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Accounting: Good or Evil?

Entry 1057, on 2009-07-20 at 21:06:35 (Rating 3, Comments)

In a recent podcast I heard some interesting comments from a political commentator talking about how the American health system could be improved. He said that the correct approach was to decide what needs to be done, ignore the accountants and economist, get the project established, and then leave them to figure out how to pay for it.

This might sound rather radical but I think he is essentially correct. Accountants seem to have the primary role of telling people why they can't do certain things, usually because the money's just not there. But if we listened to them we would get almost nothing worthwhile done because there's always a reason not to proceed with a project: if the economy's bad we need to economise and if its good we need to curb spending to avoid inflation!

I'm not saying accountants are idiots and I'm not saying they aren't valuable members of society. Wait a minute. Actually I am saying they aren't valuable members of society, although I'm not saying they are useless either. The thing to remember is that we shouldn't take too much notice of them because they rarely see the big picture because accounting seems to be more a profession obsessed with tiny (usually irrelevant) details.

If a project needs to happen for various reasons then the decision should be made to proceed and the funding should be allocated based on what's needed to get the job done. The people who decide which projects should go ahead should be experts in the relevant area: scientists, engineers, doctors, and ultimately politicians in many cases.

Should we trust politicians more than accountants though? Generally they have an even lower trust rating than other professions such as lawyers and accountants which aren't necessarily exactly at the top of the trust scale themselves! I think we should trust them because they have a wider perspective and they are more accountable (ironic word there) to the public.

So the accountants are consigned to the background where they can do what they are good at: keeping track of the financial aspects of a project without having any real input into the bigger process.

Accounting is neither good nor evil. It is a function which often isn't used appropriately and its the politicians and managers who misuse it who are really to blame.

Comment 20 (2305) by OJB on 2009-07-30 at 09:18:34: (view earlier comments)

The thing is that there is actually very little true innovation from the private sector. The real fundamental discoveries usually come from publicly funded institutions like universities. The private companies just take these and commercialise them. Without greater investment in real innovation our whole technology will stall.

Comment 21 (2308) by SBFL on 2009-07-30 at 09:53:39:

So now we are moving from the big govt programmes to 'green' university ideas. In case you hadn't noticed this is where the private sector complements universities. They are the ones who realise ideas borne from the fertile intellectual ground that comes from universities, they are investors who are willing to to take risks and try to make the ideas happen. If you want to go through all the red tape and try to make your idea a government initiative, then good luck with that. I think Microsoft and Apple were born from uni graduates if I recall rightly.

Anyway this is a far cry from the issue previously debated, but have no problem moving on, if that is what you want. Don't forget that commercialising ideas = making ideas much bigger, for good or evil.

Comment 22 (2311) by OJB on 2009-07-30 at 14:51:48:

Big government programs, big university projects, whatever. What is a "green" university idea exactly? You seem to have some odd ideas about universities, or maybe I'm just misinterpreting what you are trying to say.

I agree that a competitive private sector often develops the big ideas into real products fairly well but we have to get more of those big ideas coming by getting more money into the sector which creates them: universities and other public institutions.

Commercialising ideas doesn't really make them bigger, it usually makes them smaller but more accessible. I'm happy to keep the commercial model until something better becomes apparent.

Comment 23 (2315) by SBFL on 2009-08-01 at 05:30:46:

Heh, yeah it's not green as in envious, nor green as in enviornmental. In this context I meant green as in fresh, unripe, sort of like 'greenfield'.

Re 2nd paragraph. I agree, and those funds need to be found. Is it just my imaginations are your tending to support PPP's here...?

Well 'bigger' may have not been the best word but you get my drift, they can make them go 'mainstream', if you like.

Comment 24 (2318) by OJB on 2009-08-01 at 10:00:41:

OK, so we are reaching some agreement here...

Yes, universities are good places to pursue new and original ideas, especially when they have no obvious quick commercial payoff (even though there is often a commercial use in the future). So, agreed.

I think that since we do have an economic system built around private enterprise we should make use of it in the most productive way and let the private sector commercialise and popularise the more theoretical discoveries of research institutions. We should remember though that its those institutions which are doing the real work and they need to be funded appropriately. So I guess we're basically agreed there too.

And OK, "mainstream" I agree with.

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