dear Colleagues

Community Analytics (CA) is the perfect methodology to help with planning and oversight accountability as Haiti moves from rescue and immediate relief to longer term relief and rebuilding. But it is very frustrating ... and very difficult to make contact with anyone in the organizations, let alone the key people.

I am sharing this with the blog reading public. Dr. Paul Farmer has a big reputation for his work in Haiti and the organization Partners in Health (PIH) has been identified as very high performing in a socio-economic situation in Haiti that normally is not very positive. Since the earthquake, PIH has done everything it could possibly do ... as far as I know. But today I have been trying to make contact. It started with the following email.

from Peter Burgess
to info@pih.org
date Thu, Mar 11, 2010 at 4:19 PM
subject About the Haiti emergency ... helping with planning and accountability ... URGENT
mailed-by gmail.com
hide details 4:19 PM (7 minutes ago)
Dear Colleagues

Dr. Paul Farmer and Partners in Health (PIH) have built a strong brand for success in health in difficult places ... notably in Haiti, and more recently in Rwanda. It is good that the UN has chosen to have Dr. Farmer in the role of UN Special Envoy in this time of emergency together with former President Bill Clinton.

While the rescue and relief response has been substantially improved over other recent disasters ... the South Asia Tsunami, the Pakistan earthquake, Katrina, et al ... there are still some issues that fail to get addressed, notably the matter of accountability. There is some progress on this, but it is small, and relates to only to part of the fund flow. Worse, there is a universal rejection of accountability as a legitimate concern by almost all the organizations involved which makes it very hard to distinguish between those that raise money and do good things, and those that raise money and do nothing.

This is not a new issue. I raised it for the first time in 1978 when I did my first consultancy for the World Bank ... and have raised the matter hundreds of times in the intervening years. I am raising it again now ... and at the same time introducing Community Analytics (CA) as a way to improve the planning framework and to improve the accountability and oversight of the ongoing relief and rebuilding initiatives. As its name implies, CA has a community focus and looks at development from the perspective of the community.

There are also questions about how the official Government of Haiti plan will serve the people of Haiti. While it is clear there are some funding requirements for rebuilding infrastructure, government buildings, etc it is a concern that the planning will be in the interest of well connected contractors and the people of Haiti will not be fully engaged. It has been observed that the socio-economic structure of Haiti in the past has not resulted in much of the gross national product residing with the population of Haiti as a whole but being very much focused on the government and a small elite. Though cotton and rice were profitable for Haiti at some point in history ... the modern economy of Haiti has revolved into a poor and essentially welfare based system with no way out. The CA planning approach would help to put community back into the picture ... and would be a very valuable SUPPLEMENT to the official plan that is soon to be published.

You should know that in my career I have done several national level development plans for the UN (including Afghanistan after the Soviet withdrawal and Namibia after independence, as well as many area development plans in connection with various disaster recovery situation).

Maybe you could point me in the right direction ... and forward this message to the appropriate parties.

Peter Burgess
Community Analytics (CA)
//////////////////////////////////////////
Our contact coordinates for all mail except donations and for phone, fax and email are:
Partners In Health
888 Commonwealth Avenue, 3rd Floor
Boston, MA 02215
Phone: +1 617-432-5256
Fax: +1 617-432-5300
Email: info@pih.org
///////////////////////////////////
___________
Peter Burgess
Tr-Ac-Net Inc ... The Transparency and Accountability Network
Community Analytics (CA)
Integrated Malaria Management (IMM)
Microfinance Focus Magazine in New York
website: www.tr-ac-net.org
tel: 917 432 1191 or 212 772 6918 or 212 744 6469
email: peterbnyc@gmail.com
skype: peterburgessnyc
Books: Search Peter Burgess at www.lulu.com

I got an immediate automatic response saying don't send an email, but go to the website. I went to the website ... for the umpteenth time ... and there is no way to connect ... but you can send money.

I called a phone number ... and in the course of an internal telephone tag exercise got message after message telling me to go to the website or press a number ... and then the same recording with the information to go to the website or press a number.

While I respect PIH based on what I learned some time ago ... but honestly, I am not so sure any more. As I mention in the email, Dr. Farmer is now a UN Special Envoy together with President Bill Clinton ... and with this job description getting in touch is no longer a realistic option. I would argue that this is beginning to look a little bit like a rebuild of a dysfunctional society where the elite really do not have to deal with reality. Maybe I am being unfair ... but there should be a better way!

Peter Burgess

Irving Wladawsky-Berger on economic performance and social-progress.

Irving Wladawsky-Berger posted a wonderful piece back in January. I have only just seen it courtesy of a friend who like it.

The URL is http://blog.irvingwb.com/blog/2010/01/economic-performance-and-social-progress.html

I have commented as follows

I am so pleased to see this essay. The idea that society should be performing well when profits are up, the stockmarket is up and the GDP is up ... even though house foreclosures are at an all time high ... and unemployment is higher than at any time since the great depression ... and a pair of shoes that I used to buy for $10 are now priced at $650 ... and coffee that was 5 cents or 10 cents is now $2 ... and healthcare is 17% of GDP and consumer activity is 70% of GDP ... and everything we buy in the USA is now made abroad ... and some international companies have become bigger than most national economies ... and money is printed or worse merely created as a virtual electronic fiction! No wonder I like this essay!
Peter Burgess
Community Analytics (CA)

For the record ... I made three small edits to the above from the comment that was posted.

One of the issues that comes up in connection with Irving Wladawsky-Berger's essay is the slow progress of important things. The commission referred to in the essay (http://www.stiglitz-sen-fitoussi.fr/en/index.htm) was put together in 2008 but before the financial sector implosion was spinning out of control ... but the recommendations are still on a pace that would suggest the metrics are really quite fine, which I argue is just plain nonsense!

Peter Burgess

Socio-economic planning using the CA methodology ... Haiti

Dear Colleagues

The Community Analytics (CA) methodology is a powerful tool for socio-economic planning.

It should be noted that socio-economic planning using the CA methodology is not at all like the State Planning (Gosplan) of the Soviet era and socialist societies in the 20th century ... or even the development planning encouraged by the World Bank, the IMF and international donor agencies. Rather CA style socio-economic planning aims to channel resources so that they are used in the most effective way for socio-economic progress, and the CA performance metrics make it possible to have those that make decisions to be held accountable in a timely and appropriate way.

The CA approach is being used to develop a supplement to the Government of Haiti's official relief and rebuilding plan. Now that it is several weeks since the earthquake, it is time for rebuilding plans to be put in place, but there is concern that this will be a process that will have both rigid Gosplan characteristics and big contractor benefits, but rather less benefit that reaches the poor population of Haiti in a meaningful way. The CA approach puts each and every community into play as a unit for socio-economic progress ... and does community level metrics so that benefit to the community may be put on the record and the implementing agencies given credit.

But the CA approach is not simply about better use of external resources ... even more it is about better use of available local resources. Communities have assets ... but these assets are rarely being used in the most productive way. CA considers people as assets ... and asks the question how may people contribute the most to their society, and in so doing benefit themselves. When the goal is to improve the people asset in the community with better health, better education, better housing, better economic opportunity ... then the community is able to progress with the progress being sustainable.

While health and education are valuable for people ... it is the better economic opportunity that ensures the sustainable progress of the community. In any community the big economic opportunity question is how to have work that is surplus producing. If it is agriculture .. does the work produce more than the person and the family needs for their own consumption. If it is a wage paying job ... do the wages pay the bills of the person and the family ... and does the business have enough revenue from the work done to pay the wages. Communities need to think through ways in which their assets may be used most usefully to create value for the community.

External help for the community may be useful ... or it may be detrimental. It is fairly clear that international investment has been done over several hundred years for the benefit of the investor with little consideration to the impact on the local society. In Haiti the business of cotton and rice served the interest of business capital and not very much the interest of labor ... and also set the stage for a long term degradation of the land.

Remediation of degraded land should be an important long term program, and probably best done with community scale initiatives. The value of land remediation is high, but traditional justification of such works based on money justification is difficult. They become easier to justify using the full value analysis of the CA methodology.

The Haiti planning work is ongoing ... and will be web accessible towards the end of March.

Peter Burgess

Another portal ... another presentation of data, but not a better paradigm

Dear Colleagues

Another initiative that I have been introduced to is the The Global Disaster Alert and Coordination System (GDACS) ... and I have tried hard to understand what value is added from this initiative.
http://www.gdacs.org/index.asp

The Global Disaster Alert and Coordination System provides near real-time alerts about natural disasters around the world and tools to facilitate response coordination, including media monitoring, map catalogues and Virtual On-Site Operations Coordination Centre.

Clearly the technology is getting better, and it is now possible to see material more easily than before ... but the general observation has to be that there are better presentations of the same old same old data. Essentially much more data are "a click away", but the data being presented are mainly getting more "attractive" rather than getting to be significantly more "useful".

In the corporate world "management information" is very summary ... but with a lot of "drill down" capability to what is essential data about the subject of analysis. Management information is not about "stories" but about analysis of data ... and good management information is also very low cost in relation to its value.

Low cost and high value is only possible when the data are useful AND this useful data is in a form so that there can be easy feedback into improved activities. In relief and development, this translates into a need for data that have community focus and can be used by local actors in a practical way ... that is the Community Analytics (CA) model.

When the state of a community and the progress of a community are part of the broad socio-economic knowledge database ... then it will be possible to have mapping overlays that are of value. At the present there are the sector mapping overlays but with nothing that integrates and coordinates at the community level.

In conclusion, the GDACS portal reflects good technology ... but does not move the data agenda forward very much. Now it may be that I do not know enough about what they are doing, but the impression is that this is just another way of re-presenting data and analysis rather than the beginning of a new paradigm.

Peter Burgess

More data about projects ... good, but what about the community?

Dear Colleagues

One of my professional friends has recommended I look at the work being done by others that seems to be in the same space as Community Analytics (CA). I went to the initiatives I was pointed to and was relieved to find that the CA work was in fact going to be complementary to the work of these other initiatives.

In fact, I had taken an interest in these initiatives some time back because they seemed, on the face of it to be doing much the same. The following is from one of the websites: (http://irtheoryandpractice.wm.edu/projects/plaid/)

Project-Level Aid (PLAID) is an interdisciplinary project whose objective is to create a web-accessible database on development finance. Among many other necessary steps toward a better understanding the impact of foreign aid, this project can help improve aid coordination, assist in measuring the effectiveness of development finance, and, ultimately, provide information to improve allocation decisions by donor governments. In December 2009, PLAID merged with Development Gateway's AiDa project to form AidData.

There is going to be a conference in Oxford to help launch the combined database ... and that is good, but certainly not great.

The problem, I believe, is that there is a fundamental flaw in the way development assistance is managed. No matter how much data we have about the "projects", we are still going to be left with a huge data gap that modern economists simply refer to as "externalities". The whole matter of impact of a project depends totally on the specific realities of these "externalities" and unless they are an integral part of the data, then the work done to compile project data is going to be largely futile.

Years ago the United Nations Development Program (UNDP) compiled an annual Development Cooperation Report (DCR) for each of the member countries of the UN. This was a compilation of all the externally funded projects for a country ... and while it was rarely anything like perfect, it was a good starting point for understanding what development assistance was coming into the country. As I understand it the DCR was mandated to be prepared by UNDP by the UN General Assembly in 1978 ... and quietly dropped towards the end of the 1990s. While nobody will confirm this, it looks very much as if the report was dropped because of pressure from bilateral donors who did not like details of their assistance ... whether too big or too small ... or because of sector priority ... to be on the record and accessible. Many donors refused to cooperate with UNDP in the preparation of these reports ... but the data was usually available with a little effort through beneficiary government reports. What I learned from my work in this area over a number of years was that almost every organization preferred to work in the shadows ... true transparency was the last thing any of the big organizations wanted to work with.

The database that is being developed by this PLAID initiative is a start ... but it will have two major limitations (1) the data will mainly be about the inputs and the plans for the projects, and much less about the performance of the projects; and, (2) the impact on the society resulting from these projects will not be part of the database or analysis.

This latter is, of course, where CA fits in. CA is about the progress and performance of a community ... and the projects are the interesting externalities. The question that CA is able to answer is about the impact that a project has on a community.

Experience over the years is that there are many beneficiaries within the project structure ... everyone at the donor organization and all the intermediaries and support organizations ... and the intermediary government agencies ... and the staff of the project ... etc. But it is not usually very clear how much benefit actually reaches a community. The amount of benefit reaching communities is problematic during the project ... but it becomes even more interesting when the long term impact of the project is addressed. Bottom line, the money is disbursed and that is 100% for sure ... but the short term and the long term benefit is very much less sure ... not even a definite maybe! What is particularly concerning is that large projects cause serious distortion in the local economy ... and while there are favorable multiplier benefits while the project sets up, these are all given up when the project winds down.

I am happy when more data is made accessible ... but I won't be satisfied until the cost and impact of relief and development interventions are able to be seen at the community level ... and all the responsible parties held accountable for socio-economic development progress and performance.

Stay tuned

Peter Burgess

Iceland

Dear Colleagues

Last Thursday I met someone visiting New York from Iceland. As the world knows the banks in Iceland have become involved with the global banking fiasco and the Iceland banks and the Government of Iceland are now in a situation where every man, woman and child in Iceland is on the hook for an additional $16,000.

This is what contractual law ... banking law ... seems to have achieved. While a small bunch of bankers have taken risks to benefit essentially themselves, they have put enormous financial burdens on the population at large. And the bankers in Iceland, and the bankers in London and New York (and other banking centers) are spouting off about "rule of law" and the "sanctity of contracts" when the very concept of "equity" has been flaunted by all the decision makers and gamblers ... sorry bankers ... concerned.

I am absolutely appalled by the position of the bankers ... and their professional advisors especially lawyers. Though I have to admit to being totally disgusted with the performance of the global accountancy profession that seems to have been asleep or off the job for the best part of the last 25 years. The big question is who is going to "pay" for the debacle. I like the idea of "claw back" ... and even better if it was associated with the idea of "triple damages" that the US has (or had) in anti-trust and price fixing legislation. Two things that should happen: (1) bankers should be the ones to pay; and (2) ordinary people should be made whole.

Clearly this is not the way things are going ... bankers are getting back on a roll that nobody can understand ... and the real economy in the USA, Europe and many other parts of the world is going to get stuck in the doldrums. Just as the old industrial economies were able to "show" profit by outsourcing manufacturing to China and the neighborhood, and back office operations to India ... soon some of the real economy will get some modest growth because of the demand that is now outsourced to China, India et al. The banking industry has done untold damage to the national economies of the old industrial countries ... and profited mightily while doing it, especially in the United States and the United Kingdom.

There will not be any serious reform as long as there is no transparency and no accountability. This is not only a matter of regulation ... but also something to do with the ethics of society and the behavior of professionals in both law and accountancy. Most of the population wants a reformed banking industry ... only the bankers want the status quo ante. And it is entirely likely that they will be able to buy what they want from those with political power ... a terribly sad state of affairs!

Peter Burgess

Important ideas ... no traction

Dear Colleagues

I have been at many events in the last two years where very experienced people have talked about their subjects ... and it is clear that there are many wonderful ideas that should be used to improve the quality of life in our local and national society, and indeed in the global society.

But what is equally clear is that many of these ideas will never by used because while the value proposition is clear, there is no clarity about the profit potential. Allocation of resources is ALL about profit and making money ... if making a lot of money is not the agenda for an idea or a technology, then "who cares?!".

This has been driving decision making for a long time ... but the profit focus gained a lot of extra traction with the Reagan Presidency in the USA and with Margaret Thatcher as Prime Minister in the UK. This was a good thing ... up to a point ... but it quickly got out of hand. By the end of the 1980s I was observing that the biggest cost in the US economy was the cost of profit. In order to have a salable product and get funding, the margin for profit had to be bigger than the costs ... which worked for some dot-com type companies, but for people trying to do work involving major engineering and construction, was not a good thing at all.

Good ideas ... important ideas and no traction is not a new problem, but it has great importance now that it has become clear to everyone except bankers and financial quants that the global economy has taken a huge hit. It is no longer an acceptable idea that there will be no traction for good ideas because the money profit is rather week even though the social value adding is great.

But to get traction there has to be a change in the way the metrics are done. Value and quality of life have to be scored. Just as companies are scored by the profit they earn ... communities should be scored by the value progress they make ... and there should be metrics for both community progress and the performance of the activities that produced the progress.

Value is subjective ... and value is difficult to quantify ... but value is important. Ignoring it does not make it less important. There are ways to quantify value and do it with a reasonable level of acceptance ... using standard value rather like cost accountants might use standard costs.

But if the value of good ideas becomes clear ... and there are metrics everywhere that look at value adding as much as profit ... there is hope.

What gets measured gets done!

If you change the way the game is scored, you change the way the game is played.

Community Analytics (CA) is a new way to keep score ... a new way to measure important things!

Peter Burgess

High performance rescue and relief

Dear Colleagues

It is now several weeks since the terrible Haiti earthquake of January 12th. While the toll has been very high in terms of life lost and disabling injury ... the post disaster performance of the rescue and relief community has been very good. In a catastrophe of this magnitude it is always possible to find areas where a better job could have been done, but I would argue that the overall effort has been really very good.

Clearly there are areas where things have not gone well, and while this is regrettable and should not happen ... the human condition is far from perfect. With respect to some of the disorder that is reported including rape ... it should be noted that the number of police in Haiti pre-earthquake may well have been around 2,000 for a population of resident Haitians of some 6 million ... compared to New York where there are perhaps 30,000 police for about 9 million people. These numbers may not be exact ... but the broad idea does not change. The lesson is that Haitians have had to look after themselves and have done it quite well with strong informal systems of governance. This is a factor that should not be underestimated.

I have been impressed with what seems to have been accomplishments of the medical professionals. So far so good ... and well done. But there is now a big job going forward. In the early stages there was volunteer enthusiasm and money ... now there will be much less of both. The healthcare needs will not go down for a long time.

Children's programs are well funded compared to other needs like food and shelter. The deficits in the food and shelter funding are going to be a problem in the months ahead especially as the rains and hurricane season arrives.

Those who have survived and do not have debilitating injuries are ready to do something economically productive. While everything else has been on the agenda, the advocacy for this has been rather muted. UNDP has been able to create some pay for work in the cleaning of debris ... but I would argue this has been very limited compared to what was the need and potential.

Putting Haiti into a mode where there is productive work is an imperative ... but some people would observe that plantation agriculture and sweatshop factories should not be the driving force but something that has a more human face and a sustainable characteristic.

The contractors it seems are at work ... but there is very little transparency yet about what they are doing, how they are being paid and what they are expected to do. The role of contractors in consuming the available funds needs to be addressed ... but it is likely to be too little and too late. Contractors ought to be at the center of high performance rescue and relief ... but this is not very much "on the record" in part, it appears because contacts tend to charge high prices that are embarrassing when emergencies arise. Not good ... but almost the standard MO. Good contractors should be a key part of sustainable effective development.

High performance rescue and relief needs to have people as the beneficiary ... and people as the key resource. Any program that does not have beneficiaries integrated into the program is going to be difficult to integrate into a continuum of development.

Are people and organizations behaving as well as they should? We just do not know ... most organizations are not very interested in the transparency needed for accountability, even those that are very effective ... which opens the field to those that raise money and do nothing! This aspect of rescue and relief has got to change!

Peter Burgess