 We spent the last session just addressing an operating bank. It is like a symbol for our larger economy. The study of the institution is a study of what our economy costs us and what value it delivers back to us. It operates on the basis of value provided to us and the services we receive that we get to value. In this session, we will address the operation of our larger economy in light of the example of the bank. We will find like purposes to serve, but that services has been restricted. The value has been partly denied and the costs to gain that value have been artificially raised. So how do we address the economy as a whole? Our most potent direction is the simple black box looking for what the economy is and does in terms of a symbiotic relationship with those outside of it. So what is an economy? Who are its owners? Those for whose benefit it exists? In this, we are addressing an economy as a part of our nation and the question is who owns the nation? We have already answered that question. It is owned by we the people. It exists for our purposes as a people. This is also a good approach to ownership. It answers the question of who owns our economy. Our obvious answer is that we the people are the ultimate owners of the nation and everything that is in it. There are no others to fulfill the position of owners except as they are our agents. People are the ultimate owners of all that is owned in our economy. The purpose of our economy is our purpose. We also have a way to approach our purpose and it is in terms of our human needs and wants. We as the ultimate owners are also the ones who have set this purpose on our national government. It is to see to the welfare of the people of the United States and we are the ones who define what satisfies our purposes. Next we need to address customers. Those who provide what the economy needs to operate in order to get what it produces. In the black box framework this again is people. The economy operates on the resources that people commit to economic pursuits. We are the ones who commit our time, effort and other resources to get what we value. What we value is what meets our needs and wants as people. There you have it. We are also the customers of our economy. We are the ones who provide what the economy needs in order to get what we value. The economy operates on the time and effort people put into it. If that is not enough, we can also address the operation of the economy. It only does what people do. We are the only party in interest. That is worthy of repetition. We are the only party in interest. There is nobody else to consider. There is no special group of people whose interests are greater than ours. There is no group of people who have greater claim to own our economy. There is no us and them to consider. There is just us. The operation of our economy will be conversion. It will receive our time and effort as income and will deliver what we value as its output. It will serve as our way to satisfy our needs and wants. It should be immediately apparent that our current study of economic science is pointed in a different direction. This is not going to involve learning modern economic science. One of the black box fundamentals is that output from the economy will only have value as we the customers value them. Those outputs only have value as we the customers actually receive them. If some economic output does not come to us, it has zero value. It would be waste and eliminating it will have no impact on the operation of our economy. We are also able to give better definition to the concept of economic operations. It is any activity that produces and delivers what other people can value. It is not just those who work in a bank. It is not just the leaders and workers hired into a business. It is not just the investors who seek to own a piece of our economy. It is also the artists, the teachers, those who govern. They all can choose to expend their time and effort or commit their other resources in order to take part in our economy. As we addressed in the study of business organization and management, the real decision makers are not those who run things. The decisions that count are the purchased decisions of customers. The decisions that keep the economy in operation will not be the decisions of government leaders with the guidance of well-educated economists. It will be the decisions that you and I make based on what we are willing to commit to get what we need and what we want. We give purpose to our economy. We evaluate what our economy does produce and we only value what we receive. The connection with the bank is obvious. Its employees are likely to be among its customers. Its owners are likely to be among its customers. It is a public business so almost anyone can access and use the services provided by a bank. What was true in the relation of the bank to its customers is very likely to be true for relation of the economy to us. What worked well for supporting and enhancing bank services is likely to work well for us in supporting our economy. What caused damages to the bank services may be a source of damages for us. Opportunities for our action. That is part of the nature of performance orientation. We learn from what has succeeded or failed in the past to guide our efforts to success in what we do today. Consider as a first concept what we addressed as the common interest of bank owners and bank customers. There is no basis for seeking to benefit the owners at the expense of the customers because they can be the same people. It is even more true of the economy where they are the same people. That of course is why I emphasize this in our last session. We learn from what works in one performance situation as a way to assure that we are doing what works in others. For our empowerment we have to consider performance metrics. We have the black box. Now we need some way to measure the performance of the economy's conversion process. This is the first step in establishing working metrics for empowerment. Something to accomplish through the impact we have on our economy. With our black box presentation we see one immediate challenge in the commonly used metrics of modern economics. The metrics we need are performance cycle inputs to the economy and values delivered as its product. Metrics such as gross national product or rate of employment they measure economic operation. The internal activity being performed. These are activity measures not performance measures. We need to measure the time and effort people commit to economic pursuits. This is generally available though not currently presented for reasons that will become obvious as we go forward. I would generally assume an average level of skill and effort and concentrate on the time that we commit. As our economy has largely shifted to corporate efforts it would be the time of employment as representing the scope of our commitment. This should do for the average cost of living. The value of product provides a different sort of challenge. It is a challenge as we do not have any real social valuation. Our valuation is personal. It cannot be measured directly. So how do we approach value? There is a good performance answer and it is in demonstrated value decisions. It is what we decide to purchase what we are willing and able to earn. It is measure of where we determine to spend what we earn. When we look at what people choose to spend upon we are also looking at the relative value that we place on what the economy produces. Do we decide to spend more on a comfortable place to live or on quality of food? Do we spend more on rest, relaxation and entertainment or on protection of our property? Where we do not have any absolute measures for value we receive from the economy. We do have a very effective means for looking at relative value. The obvious value of such metrics is that they will be effective for measuring changes in value received. They are natural metrics for increases and decreases in personal prosperity. For that purpose we need a baseline to measure changes. It can be any past period looking at where people spend their earnings by any convenient categories. At a later time we look at the same categories to see whether we are spending more or less on that economic output. If we spend more its relative value is increased. If we spend less its relative value is reduced. We also have non-economic metrics for the same categories where we spend on real estate are we getting more real property for what we spend? This is a measure of value of the time we commit relative to what we can purchase with our earnings. Again, it is measuring our prosperity as a people. At the time of this presentation I note that this approach to value metrics is not supported. We do not have the information collected and organized in support of evaluating our national prosperity. In answer to the question of why it is not there, we have to take a look at modern study of economics. Like all sciences it is a collection and organization of knowledge for the purpose of prediction. For economics it is focused on the operation of the economy and provides cause and effect information in support of running the economy. This is technical support for those who would run the economy for privileged leaders to have their design their design and promoted effect upon economic operations. Like other privileged based studies it addresses how to do things with the economy. It is a study of how situations and actions of leadership can influence what our economy does. It is relatively unconcerned with economic performance as we have to present it. As in other such privileged based approaches people are approached as beneficiaries of the actions of leaders. This is marvelously consistent with other such studies. As other performance studies the authority approach is able to do what is done. It is just not very good at it. That is not its primary purpose. With performance orientation we have a whole new box of working tools. If an economic good or service does not come to you it has no value as a product. Raw materials like land and metals are not economic inputs unless people are the ones who decide to commit them to earn income. They are not a true part of the operation of the economy but are affected by it. Very much as in business leadership interference in the purchase decisions of customers are very likely to create waste rather than value. Attempts to manage the economy are generally to be discouraged as wasteful. Government value will be an economic waste as an investment to provide other human values ensuring the freshness and safety of food products or the safety of medications. The true governing of our economy is accomplished by notice that the economy only does what people do. We run the economy by our commitments to its operation and by our purchase decisions as noted we are the only party in interest. For empowerment we need to address citizen actions that achieve economic changes. We have an economic environment that discourages even looking at performance much less honoring or supporting people being effective. The inertia is strong for avoiding any empowerment. The investment will have to be pretty significant and amenable to good communication if people are to invest in any changes. This course with its performance orientation purpose is a tool for defining and describing potential improvements. It can present waste, productive efforts for which we do not get adequate value back and economic outputs that we do not receive. These are possible motivations that will support change actions. In later sections we will be addressing some of these potentials. They include things like congress having a valued result to be from expenditure of tax dollars. Another potential is replacing public charity with charity accounts that people can choose to support. Such things address assuring that the public funding has some return to the people who own the government and giving value choices to the people instead of trying to authorize economic actions on their behalf. For another performance aspect we can look at the economy serving human family as an economic unit. This provides a different sort of metric. It is with recognition that only one or two people in a family unit commonly commit their time and effort to economic pursuits. The younger citizens commonly commit their time and effort to education to hopefully increasing the performance effect that they will be able to achieve when they later are called to be family earners. For our purpose that is an investment. Often senior members of the family those who have ceased to earn from their productive efforts are supported as part of the family. This provides us a whole new concept of measurement. The focus is on the whole lifetime commitment of the family member to earn what is needed by the family. This provides a long term perspective on the operation of our economy. My grandparents family commitments in the early 1900s raised 5 and 7 children as middle class citizens. They retired after about 30 years of personal commitment to and above poverty, living largely based on what they had saved. My parents both born around 1910 raised 3 children. They were upper middle in earnings and mom worked 15 years to supplement family income. Their total cost for this was about 50 years. They continued to be fairly well off due to their invested earnings. My wife and I worked about the same together. We got to upper middle level but only continued due to an excellent federal retirement pension. Where grandparents saved the economy supported their retirement. Savings was not sufficient for my parents. They had to accept the risk of investment and paid an expert to guide their investments. There was little potential for me to save and live off my earnings. The ability to invest was nowhere near as good for me as for my parents. What we are called to commit in order to have a reasonable flow of value from our economy appears to be going the wrong way. While this is not a definitive metric it is one that can address the value of shifting our economic emphasis. We return to that observation that it is people who give purpose to an economy. It is people who are both the owners and customers of that economy as well as the active party within it. There is only one party in interest and it is us. What is it that has value to the family? Again we are called to the potential of economic improvement and it is through either expanding less, getting in more or better value for what we spend. We also have an application of the Pareto principle or 80-20 rule where 20% is a normal variation. If 80% of people see some action as an improvement then it is an in fact improvement. If agreement is less then 80% that it is just popular. As will become much better defined in later lessons the will of 80% of people in agreement is the effective will of the people and others will generally go along even if they have other preferences. In that sense personal or family prosperity is a social determination being prosperous is otherwise just an opinion that people hold. A necessary observation is that there is no social prosperity that will be gained at the expense of others any involuntary taking from some to support others will be a loss of prosperity. In that sense we are all in this economy together if it is more effective at generating what we value then it is increasing in economic performance to discover that some value good or services are being limited or reduced it indicates potential waste something that can be eliminated. Where the banking industry has lost the ability to give a good return to customers on its deposits there is likely to be a waste problem. Costs incurred that do not return value to the depositors. If the economy is able to reduce what people have to gain that is valued output it is increasing its economic performance. If people are called to commit more to the economic pursuits without a corresponding increase in the value they can purchase with their earnings we have discovered waste where the banking industry is so tightly regulated it cannot earn a reasonable return on its investments we have a source of waste that might be eliminated. And next we get to turn this around asking after the alternative concept of the prosperity of humanity. Our approach to this begins with human family and the question of how prosperous a family is. The obvious answer is in what the family earns in relations to its needs and wants. If it is the wage earner being effective in earning then the family is effective. If there is a second wage earner it becomes more prosperous now consider that one earns much more than the other so we bring in an external manager to make things a little more equal however much you pay that manager that is how much it reduces the prosperity of the family that is because all the family members are in it together it's all about income and product the family cannot become more prosperous by taking earnings from some people for the benefit of others it just makes us poorer by what we expend the redistribution of wealth is itself a cost that has no product that anyone can receive and value it is waste. In a like way we cannot become more prosperous people by the interference of those who would shift wealth from one family to another. That effort is a cost that has no product it may have social benefit a different value but it is going to have a loss of economic effect a nation can only be prosperous effective at satisfying the needs and wants of its people if that is a nation of prosperous people we are all in that aspect of civilization together for this larger application we have to address the public as a customer we have a serious cultural limitation that has been taught us for centuries it is that we can do things for the good of the family, for the good of the nation or for the good of the humanity that is somehow different than what is for the good of people we have already addressed the performance orientation that can present the alternative view it is that the public is just a way of addressing many people there is nothing that is a value to the public that is not a value to the people who receive it there is no other public contrary to today's common authoritative orientation there is no us and them in the public in our challenging and contrary performance understanding if you and people like you do not receive the benefit of a public effort then it is not beneficial to people trying to benefit some people at the expense of others turns out to be waste something that cannot be received and valued by the people to the contrary it is all about us not about the public we are the public and what we value is what the public values where we would choose to commit our time and effort and earnings is where the public would commit our time, effort and earnings having leaders decide on where our time, effort and earnings are to be committed is a denial of the public in favor of those who have an authority we have a term for where an authority gets to make commitments on behalf of others and that word is slavery when does it stop being slavery and become a public decision and we have a ready answer from our performance orientation and it is the Pareto principle we are together as a body when we have 80% or more agreement it is then that the people have a public choice that is the choice of the people but we can go even further for we have identified what the people value because we are human we have values of freedom prosperity and trust based society of others we provide a basis for our address of values upon which people are very likely to find agreement for addressing our economy the primary value will be prosperity it will be having sufficient resources to have choices in where we commit our time and effort and choices in what we gain because we made those commitments it is inputs and outputs that are valuable to people as people our economic decisions are going to make commitments for us as people our corporate decisions are going to be based on what we as a collection of individuals value enough to make commitments it is all about us there is no other party in interest there is no other contrary economic or political authority that must be served whenever and wherever we as a people find ourselves an agreement at the Pareto level that defines the only direction available to leaders the clash of this understanding with modern political and economic actions comes to focus in the concept of political and social issues with the practical understanding of performance an issue is a subject on which there is no agreement if we come to Pareto level agreement on the matter it is no longer an issue but a mandate to action in accord with the authoritative model leaders focus on issues that is where they can be effective if it is a mandate they become servants of the public doing what people have agreed to have value authority based leadership strives to take the best side on issues serving some part of the public and overcoming the rest this defines winners and losers on the issue it creates drama not performance in our authority based approach to an economy we have economic issues these are divisions on where people will commit their resources the ultimate witness to the effect is the expenditure of tax dollars to the benefit of some people at the expense of others it is delivering economic advantage to some people that is taken from others and it creates winners and losers if we had competing for public resources it generated drama not performance so where are you in this you are the ones who are gaining the ability to see performance matters more clearly than others you are the ones who are learning to focus on presenting your vision of what people can accomplish as you find agreement you are able to see how modern leaders and economic scientists are focused on what is going on inside the black box trying to get things to work to greatest effect and then you are able to close the box leaving all inside that box out of sight and no longer a distraction for you it is the value that people put into the economy in order to get what they value and it is what the economy can deliver to people for them to value you are becoming one of those who knows that you are the only party in interest it is your place to ask that performance question what is this going to cost me and what will I or my family receive because of the expense in the study of performance that final choice is going to be yours if you and other people do not receive value then it has no value to the public so how valuable is it to you that your government acts to reduce unemployment you are urged to make it an issue that your choices how much your government is to expend to make it better for you and your family to live in it is not an issue when approached in performance orientation for that we look at the cost we incur and the value we receive because we made the commitment how valuable is it to you as a taxpayer that other people have a job the question is how much you would commit to receive the value of more people having employment it is your dollars your contribution to public taxes that leaders would commit it is what you can receive and value that is the basis for your purchase decision we have the performance rule as a guide you only get to value what you receive if you do not receive the benefit then it has no value to you and then you and people like you are the only party in interest if value does not come to people it comes to the public it is easy to sum this up this is not an improvement it is a public charity it is accepting a personal taxpayer cost without delivering anything of value back to the taxpayers but hoping for it to be an investment where things will get better if you spend without receiving it is not getting better the government and economy are measured for performance by what it assumes and what it produces if consumption goes up and you do not receive benefit back we have public waste citizens required to figure out their own taxes is an expenditure of citizen time and effort and there is no value that gets returned to the taxpayer for this effort it is waste it is to be eliminated if possible and minimized if it can't be totally eliminated government price manipulation has no product it is a way to shift customer economic decisions by either using other people's money to help pay for leader preferred sales or by raising prices people must pay for what the economy would deliver to them in general this is a subtle form of economic slavery it is leaders making choices for you it is the worst sort of misrepresentation it is a way to create massive waste consider setting a minimum wage setting a minimum on the payment a person can be paid for committing an hour to economic pursuits so what does it cost you what is it that you can both receive and value from that economic interference does it have effect on the time and effort that gets committed into the operation of the economy there is probably very little impact on economic inputs there might be a slight reduction in what people get to commit because it will encourage a few efforts that replace some workers with other approaches the input effect will be slight what about outputs will the economy be producing more or better products for people to receive again any effect will be negligible there is no value output effect as a simple summation it will not improve or damage the economy through economic effect so what will it do the answer is that it will shift some of the earnings from people who are most productive to those who are not it will in this require some again very minor expenses in its implementation and maintenance it will encourage you with some wonderful thing to do or to avoid it is the empowerment that comes with being able to see the flow of value to the customers of the economy this is empowerment at the highest level it is giving you access to that ultimately important information of cost and benefit that can support your intelligent decisions on where to commit your personal change and what you have to present to enlist others to that effort