For years I have advocated for a better system of corporate accounting, one that doesn’t let them report as “profits” the proceeds of layoffs, outsourcing to the Third World, environmental degradation, etc.
In Basic Business 101, we learn that Profit equals Price minus Cost, and that profits are made based on how expensive you can make your product or service. Mathematically, of course, you can also lower Cost and hold Price constant, or even lower Cost while raising Price for extra “return.” But that doesn’t seem fair. And when we see the effect lowering Cost has on people and society and the environment, it doesn’t seem moral either.
But in our system the shareholder wants maximum return no matter what. And that “no matter what” is where I have a problem, because the end never justifies the means. What kind of accounting system could level the playing field between Cost cutters and moral, socially-responsible businesses? One that factors in the costs incurred by society when companies cut (big-C) Cost.
Because in O Faolain’s First Law of Economics, Cost is neither created nor destroyed, merely transferred.
And what doth it profit a shareholder to receive maximum “Profits,” if s/he’s paying it back in taxes.
Ah, then we hear the squeals of the tax-cutters. And the ultimate goal of Rationalized Capitalism – to reduce America to a Third World country with a rich few and impoverished majority.
When…and how…do we draw the line, and say Stop?