Capitalism Without Capital – Intangible Assets Season 1 Episode 4

This episode features the famous British economist and author Jonathan Haskel. He talks about the shift from tangible to intangible assets and how the economy has changed over the past 20 years. The pandemic is kind of a kick for the intangibles program and the vaccine itself is an amazing intangible.

We were joined by an industry expert and the hosts of the Cipher Vision podcast

  • Jonathan Haskel from Imperial College
  • Nigel Swycher CEO encryption
  • Francesca Levoir co-host
  • Strong points

    I am an economist. And being an empirical economist who likes to look at data, I spent the first part of my career listening to endless seminars.

    It is this passage from the tangible to the intangible that allows us to better understand how economies have evolved. And if we did, we would probably have a more complete picture of the innovation process.

    Thinking about the corporate landscape, I think when we look at Fortune 500 companies now, half of them are gone. The average age of an S&P 500 company is less than 20 years. Do you think it has to do with the change and rise of intangibles and how should we view the assets of a business, tangible assets versus intangible assets?

    Economists like me, maybe a little older economists are high on Galbraith. Companies like General Engines, Bethlehem Steelused to dominate the fortune 500. Oil companies were usually an example because they had huge tangible assets, but a company like Microsoft has almost none of those kinds of tangible assets.

    How do you explain the difference between tangible and intangible assets, therefore between General Engines and Microsoft. I know you write about the four S’s

    Four describe these different economic properties that we believe these intangibles have. It is better that I choose a specific example, which is, of course, the most famous British innovation, Harry Porter. The four Ss are scale, synergies, spillovers and sunk costs.

    When we try to correlate countries’ corporate GDP with intangible assets, which are usually lacking, we get strong correlations. So it’s on a large scale, but also the work that you do at Cipher to try to add more value to what companies are doing.

    Keynes decided that he would rather be approximately right than precisely wrong. That is, if we don’t count the intangibles, or rather have this asymmetrical treatment, we’re sort of very accurate, but we know we’re wrong in our accuracy. So, where on the spectrum do we want to be between being precise, but wrong, but approximate, but being right.

    When we look at GDP as policy makers or just as concerned citizens, it’s through that lens that we make a lot of our decisions, and we try to understand where the economy is going among the community of national accountants who design all this stuff. They are very connected on these questions of immaterial assets.

    Hopefully the message of our book and the work that Cipher is doing, this style of podcasting. Hopefully this will get the word out a bit and underline how important this all is.

    The whole pandemic is kind of a kick to the intangibles agenda, which is of huge interest to policy makers. Even as we talk about the pandemic, the very thing that will hopefully get us out of this pandemic, namely the vaccine is itself an incredible intangible asset.

    If policy makers work hard and national accounts work hard? What can IP teams within organizations do to help understand the value of intangible assets?

    80% of the enterprise value of companies is or will be intangible, and this is not disclosed. One of the things I’m very obsessed with is that we shouldn’t look at this just as an accounting issue. We can’t wait 40 years to catch up. And so the key word should be transparency. I would like to use ESG as an example. ESG today represents around 20% of the $46 billion invested in companies in the United States.

    If these questions are being asked of CEOs and mainboards, please tell us your story about intangibles. I understand from Mr Haskel and many others that it is essential both for the company, the country and the world.

    Cipher Vision – I would say that intangibles are the business assets of the future.

    For comments or a guest presentation, contact [email protected]

    Listen to the Cipher Vision podcast

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