To paraphrase an old cliché, value, like beauty, is in the eyes of the beholder. But unlike beauty, which is perceived largely at the personal level, value and its meaning impact economic, political and societal behavior. And here-in lies a problem of mammoth proportions. With so many notions of value, and so many diverse and diversely motivated beholders of its existence, how do we avoid the danger of oversimplifying its attributes, even its reality? How do we reduce the risk of acting on the assumption that decisions will have desired outcomes, when in fact they're invitations to disaster? In short, how can we even identify and separate the essence of value from its mere illusion?

Sad to say, we can't and we don't. Proof of this can be seen in the recent and ongoing tragedy of the housing boom and collapse, where price and value were assumed to move in parallel, and assumed, further, to rise forever. It can be seen in the 2000 to 2002 dot-com bubble and bust, which provided a clear warning about the relationship of asset prices and value. It can be seen in the bankruptcy and bailout of General Motors, Chrysler and the auto supply industry, where the notion that by cancelling out debts, supply contracts and labor agreement obligations, the value of these firms is enhanced. It's evident in the "bridge to nowhere" and the myriad other earmarks our political representatives sponsored and approved--where value and pure political interests are one in the same. Add in the failures in judgment made by the universe of buyers, sellers, investors and voters who continue to make decisions, which equate a seemingly attractive price with value, and we gain some perspective as to whether we truly know the difference between value and its illusion.

So how did this all happen and how do we even begin to address the issue?

As I see it, three factors lie at the root of the problem. They are intimately intertwined and reinforce one another in their impact:

• First is the explosive spread of technology in all areas of communication, to the point that we are literally inundated with data, information, surveys and polls--all purporting to present facts, but, in reality, expressing self-serving interests. Thus, whether it's the Internet, TV, radio or a publishing medium, each promotes the concept of value in loose and narrowly-defined terms. Each relates the product, service, institution or interest to a value outcome. And with its pervasiveness, the medium becomes the message.
  
• Second is the pressure to innovate as a means of gaining competitive advantage. Whether we look at the automotive, appliance, electronics or other consumer industries, a common strategy is to introduce new or different designs, applications or performance features, and to characterize these as value or value-added. Looking beyond these industries to financial services, we see the quest for innovation in the once-lauded, but now infamous, securitized financial products, collateralized debt obligations and credit default swaps. The point is that the more innovation is promoted as a business strategy and facilitated through advanced technology, the less it is understood and evaluated diligently by all those less informed. 
  
• The above suggests the third cause of our failure to differentiate value from its illusion. The spread of populist and activist movements, and the "dumbing down" of their message, has severely reduced our ability as a society to make deep and penetrating analysis of options and alternatives, risk and reward consequences. We want quick and easy answers and we want them now. So if issues like universal health care, immigration, education curriculum diversity or financial reform can be expressed in terms of value--promoting or discouraging it--let's go for it.

In our day-to-day decisions, the most common standard we employ to reflect value is price, that is the amount of money given or agreed-upon for a given good or service. And with this "standard," we should see a prime example of the dangers implicit in how we use the value term. If value is equated with price, how do we, as its beholders, react to changes in the money supply or its volatility? Do we assume that changes in one have no impact on the other? The rash of foreclosures and mortgage defaults should provide a devastating answer to that question. There is little doubt that a prime reason for the housing melt-down was the ready supply of money circulating in global markets and its easy availability through low interest rates. When that supply ran down and credit became tight, prices declined as well. However, it does not follow that the value of specific properties to specific owners or investors went down as well.