Creating a Platform for Economic Discussion
We believe that good National economic policy is information dependent. Noting that some accounting regarded as being indispensable to corporate governance is not practiced in National accounting, our intent is to seek a means of having this data provided, and its usefulness and application to better National economic policy and practice explored in the public interest.
Specific Accounting Deficiencies
One. In Corporate culture comprehensive Balance Sheets are produced to inform both Management and shareholders of the means available to the Corporation to implement policy. Assets are noted, and all current claims upon those assets (liabilities) are identified.
Although some nations (Canada and Australia for example) have occasionally done partial Balance Sheets, no Nations produce comprehensive ones. The vocational education of their people, though the greatest asset available to a nation, formed no part of their listed assets. The universal public concurrence in the value of such education was either neglected or wholly discounted.
The largest claim outstanding against national assets, the issued money supply, was not noted under liabilities. This neglect fails to properly inform upon the best practice in liability management.
The relevance of the concept of “good will”, so common to corporate balance sheets, is not examined as a possibly useful inclusion in national ones. Good relations with other nations may have a measurable value worthy of acknowledgement and warrant appropriate expenditure.
Two. Corporate accounting continually measures production accruing to their Shareholders against that which is consumed in the process. These Profit and Loss Accounts in the corporate sector have no equivalent in National Accounts. The consumer production made available to the public in the market place, is not measured against the costs paid to the public to induce them to produce it (which constitutes their purchasing power), so any possible inadequacy of one in relation to the other is unexamined.
Data on deficiencies or surpluses in consumer purchasing power in relation to consumer production is not therefore available for public policy formation.
Some Purposes and Uses of Better Economic Data
With much human employment being progressively displaced with the application of technologies, greater scrutiny of the adequacy of consumer purchasing power may become increasingly critical. The effectiveness of adjusting interest rates to stimulate growth and demand is declining; in some cases negative interest rates notwithstanding.
In countries such as the UK, Australia and the USA approximately 2/3rds of all money currently in existence has been created by the banking system as residential housing loans. With many now priced out of home ownership, increasing economic demand through rising home loans is not the easy option it once was. Over 40% of retirees may now (or soon) still have house mortgages.
Crisis in confidence has always visited the human economy periodically. In the past Keynesian deficits and lowering interest rates were options with effect. The quantitative easing of the future may need to be injected below the level of high net worth individuals and other entities. If this is so, quantifying it will require National Profit and Loss Accounts predicated and constructed from the point of view of the nation’s shareholders; those who are normally described as the voting public.
The Institute does not hold that information and data should not be had unless it has an attributed predetermined use. Information can sometimes lead application, and follow neither speculation nor fashion. While whether a people are producing more consumer goods than their incomes will allow them to consume, or are endowed with more purchasing power to buy than there are such goods is unmeasured, it may allow all sorts of errors in economic policy.
The limitations to understanding depend upon measurement. We cannot know whether a country is profitable or not unless we have measured it. Unfortunately in this there seems to have only been one National Profit and Loss Account produced in the history of economic endeavor. It was done for the year 2014 for the United States by some Australians. Unfortunately the authors were of only amateur status, however as of now their work is the only conceptualized suggestion in producing National comprehensive Balance Sheets and National Profit and Loss Accounts, although of course these abound amongst all other large entities.
This primitive inaugural conceptual work may be found at the link:- http://www.socialcredit.com.au/uploads/NationalAccountsPrototype.pdf It provides a prototype from which seriously improved National Economic Accounts may be developed and national policy might be placed on a more informed basis than is now available.
Scope of Focus
All 195 National Governments on earth, their Economists and peoples are dependent upon data in our information age. The scope of The Defined Institute is therefore international and universal. Good behaviour in data production in one country can, by example, inspire it in others and demonstrate its critical usefulness in formulating and applying more informed national economic policy.
The structure we envisage might be described as an open forum with free access between all those involving themselves. While some initial filtering might be done of applicants wishing involvement, henceforward no moderation or guidance will be offered or suggested, other than that of the participants themselves in free association with each other. Sub-groups may form and relate to others as they might determine.
Those wishing to participate need contact us giving only two statements in their own words; explaining why they wish to be involved, and what qualifications or experience they bring to these endeavours. Be informed that this information from each participant will be available to all
Start with the customer – find out what they want and give it to them.
Do you accept that a Company Director could understand his company if he was unaware of, or unfamiliar with, that Company’s Balance Sheet and Profit and Loss Account?
Are you aware of any economist who has ever seen a comprehensive National Balance Sheet or a National Profit and Loss Account?
We constitute a body who would like to see such?