Science, People & Politics issn:1751598x. Iss. one 2017

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Together science and politics exchanging information without trying to influence one another's
remit, acting, in other words, like a board of directors, could leverage each others' competence.
Politics, probably, would have to decide which body undertakes the function of chairperson.
Parliament? Law? Referendum? Electorate? Executive?

DEPRECIATION AND AMORTIZATION
These two terms deal with the decreasing value with time of physical and intellectual property.
Both can be difficult to parse and value. Tax authorities intermittently intervene and say how a
purchased asset may be claimed as an allowable expense against tax on net profit generated.
In doing so they separate amortisation and depreciation on a tax return from intrinsic value.
Thus there can be a separation between asset value on a corporate balance sheet and its
amortized and/or depreciated value on a tax return.

The governmental act specifying depreciation and amortization allowed on a tax return applies
financial brakes which can prevent an economy spiralling out of control. Clearly, though, some
assets keep their value and/or appreciate in value long after they are no longer a tax deduction.
The flip side of the coin is that the value of the partially depreciated/amortised asset may loose
value because it is overtaken by more efficient technology, or technology cheaper to maintain.

In this article the depreciation and amortization are for analysis in the framework only of
EBITDA when a country, region or their agents seeks finance for a significant capital project to
enhance national energy-generation, transmission and distribution infrastructure. The question
is: can science and politics optimise the value of an existing asset which is currently being de-
preciated or amortized on a tax return so that the asset is more attractive to a lender. How a
fully amortised or depreciated asset looks to a lender is a different question, which properly
belongs more to politics informed by science, than to science leveraging sustainable finance.

Also, since the value of an asset may be greatest, and have the greatest possible (unseen in
the books) leverage on operating profit once the asset is fully depreciated or amortised, both
science and politics need to assess the borrowers' assets.

What is the purpose of the asset? Operational reliability or maximum revenue generation, for
example. Has an alternate come on the market that means selling the asset before fully depre
ciated will maximise operating profit? Is that because profit generated will exceed the tax de
ductible by the not yet fully amortised/depreciated asset? This kind of analysis could provide
the profit surge which, if the legislative and diplomatic pieces are in place, would allow a comp-
any/municipal authority or country to make an extra payment on its existing loan interest in
order to borrow more money. And this is where ethics enters. Should it?

A FORMULA FOR THE WORLD OF BONDS
EBITDA, therefore, is not a tool to guide stock market investing, but is a formula belonging in
the world of bonds, diplomacy, international politics and national politics red in tooth and claw.
If understood by science which, in its bones and DNA, is co-operative and international (that is,
when not competing to publish in high impact journals), then science could leverage the term.
But I can think of no circumstances in which science must not cede to politics and government-
controlled diplomacy in efforts to implement findings from such analysis.

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Issue 1 (Jan-Mar), 2017............................................Science, People & Politics ISSN 1751-598X print and online