SWorldTV

Monday, 9 March 2009

Sustainable 'Infladeflation'

Inflation and deflation are the opposite extremes of the devouring beast that every economist and policy maker wish to avoid. But the fact of the matter is that in a sustainable economy nothing can inflate or deflate beyond its natural sustainable limit.

For example, if a company has a mature SFS (COP and COC combined), it is naturally impossible for the prices of its services and goods to inflate or deflate beyond their natural sustainable levels because all their underlying potential variants are already naturally absorbed by the company’s matured SFS, COP to be precise. As I have explained elsewhere, an SFS such as COP is designed to police and absorb variants before they cause problems in the business or the whole economy.

Classical economics leaves many economists intellectually very vulnerable, and, under the current global crisis, unable to understand even the very basic implication of this natural ruling.

Personally, if you ask me, I think that the classical model needs to be undone to help them see this in clearer context and light.

Quantitatively, sustainable inflation and deflation are a ‘Zeroflation’, the topic seperately dealt with elsewhere.

Zeroflation is defined by two significant factors:

(1) Variants Absorption by C O P SFS
(2) Intrinsic Qualitative and quantitative Values of Assets

0 comments:

Post a Comment

The UNFCCC CDM Carbon Trading Centre

CDM in Brief 2008

We have heard over the years about the Kyoto GHG/CDM Protocol and the efforts and steps taken to implement (or at least make workable) the CDM projects with Carbon Trading as its underlying mechanics. This page provides a research opportunity and an insight into how far UNFCCC and all the associatied bodies and institutions have gone to implement and make it successful. The UNFCCC's CDM Bazaar website displayed in the box below is the real proof that the Kyoto CDM protocol is up and running. The UNFCCC created this website to collect and take stock of all the Sellers, buyers and service providers within the Global Carbon Trading Market, so that new traders and dealers can be registered as they enter into the market. However, there are also diverse levels of views against Carbon Trading as an effective way of combating climate change and global warming. Click the links to display them in the viewbox below.

Arguments against Carbon Trading

NOTE: Note that while the softly-softly appraoch adopted by the UNFCCC as a strategy taken in good faith to address the issue of 'Corporate Compliance' may be open to question as it is now the case, the core problem that we at SWorldTV have identified is not about the choice between taxation enforcement and carbon trading, but rather the choice is between the authority's dependence on the commercial sector to foot the bills for various projects (afforestation, reforestation, renewable technologies) and an equally important need to get the commercial sector to comply with their carbon reduction obligations. We think, wrongly or rightly, that this is an extremely difficult balance for the authorities to strike. While various Environmental Laws do exist to complement the softly-soflty approach of the Carbon Trading, coupled with the issue of fundraising to finance various sustainable projects such as the CDM types, we believe that there is now a real and genuine opportunity for more research to be done on the issue in order to give a clearer picture as to how this moral dilemma may be resolved within a reasonable period of time. The conseqeunce of doing nothing or otherwise is potenitally 'feet-dragging' which is the most costly luxury we really can't afford right now. Such research should essentially capture a mixed-bag or cocktail of related issues such as 'Sustainable Corporate Investements' (the so-called 'Social Responsiblity Finance or Investment'), carbon taxation and environmental laws enforcement, carbon trading which, as the market develops and grows, needs to be completely insolated from the wilde-wilde-west speculative structure of the main stock market. As a final thought on this, although Sustainable or Responsible Investment portfolios are now being policed by Sustainability Indices operators like Dow Jones and others, clear evidence is emerging that some potential partakers or investors are picking and choosing (old habits die hard), and tend to be motivated only by projects with the highest yields or earning potential, a recipe for neglecting a wide range of sustainable projects due to their low ending yields or potential. These neglected projects thereby need to be subsequently picked up by either charities or governments subsidies.

Environmental Sustainability Management Tools

If you are thinking about how to become resource efficient in your business both internally and across your supply chains, then you would need tools similar to the ones below to assist you. But it is important to equally remember that Environmental Sustainability by Resource Efficiency is just one part of sustainability and that here at SWorldTV, we have extended the concept to also cover another crucial aspect of it - Economic Sustainability by Operational Principles Efficiency. We have demonstrated above all else, why the latter is needed to complement and help the former to succeed. For example, we have shown here that the latter is what is needed to cure such human and societal problems as inequality and poverty that, if left unresolved, could dwarf or discount any progress made in the former on the other side of the equation. For example, a poverty-riddled and unjustly treated population could be destroying the ecosystem and the rainforest as they are being replaced or the trees as they are being replanted via the Kyoto CDM projects. So there is a clear and justified case for tackling the problems on both sides of the equation - Environmental Sustainability and Economic Sustainability - the former by being efficient in the use of natural resources and the latter by being efficient in the application of the fundamental economic principles. You can view the tools by clinking the links on the box below:

Sustainability Management Tools

NOTE: Note that when the Sustainability Value or Performance index is calculated, the consequence of failure to tackle economic sustainability simultaneously with environmental sustainability is the former naturally discounting the value of the latter in the resolution pool, and as you may well remember from what you have read around the website, the 'resolution pool' is a set or pool of calculated or weighted values or a combination of both as the case might be in certain circumstances. These values are quantitatively or judgementally derived.

Sustainable Design - Source Document of this SWorldTV Website

Sustainable design is anything or system designed to solve a specific problem or a set of problems using sustainable principles. When the sustainable value for such a design is measured it must yield the highest value possible. So simply put, sustainable design is any design with the highest sustainable value. Note that once a designer adopts sustainable design methodologies and principles from outset, the sustainable value of his or her design is always viewed in a positive way and with great dose of optimism for very obvious reasons. One is that if the sustainable value of the resulting design is less than the maximum value, the balance would be treated as the pending 'sustainable balance' of it. Consequently, this put the design in good stead on the sustainability scale and places the design on a value-added mode of continual structural and functional improvement. There are guidelines that designers must follow to meet the design standards required. The Sustainable value of a design is a measure of the degree by which it solves the problem for which it was designed and the degree by which it avoids causing problems elsewhere in the system. The greater the resulting values from this measure the more sustainable the system is. The problem solving and problem avoidance values are consolidated in the resolution pool into the Sustainability Performance Index (SPI) of the system. Please see the postings under this topic for details. You can view and download the source document for this here, which lays down the foundational principle of sustainable design and grounding sustainability principles for the whole website. ===========[scribd id=11471814 key=key-1milyuelghmlzfwfmise]===== The Natural Distinction Between Intrinsic Value and Extrinsic Value

Publish at Scribd or explore others: Humanities Research value sem

==========================

↑ Grab this Headline Animator

Sustainability Performance Index (SPI)

Sustainability performance Index (SPI) is the sustainable value of a thing, a system or an event, and it is a measure not only of the degree by which it resolves the problem or a set of problems for which it was designed to solve but also the degree by which it does not cause problems elsewhere within the same system. In this piece I develop the theoretical and practical principles and concepts involved in the process.

This earth clock is courtesy of poodwaddle.com, and as clearly stated by the developer, the values are estimates verified from the originating sources. Therefore, any use of the data from this earth clock is merely illustrative, and is not meant to represent absolute facts about the sustainbility value or the sustainability performance index of the current world situations with regards to climate change, health problems and poverty that are traceable to economic problems associated with the current economic model.

The key issues at stake are these:

Climate change has a direct or indirect link to the economic practices of the current economic model. From the point of view of resource enfficiency, the model encourages deriving goods and assets from natural raw materials without any consideration for replacing what is taken, minimising wastes, and using resources across the supply chain efficiently.
Poverty has a direct or an indirect link to the economic problems associated with the current economic model. The current economic model is blamed not only for generating and distributing wealth from the natural resources inequitably but also for widening the gab between the rich and poor. For example, the real-time malnutrition statistics shown on the clock is a resulting symptom of poverty created by the current economic model.
World population growth has direct or indirect link to problems associated with the current economic model, educational system, diverse belief systems, and general human habits or nature
Health (HIV) problems have direct or indirect link to problems associatd with the current economic model, belief system and habits.

When the sustainability value or sustainability performance index of each of these problems is computed, what results is a relation between what the current economic model and belief system do that is intrinsically valuable to the society and the problems that this also at the same time creates elsewhere within the same system. In terms of the Climate change problem, the standard argument put forward by the environmentalists and the academics who campaigned for years on this issue is that efficient use and management of natural resources (water, energy, gas, electricity, oil, and raw materials) by businesses and people in the wider society would reduce the CO2 and other GHG (greenhouse gases) emssisions into the atmosphere and limit the damage to the climate. So the current campaign by the environmentalists and by governments with their national GHG emissions reduction targets to fulfil under the Kyoto accord is about helping companies, especially the so-called 'Supper Polluter's, like oil extraction and energy generation companies, to install and action sustainable environmental practices that allow them to manage their resources both internally and across their supply chains more efficiently. Admittedly, a great deal of work has been started globally via the Kyoto GHG/CDM mechanisms that set reduction targets for all the countries that are directly or indirectly responsible for this problem. Substantial progress has been made and still being made but there is still a huge amount of work to be done, and in some quaters progress is slower than originally anticipated. The replacement of lost trees or forest displayed on the world clock can be roughly attributed to such progress. I am assuming that the reading on the clock is attributed to progress made collectively on the Kyoto compatible CDM projects around the world, which also include reforestation and afforrestation.

On the poverty issue, the emphasis now shifts from environmental sustainability by resource efficiency to economic sustainability by efficient use of sustainable business practices. A wide range of problems in the society (poverty, unemployment, illitracy, diseases, etc) are blamed on the current economic model with unsustainable business practices. The model is seen generally as being problematic because the underlying variants of the model such as prices, wages, interest rates, inflations, salaries, business rates, costs of production, costs of labour, cost of materials have no protective mechanisms to keep them under sustainable levels. Each time these business variants fluctuate to unsustainable levels the whole economy busts or collapses and triggers a wide range of problems including umeployment, business failures, poverty and general human hardship as we have just seen in the current global financial crisis. The new area of campaigning now is to encourage businesses to take a stand and start to adopt sustainable economic principles that they themselves are aware of or even those that are suggested here on this blog website. The advantage of using the SEP (sustainable economic principles) that I am proposing here (which is the installation from outset of the COP and COC Sustainable Funding Streams (SFS) and growing them to maturity) is that the business benefits from the sustainable principles of self-insurance, self-financing, full business variants control, and equitable wealth redistribution to the wider society (staff, customers, and shareholders all benefit).

Population growth on the other hand is not attributed to economic problems alone, it also has links to the belief systems and customs of different regions of the world. Cultures that practice polygamy are often blamed for exponentially adding to the world population. A perfect example is the poligamous practices in the sub-sahara and East African Regions, Asia and other parts of the world such as this Ethiopian man here on this

BBC News report on an Ethiopian man with 11 wives and 77 children now turning adovocate for population reduction

(You can also view it here on the main EthioBlog website)

The current economic model only adds to the problem in that it raises the standard of measure to a whole new level and attributes both polygamous and monogamous practices and needs to affordability. What I mean here is that it is not only the polygamists such as the Ethopian man above with 11 wives and 77 children that are feeling the full sinking jaws of the current econmoic model but also the monogamists or those contemplating going into monogamous relationships are aslo feeling the bites as well. The battle is now fought on two fronts, one of affording the costs of financing the western style rituals to start a decent relationship in the first place and second of affording the costs and battle of keeping the relationship once it is formed amid various social and economic presures, including 'dinning and winning', cohabiting and buying a house together, raising up children and keeping jobs of both partners. The average cost of bringing up 1 child to the highest education standard possible ranges between £200,000 and £500,000 in the western world and this cost is not only currently increasing in line with the rising costs of living but also it is spreading and it is being emulated across the globe. As we speak a huge percentage of the the world population are not only fully priced out of a decent education market but also they are priced out of the housing market that has just collapsed under the mountain of negative values that it piled up over the years.

The sustainability performance index of the population growth is a relation between wealth creation and poverty creation. When the sustainability values of both are consolidated, this has the consequence of the negative value generated by poverty writing off the postive value generated by wealth creation. The argument therefore would be if the current economic model cannot produce enough wealth for the current world population and elimante poverty, then the advocates, the propagators and users of the model should now consider adopting sustainable economic principles proposed here on this website to kick-start the process. The next world clock contain additional data regarding the problems that we are currently facing in the world, including those that we have just discussed.

Sustainability performance index therefore is a measure of the degree by which an action protects and benefits the actor, other people and the environment. The standard rule of sustainability states that when you set out to design something or a system to solve a specific type of problem or a set of problems you ought to do it in a way that it causes no problem elsewhere in the system, or if it does it should be minimal to avoid the resulting negative value from this writing off or discounting the positive value in the resolution pool of your action. The 'Resolution Pool' contains everything needed to bring about a problem-solving action in a holistic and fully sustainable way. The resolution pool naturally contains aspects of a given problem that an action or a set of actions is designed to solve, therefore they are measurable. That is, they have measurable consequences not only on the actor, but also on other people and the environment.

In any society every institution, however small or big, plays a specific role to solve a specific human problem or a set of such problems. It is much better for an institution to strive to be better at what they do and improve the ways they do things than cynically attempting to usurp and dominate the governance of the society in a manner that undermines the contributory values of the participating ‘CORE INSTITUTIONS’. I predict that sector or institutional analysis would inevitably reveal many sectors and institutions that are currently facing the risk of solving problems in the original or main roles that they play while unknowingly or knowingly causing problems elsewhere in the same system. The knowledge that there are some sectors and institutions that from outset already constitute nuisance to the rest of the society is bad enough, yet the risk of a perfectly sustainable sector or institution becoming a nuisance institution due to its self-imposed operational or functional recklessness and operational incompetence is in my opinion far greater risk unworthy of taking. There is nothing magical or harder about what to do to genuinely avert this risk. All that each sector or institution has to do is to analyse and constantly police its norms, intellectual and material resources, and its operational procedures to underpin which one of it is at the time of observation and analysis functioning unsustainably and then do something about it. If unsustainable components exist, eliminate it or risk being functionally recast and displayed for the whole world to see as a nuisance institution. Added to this risk, which in my opinion may be far greater a risk, is the possibility of incurring very lengthy and costly litigations by some of these self-made nuisance institutions due to unsustainable norms and practices (norms and practices that may have over time become outdated, sabotaged or rendered intellectually unsound and impracticable). Some sectors or institutions are currently living in the self-deluded belief that this measure which is universal in substance and in scope does not apply to them therefore they are highly placed in an untouchable position. Wrong.

How sustainable your action is a measure between how much problem it solves and how much problem it does not cause. The higher the measure the greater your sustainability performance index.

This is a universally binding measure that sooner or later will apply and catch up with every sector or institution that is one way or the other interfaced with the wider economy or society. They are taking an unnecessary risk whose consequences mount up and weigh heavily in history and await them in the nearest future. The greatest injustice that some institutions could do to themselves is to declare a text of their norms or guiding principles sacred (timeless and unchangeable). But they should have asked nature first: “what in your abundant laws and resources is sacred or should be declared sacred?” A norm, law of nature, guiding principle or whatever you may wish to call it is sacred (timeless and unchangeable) insofar as there is nothing in it substance and scope which conflicts with the content of each time it passes through. In other words there should be no future laws, norms or principles to neither conflict with it nor overthrow it altogether. Therefore norms that conflict with the sustainable content of a passing time are not only unsustainable but also inevitably must incur ‘Sustainable Cost’ (SC) proportional to the extent or magnitude of the damage done within the duration of the conflict. In this case, collective action of the rest of the society or economy may ensure not only the smooth transfer of the status of the offending sector or institution from a ‘sustainable institution’ to a ‘nuisance institution’ but also to pay the SC (sustainable cost) of the damage done by their inflexible and uncompromising norms or guiding principles. And the risk is greater if there is a solution (offered by other sectors or institutions) but which is nevertheless prevented from adopting by this so-called ‘timeless and unchangeable norm or practice’.

Sustainability Performance Index is based on one basic assumption and that is the fact that every design or system brought into existence to solve a specific human problem has several aspects to it that must be independently monitored and managed from outset. The problem that it is meant to solve has unique and different aspects to it before it can be declared fully solved. The measure of each aspect of the problem is simply the extent to which that problem is genuinely solved by the design or system. This is naturally expressed as 100% solution value and as its sustainable value which ends up in the resolution pool as a fully or partially solved aspect of the problem. The solution value of each aspect of a problem that ends up in the resolution pool has either a discounting or a value-added effect on other solutions values there (each one ranging between 0 and 100% solution value) when consolidated into a single sustainable value for the whole problem.

The consolidated values in the resolution pool of the problem are the Sustainability Performance Index of the design or system in question. Calculating the SPI of a system involves the following basic steps:

Count the number of items in the solution pool. How many aspects or parts does the problem under resolution have?
Calculate the sustainable value of each aspect of the problem and store the value in the resolution pool for subsequent consolidation
Consolidate all the sustainability values in the resolution pool into a single sustainable value.
The result is the SPI of the system

Now let us have a look at a few examples and see how this actually works.

Sustainable Values consolidation (SVC) usually applies in situations where a problem may have several aspects to it before it is considered completely solved and declared sustainable. In this case, each aspect of the problem will be treated as possessing some qualitative intrinsic value such that when resolved the sustainable value of it will be calculated separately and expressed as a percentage value. It is treated as a separate entity or parameter with 100% solution value. Repeat the same process with the remaining aspects of the problem, calculate and consolidate their sustainable values as shown here:

Worked Example 1:

Wisdomia, a country with very limited economic resources but with agriculture and manufacturing as its main source of income, decided not only to revamp the whole economy by making loans available to all its citizens regardless of class, religion or sex but also to localise and grow it to sustainable level. The policy makers of Wisdomia, conducted a detailed sector-by-sector analysis of the economy to assess and estimate the production and service capacity relative to the total output requirement or demand by each sector. This gave them the full picture of what the 'Sustainable Capacity' and the 'Sustainable Balance' of each sector was and how much money to set aside for loan for sustainable capacity building and sustainable growth. When the policy makers started to release the loans into the economy, they did so via a business advisory service body that made sure that the loans are issued and channelled to new and old businesses to service sectors with outstanding sustainable balances and generate sustainable surpluses in the sectors without sustainable balances to fulfil. Sustainable surpluses are exported, donated or reserved for future emergency home use. From the point of view sustainability, Wisdomia has constructed an economy that generated the following sustainable values.

1. 8 productive sectors with 89% of their sustainable capacity (SC) fulfilled

2. 100% Loans coverage of 11% outstanding sustainable balance (SB) of two sectors – local production and service capacities increased without the need to outsource.

3. 100% Loans coverage of sustainable surplus generation for export and building up reserves

4. Current reserves level for all the sectors combined built up over the years and increased by the current surplus generation programme = 89% of total SC

5. Their COP and COC Sustainable Funding Streams have also been setup and currently at 98% of Wisdomia’s National Assets value and current economy’s subsidies level

6. Wisdomia has also paid off 98% of its economy’s debts

7. Actions 1 -3 increased employment from 65% to 80% and the introduction of job share program at 100% wage value pushed this figure further to 94%

8. Actions 1 – 5 reduced business failures, sector collapses, and negative outsourcing by 98%

9. The installation of Sustainable Environmental practices in all the sectors produced 110% above their national annual GHG emissions reduction target.

The standard equation for consolidating these values and calculating the sustainability performance index of Wisdomia's economy is stated as follows:

SV/SPI = Σ(μ + λ + …. n) ÷ (n x 100) x 100.,

where μ= Sustainable Value for aspect 1: λ= Sustainable Value for aspect 2, n=the number of aspects or percentage values in the resolution pool. Recasting the equation for Wisdonia example, we derive:

SV/SPI = Σ(v1+ v2 + v3 + v4 + v5 + v6 + v7 + v8 + v9 +…. n) ÷ (n x 100) x 100

Where v1=89; v2=100, v3=100, v4=89, v5=98, v6=98, V7=94, v8=98, n9=110, n=9

SV/SPI = Σ(89+ 100 + 100 + 89 + 98 + 98+ 94 + 98 + 110) ÷ (9 x 100) x 100

SV/SPI = Σ(876) ÷ (900) x 100

SV/SPI = 97.33%

So what has Wisdomia achieved here? There is no doubt that they have put a lot of thought into localising and applying sustainable economic principles to equitably develop their economy to sustainable level. This imaginary example is not meant to imply, suggest or recommend a specific real life solution to any particular economy's problem. What we are concerned here is to illustrate a point about the standard procedure for investigating, identifying potentially significant parts of a particular problem-solving situation, calculate and consolidate their sustainable values into the sustainability performance index. What the Wisdomians have done is not 100% perfect, but it is undeniable that they have done something very unique to identify as much of the relevant parts of their economy as possible and to enact sustainable economic and environmental practices that raised their economy’s profile and sustainability performance index to the highest level possible. 97.33% SPI is not bad for an economy that has only agriculture and manufacturing as their main sources of national income.

Worked Example 2: APPLYING WEIGHTED VALUES IN THE SPI CALCULATION

In this second example, we compare the SPI for Wisdomia's economy with that of another country called Moronia, a country with a lot on its mind. Here we use a completely different set of parameters, which are (1) the total national, business and personal debts, (2) National Savings, (3) Gross National Income, (4) Gross National expenditure and (5) SFS (COP & COC). As the table below shows, Moronia is using Unsustainable Business Model (UBM) and over time has piled up a set of self-destructive negative values. Businesses, Citizens and the Governament Policy makers are encouraged to borrow money for everything and between themselves, they have generated debts that exceed their national income by 13%. Also, Moronia has no COP and COC funding streams and while Wisdomia is applying Sustainable Business Model to build up surpluses and positive savings, Moronia is falling deeper and deeper into debts. As the illiquid asset values of both countries are not included on the table, we cannot make an appropriate estimate of the extent to which Moronia's current debt level has bitten into its illiquid assets value after already wiping out its national income by 13%.

What we have to do now is to calculate the sustainable value or SPI of each country using the given paramenters in the resolution pool.

NOTE: Here we convert the figures in the table into resolution values using straighforward weighted factors. Negative values are weighted down the scale and positive vsalues are weighted up the scale. For example, zero debt is given 100% weighted value and the debt level which exceeds income value are weighted down to zero, a complete reverse of each other. Here we assume the debt of each of the two countries to be a proportion of each of their annual incomes up to where it zeroes out and be in the black (become debt-free) or up to where it exceeds the national income and be in the red. All that this boils down to is that these derived values are products of personal judgement about how one allocates values to positive and negative paremeters generated by the different aspects of the system as in the case of the two economies under examination. Here we are converting all the data on the table into weighted values, and negative values are weighted and converted into positive values. For example, we convert a zero debt value into a positive value of 100%. It is frankly a matter of judgement about what is good or bad, what is negative or positive. Moronia is obviously bankrupt from their performance data on both the table and the graph. We are just making judgement about what the values of the parameters in their performance portfolio should have. The derived values seem to all have absolute zero values, hence the consequence of consolidating these values is obvious. The reason why Moronia is given a 34% weighted value on their National Income is because they are still earning £200,000,000 a year even though this has been technically wiped out by their current national debt level

The derived weighted values are as follows;

Moronia – debt = 150% (0%); NI (34%); SFS = 0%; Savings = 0%
Wisdomia – debt = 0% (100%); NI = (100%); Savings = 30% (100%); SFS = 100%

For Moronia, we calculate and consosolidate the sustainable values of the different aspects of its economy as follows:

SV/SPI = Σ(v1+ v2 + v3 + v4 +…. n) ÷ (n x 100) x 100

Where v1= 0; v2=34, v3= 0, v4= 0, n=4

SV/SPI = Σ(0 + 34 + 0 + 0) ÷ (4 x 100) x 100

SV/SPI = Σ(34) ÷ (400) x 100

SV/SPI = 8.5%

The SPI of Moronia is this bad because the country is technically bankrupt. This sort of result and example might seem naive and unrealistic. Well, not quite. The old adage that no Country ever goes bankrupt is no longer true. The current global financial crises has produced the first real living examples - including the Icelandic debt crisis. For a sovereign country like Iceland to pile up debts up to 6 times its annual GDP in the living memory of the world applying the current economic model is no child's play. For this to have happened without the managers of that economy being aware of it is beyond the human comprehension. But nevertheless it has happened and it is an apocalyptic event that will help rewrite economics textbooks and change the rules of the game forever. Have countries around the world learnt any lessons from all this? Well, that is the question and your guess is as good as mine on this one.

Wisdomia, on the hand is a country that has fully embraced and installed sustainable principles into the management of their economy. They have not only mature SFS (COP and COC) at the same levels as their annual expenditure and national income, but also they have a zero debt policy in place and have started to build up surpluses in form of positive savings. This is the reason why I scored all these measures that they have put in place with 100% weighted values and consolidated them as follows:

SV/SPI = Σ(v1+ v2 + v3 + v4 +…. n) ÷ (n x 100) x 100

Where v1= 100; v2=100, v3= 100, v4=100, n=4

SV/SPI = Σ(100 + 100 + 100 + 100) ÷ (4 x 100) x 100

SV/SPI = Σ(400) ÷ (400) x 100

SV/SPI = 100%

The resulting SPI is 100% and obviously implying that Moronia left no room in their economy for negative values to write off the postive values that they painstakingly built over a carefully policed Transitional Period. The graph below gives a clearer picture and a good comparison of the two economies.

NOTE: The Value Write-off or Discounting Effect occurs when an aspect of a problem turns up in a ‘Resolution Pool’ with a negative value, which is a value that is substantially less than the maximum (100%) solution value or sustainable value. The Sustainable Principle says that under normal circumstances every aspect should contribute 100% sustainable value into the resolution pool, unfortunately in real life this is rarely the case. When there is more than one sustainable value applying to one thing or event, then all the derived values can be consolidated into a single sustainable value. Such consolidation has the consequence of causing the negative values to write off the positive values in the resolution pool, hence lowering the result to unsustainable level. The next Sustainability Performance Indext table shows precisely this. Countries with SPI lower than 50% implies that all or nearly all aspects of the economies are underperforming and generating negative values that are collapsing them or bringing them to the brink of doing so.

Sustainable Performance Index (SPI) can be used not only to analyse and get a full picture of what is going on any one system but also to influence and help the system to improve different aspects of itself. In an economy it can be used to compare and contrast different or related sectors to see how they are performing, to see which sector or sectors are letting the whole system down. After the analysis, a table similar to this can be constructed to display the comparative results.

COUNTRY	ECONOMY’S SPI (%)	COMMENT
Wisdomia	100	Good Result with no discounting effect. The values in the resolution pool are all high indicating that the economy has adopted sustainable economic measures, or operating under SEM.
Moronia	8.5	It means there is no single positive value in the resolution pool indicating that the economy is technically bankrupt.
Goodysia	55.40	Substanitally written down by negative values indicating that the economy has more negative values than positive ones.
Santa Bay	33.33	Same as Moronia. All the values in the resolution pool are under 50% indicating all are negative. The economy is either already technically bankrupt or on the brink of being so.
NOTE: The SPI’s of all the countries on this table are calculated with the same set of parameters. That is, whatever paremeters are chosen for measuring the SPI of one economy must apply across the board to make the comparison consistent. It is important to also note that sustainable performance index, from the point of view of any sustainable economy that applies prudent economic principles, genuine growth and financial security are surpluses over and above the COP and COC Sustainable Funding Streams (SFS), which protect not only the underlying business variants but also the whole economy from total failure. So the overall health of such an economy after the measure would be similar to what is shown on this graph. An Economy that still operates under UEM (Unsustainable Economic Model) does completely the opposite. Instead of generating 'genuine growth' and 'genuine financial security', rather it is living in a 'coocoo land' generating unprecedented mountain of debts, often at the same self-destrdutive level as in the case of Moronia in the above example. Given it in a graphical context, the full financial status of an economy operating under UEM would look something like this:

On this table we campared economies of four countries on a global basis, including those of Moronia and Wisdomia that we compared earlier, to try and establish how each one of them is performing with regards to the overall sustainability of all the structural and functional procedures that they have put in place. The table also contains explanatory commentaries about what the resulting SPI for each country indicates. As you can see so far, SPI can be used to mesaure and compare all types of institutions, companies and situations in the society. The aim of doing this is not in anyway meant to undermine the existence or activities of any institutions, rather it is meant to help them look deeper into their mindsets, norms and the resulting consequences of their thoughts and actions in a holistic and valued-added manner. Ultimately, in the end it is aimed at helping them improve, progress and elimate pontential risks that they may pose not only to others in the wider society but also to themselves in terms of their ability to continue to exist and function according to their overall goals and remits. In the next and final example, we drive the message home by calculating the sustainable value and SPI of a car manufacturer, and demonstrate what the social responsibility of such a company should be and the significant value of it to the wider society.

Worked Example 3: CALCULATING THE VALUES FOR SPI

A car maufacturer, after many years of investments and continual improvement of one of their car models, eventually produced a car with 100% safety but only 33.33 percent of car drivers could afford this car. From the point of view of sustainability, the car manufacturer has produced a car with the highest intrinsic qualitative value with regards to the car's overall functionality and performance, but the car was overpriced such that only a limited number of drivers could afford it. The sustainable value of this car is naturally a relation between the overall functional performance valule and its beneficiaries. Sustainable Values calculation must take both into acount and consolidate the resulting values accordingly as shown here:

Calculating and Consolidating the Sustainability Values of the Car's Beneficiaries and Functionality into its overall Sustainability Performance Index (SPI)

Let SV/SPI = Sustainable Value

Let B = Beneficiaries

Let P = Population

SV = B

——- x 100%

The sustainability principle says that 100% qualitative intrinsic value of a design with regards to functionality must yield 100% quantitative value with regards usage for it to qualify as being sustainable.

For example, after the car has been brought to the market with the full knowledge of the population, let say that after the count B = 100,000 beneficiaries and P = 300,000 people in the population with driving ability and transportation needs, then the calculation should yield the following result:

SV = 100,000

———- 100%

300,000

= 33.33%

SV/SPI = Σ(μ + λ + …. n) ÷ (n x 100) x 100.

μ= Sustainable Value for the Car's performance: λ= Sustainable Value for the beneficiaries.

μ=100: λ=33.33: n = 2

SV/SPI = Σ(μ + λ) ÷ (100 x 2) × 100

= (100 + 33.33) ÷ 200 × 100

= 66.67%

NOTE: It is important to note that the sustainability value of any mobile system's functionality and safety is a scientifically quantifiable, testable and determinable value. It is not a value that can be assumed, and the value used in the above calculation is merely illustrative. The parameters that go into quantifying it and summarising it into a percentage value are wide ranging and extensive, obviously based on the number of things in a mobile system's design that contribute to the passengers' physical injuries, destruction or death. This issue is the sort that any good modern sustainable design project should aim to cover not only widely and in greater detail but also with double precision. And remember that when it comes a sustainable design project of this monumental scale or magnitude, a multidisciplinary approach to it is fundamental and inevitable. See all the topics under Sustainable Design on the menu bar for additional information and guidance on the subject.

The negative value of 33.33% has written off or discounted a substantial value from the consolidated result. The manufacturer, if they genuinely want this 100% life-saving car to be fully sustainable, should apply sustainable methodologies to bring the price down and increase usage. The same will be true of a drug company that finds a miracle cure for any type of disease and manufactures the drug but only 20% of all the sufferers from that disease can afford the drug. Or a sweet manufacturer that manufactures a special pack of tasty sweets to help relief the busy population of hunger but which at the same time is costing the nation's health service billions of pounds in obesity and dentistry bills. In the first example, the negative value generated by the overpriced drug with 20% low usage will write off susbtantial part of the positive value of the drug from the consolidated result. Equally, if relieving the busy population's hunger with a pack of tasty sweet is going to land the health service with a budget-busting obesity and dentistry bills, then the negative value generated by this will discount the postive value from their calculated and consolidated sustainable values. Both manfucaturers (drug and sweet) should consider applying sustainable economic principles to rectify these dilemmas.

NOTE: Some things or events or systems that were designed to solve a specific type of problem while in their normal functioning states may create a completely different type of problem or a set of problems without people involved knowing this. The take home lesson from this is that people should think of things and systems in a holistic way, especially at the design and implementation stages, for you may end up creating a thing or a system that causes more problems than it solves. If you do, then you are naturally obliged to quantify and consolidate the sustainable values of all aspects of the thing or system in the manner just demonstrated. The result is SPI of the system.

Get this widget!

Monday, 9 March 2009

Sustainable 'Infladeflation'

0 comments:

FEEDJIT Live Traffic Feed

FEEDJIT Live Traffic Feed

Twit with us on Twitter!

SWorldTV - Creating Sustainable Economy Headline Animator

FeedBurner FeedCount

Intrinsic - Extrinsic Values Distinction Podcast

Mortgage Calculator

SWorldTV - Sustainable Designs

SWorldTV - Sustainable Resource Centre

Sustainability Performance Index

Sustainable World TV

Sustainable Designs & Technologies

SWorldTV - Cluster Map

SWorldTV - Sustainability Resource Centre

Clock Calendar

What to include in the calculation of the Sustainable Value of a thing?

SWorldTV Answer Tips

SWorldTV Blogline Subscription

Feedburner Counter

Blog Archive

Slideshow

About SWorldTV

Followers

The UNFCCC CDM Carbon Trading Centre

Environmental Sustainability Management Tools

Sustainable Design - Source Document of this SWorldTV Website

SWorldTV Webinar Series on Sustainability Indices

SWorldTV - Sustainable Resource Centre Headline Animator

DJIA (DowJones Industrial Average) Graphical Datafeed

Sustainability Performance Index (SPI)