Platt Perspective on Business and Technology

Assumption 3 – stepping back to an economic framework and its assumptions

Posted in macroeconomics, reexamining the fundamentals by Timothy Platt on February 24, 2010

• What do Gross National Product and Gross National Debt mean in an increasingly interconnected global economy?

I shift gears from the technology oriented to the more economic and business context oriented with this posting. When every country still measures its economic health and vitality in terms of its own cash flow and its own reserves alone, what should they even measure? So many businesses have headquarters in one place but production and other value-adding centers in others. Resources that go into production that range from extraction and development of raw materials to production of highly processed subassemblies and parts that may themselves include materials and parts from several other countries in and of themselves are brought together in still other countries. If you assume that any one production item can only be produced in one place to avoid the confusion of multiply counting for everything in this global production system and marketplace, how do you divide up contributions to production and how do you determine precise levels of intra-national sales and purchasing? If you do decide to subdivide the complexities of production according to source how do you consistently, unequivocally apportion value among all the contributing sources, and especially where much of the overall value is emergent from the assembly per se, and where that is distributed too?

In a way this is way too obvious an issue but I raise it here because every country still generates reports citing these values and as a basis for economic and other policy. The simplistic and even pre-twentieth century models of stand-alone production and sourcing still hold, and in setting national and international policy and in driving political decision making.

We need a clear-cut internationally oriented networked alternative to this older, and intra-nationally oriented approach to global finance and policy. Any newer alternative has to connect with our technology and production bases and how we actually use them and derive and determine value in them.

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