A National ‘Balanced Scorecard’

All nations – governments and their electorates – need a National Balanced SCorecard (NBSC) of performance measures – a set of cardinals they each can monitor which covers all important factors affecting their standard of living (SoL) and quality of lives (QoL)

The  NBSC would be a mix of measures – some absolute, some subjective – much as medal winners at the Olympics are determined either by being clearly longer/ faster/ higher or in the view of expert  judges in  their discipline e.g. gymnastics, boxing, synchronised swimming or diving

At present, government ministers have to navigate their economies based on just two bald statistics – GDP and national (labour) productivity, produced just quarterly

But no skipper, navigating his boat through dangerous waters, would rely on such a paucity of measures to decide a safe course and speed – to be in good control, he would use a set of measures – not too many or he might get confused, not too few or he might miss something important – and no crew would be happy if they knew their skipper relied on so little whilst ignoring them completely

Back on land, the same thinking applies – people want to know whether factors important to their lives are getting better or worse,  whether they’re getting good value for their taxes paid, whether their government and its managers are doing a good job and spending their money wisely

Sadly, lack of transparency at national level prevails:

• The ONS (Office for National Statistics) produce the above two statistics – but even they are said to be ‘seriously flawed’
• And, whilst the OBR (Office for Budget Responsibility) checks government budgets and borrowing, it does little on  how they spend the money – hence, there’s little to prevent the government spending what it wants, where it wants, perhaps unwisely
• Overall, there’s no regular national performance scorecard issued – electorates have to suffice with a few select crumbs of information once every four or five years when general elections are held, but they are invariably biassed, not balanced – for the rest of the time, the electorates’ views are (seemingly) mostly ignored

So what factors need to be covered by an NBSC recognising that there are two distinct economic worlds out there, working in parallel?

If in any doubt, ponder why 86% of Americans already feel ‘what matters in life matters more than more stuff’ – the two are:

• An old world of tangibles satisfying our material and physical needs
• A new world of intangibles satisfying our mental needs

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THE MATERIAL WORLD – for tangibles

• Prosperity:
  • Current measure = GDP/ capita
  • It counts revenue, whether profitable or not, and ignores the value of fixed and current national assets
  • It’s therefore a flawed, useless measure – something better is needed

• National output (versus income?):
  • Current measure = GDP
  • GDP is known to be seriously flawed – much national effort is uncounted or miscounted – much is estimated and so prone to error
  • Something better is needed, which includes a credible assessment of the intangible value people now get from much that is offered them
• National inputs:
  • Current measure = Labour hours or numbers
    • Need to account for skills and experience inputs too
    • And need them broken down by sector
  • Re labour inputs, also need:
    • Average hours worked per annum
    • Average wage/ employment cost per sector
    • % unemployed
  • Capex is also ignored – it needs to be broken down by spend on:
    • Plant/ equipment – (% GDP)
    • R&D
    • Infrastructure
    • Energy supply
• National productivity:
  • Current measure = GDP/ Labour hours or numbers input
  • This gives only part of the picture
  • It ignores the ever-increasing value of capital input
• Poverty v Inequality index
  • Measures of both are needed
• Housing index:
  • A measure is needed reflecting shortages and building rates

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THE MENTAL WORLD – for intangibles

• National Health index – NHI – covering:
  • Length and quality of lives
  • Quality of healthcare experienced from NHS
• National Knowledge Index – NKI – covering:
  • Overall education levels attained
  • Quality of education experienced
  • Investment in R&D, IP, patents, broadband infrastructure
  • Accumulated knowledge, skills and experience
• National Crime index – NCI – covering feelings of safety and security re:
  • Defence
  • Terrorism
  • Effectiveness of police/ prison/ legal systems
• Establishment and institutional index – covering:
  • ‘Faith in Government’
  • The degree of trust affecting transactions and the provision of public goods
• Environment index – covering:
  • The positive value of renewable resources provided by nature e.g. clean air, mountains, moorlands, open seas – the natural environment:
    • Currently fresh water and air are either cheap, or free – but we cannot live without either
    • What if they were priced with the underlying value to each of us
    • Compare water to a diamond – a lump of carbon only, and no life saver
    • For years, too much money has chased too few assets
    • So prices alone do not paint the full picture
  • The penalty costs of modern day polluters – greenhouse gas emissions, plastic rubbish in the oceans, kids ignored when young so they become criminals – who currently pay nothing towards future clean-up costs – or those destroying habitats which prevent flooding, absorb/capture carbon dioxide or provide recreation

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A set of measures covering the above factors would force ministers to ‘do something’ where action was needed most – they’d be well aware of the biggest issues affecting their electorates, whether things were getting better or worse, where they needed to ‘do something’ fast

And the electorate would be able to monitor their progress

Conclusions:

• The principal aim of any government should be to grow the national wealth pie first (the Tories’ main aim?), then distribute it more equitably and improve public services (the Labour party’s main aim?) so all enjoy better lives than before
• At present, most electorates have far too little information on how well their governments are spending their tax money – worse, most of the information they do get is ‘seriously flawed’ so big improvements are needed there straightaway
• The proposed NBSC should be devised and collected by an independent survey organisation – Ipsos Mori for example
• The problem will be government inertia if and when it comes to commissioning such an agency to collect and publish their findings for all to see – a ‘can of worms’ may then be opened for any sitting government
• And there lies the rub!