Counting All The Parts

Several weeks ago, I developed an infection in my foot, from causes unknown. Without going into a lot of detail, it’s pretty serious stuff that might require months of recuperation. There remains the possibility that I could lose my foot, but that seems to be less likely every day and I am anticipating a full, if slow, recovery. Months of antibiotics strapped to a waist pouch and pumping into my subclavian artery non-stop is not my idea of an enjoyable summer, but I keep all of it in perspective and know that this is a minor inconvenience compared to the ordeals suffered by millions. But one restless night last week, I had a dream. In it, the time was some years in the future; I was dead and I was reporting for duty in the Afterlife. And just so you won’t be disappointed when you get there, the Afterlife admissions desk looks a lot like a motor vehicle license office, right down to the ‘Please Take a Number’ thingy. I didn’t see any harps or halos or wings; just a lot of drab grey business suits with drab grey faces. The staff look like the usual soulless automatons favoured by license bureaus everywhere. Here was my problem: I was reporting for duty, but I didn’t have with me all the parts I had been issued at birth. You see, I had lost the foot due to the infection and the Afterlife staff were quite accusatory about it, like I had showed up at Blockbuster without fully rewinding a video. Because I couldn’t return all the stuff that had been issued, I needed to see [hushed tones, here] The Accountant, Ms Glabella. (I don’t know if that was really her name because no one told me. But she was a stern-looking unibrow who sort of abused the privilege of ugly and since the space between the eyebrows, a space she lacked, is known as the glabella, that’s what I called her.) Ms Glabella was harsh and got right to the point, demanding to know what I had done with the foot. I tried to explain about the infection but she had no interest: her concern related only to the missing part, something that she would not be able to tick off on her Intake Form as having been received. We got into a heated discussion with her telling me how irresponsible I was and me replying that it wasn’t my fault I got the infection and I was never issued any instructions about the proper care and return of original equipment. “That should be common sense,” she said. “How stupid do you have to be not to know that you would be expected to return everything you were given?” I didn’t know how stupid I would have to be but, apparently, I was there. And then it hit me: why was she asking only for my foot? What about my foreskin? I started out with one of those as well. So I asked. “That’s different,” she snarled. “There’s a rule about those in the Bible. The Lord made some kind of deal with some old guy thousands of years ago.” I thought she was dissembling so I tried to press what I thought was an advantage and kept wanting to know why I didn’t have to return that part, just the foot. After all, I said, if the little part was useless it wouldn’t have been attached in the first place. She looked at me with great disdain and said: “Sir, I can assure you that we do not want the return of your foreskin. It’s an extra bit, like when you have a part left over in one of those ‘some assembly required’ purchases even though you followed the instructions exactly. Besides, given some of the riff-raff we get in here, I think most of us would agree that there are a whole lot of cases where they should have kept the foreskin and thrown away the boy.” She kept going on about the nightmare of having to account for the missing part, having to amortize it over the length of time it was actually used, to discount the salvage value that they could no longer realize. She went on and on and I think I woke up right about the time she started trying to figure how to account for the extra life I would have gotten from a pair of socks, since I would only need one at a time, and whether that should be a debit or credit entry. In the morning, my dislike for accounting and accountants was revived with a vigour it had not enjoyed in years. You don’t have to search your memory very hard to come up with scores of corporate scandals. We’ve all heard tales of cost over-runs on virtually any project you care to mention, of executives of big businesses taking home more money than the GDP of some countries, of parts for anything being repaired by government costing many times more than the same products would cost in a retail hardware store. We’ve heard of the trading swindles that have collapsed some of the biggest and brightest stars in the corporate panoply. Companies like Bechtel stun the imagination by trying to bring legal charges against poor peasants in South America for collecting rainwater instead of purchasing water from them. Coca-Cola is facing lawsuits in India because they figured no one would mind if they ruined the groundwater. Monsanto is attempting to patent everything we eat, from millennia-old grains that have suddenly become their creative property to pigs. [Monsanto has actually applied for a patent on pigs in 160 countries with regard to breeding methods, the offspring of that breeding, and all little piglets forever after.] In recent years, companies around the world have excised millions of workers in an effort to get lean and mean. Traders have sent individual economies into tailspins by playing with currency values, none of which have any real worth other than some arbitrary trading number picked with the same caution as quick-pick lottery tickets. A flawed-but-better-than-nothing Kyoto accord respecting the environment is built on a complicated scheme of trading off one nation’s filth for another nation’s very modest clean-up efforts. So-called ‘free trade’ agreements which have as their sole purpose the enslavement of the non-corporate world and the elimination of any semblance of democracy — anywhere — have failed to generate all the leveling of disparity between rich and poor that was part of their selling features. It isn’t hard to see the world is an economic mess. Despite producing far more than enough of virtually every food and product necessary to feed and clothe and house the world, poverty grows daily and the gap between the poor and the people at the top can be measured only in light years. None of this occurs without the chicanery of accounting. Corporate and government executives, and many of them are former accountants, spend an incredible amount of time looking for new ways to cook the books, to avoid paying taxes, to doctoring the bottom line and artificially inflating stock prices. And when one becomes skilled at using or creating loopholes to bolster corporate gain, it is but a small step to use the same wizardry for personal enrichment. This isn’t honest bookkeeping. It isn’t as simple as being able to tell you the price of every part that goes into a product and how to make it cheaper with other parts. And it isn’t just figuring out how many people they can squeeze on to an airplane, or how much each employee costs a firm and where to get the work done cheaper. This is about, or so they claim, enhancing shareholder value. But the accountants invariably fall into two traps: what mathematicians call ‘sub-optimization’; and the trap of ‘near-term improvement’ versus ‘long-term gain’. In the first case, all the arithmetic gyrations of the accountants fiddle with just a few of the ways that a company is measured. The tangibles are easy enough but valuating things like goodwill, intellectual property, brand recognition and so on is simply voodoo. The ‘value’ of those things will swing wildly and the worth of the company becomes about as steady and reliable as the betting window at the racetrack. The near-versus-long term issue comes from trying to pump up the value of stock to satisfy Wall Street or some other financial coven. A lot of energy is expended in looking for new ways to have the books show numbers that will satisfy observers everything is rosy, especially when everything isn’t. Divisions are sold, new acquisitions are bought, mergers are made to increase sales figures. The accountants utilize any number of tricks to embellish financial statements by postponing or capitalizing costs, even though in the long-term that will almost always devalue a corporation’s assets. The common thread running through the corporate and government scandals we all read about is accounting. Without the faceless number crunchers, much of the corruption we see occurring around us daily could not occur — because it would be readily rooted out. I daresay that without the accountants to find the money to finance them, there would be many wars either. Remember US President Richard Nixon using the accountants to fluff off gold the standard in 1971 in order to finance his country’s excursions in Vietnam, Cambodia and Laos. There wasn’t actually any more money, but the accountants could make it look like there was. A while ago, I was involved in a personal legal matter than involved accounting chicanery and, at the end of it all, the forensic accountants, the lawyers and the judge had to agree the whole thing had been so convoluted that there was virtually no way to determine the real losses, if there actually were any. Even with other accountants auditing the process, no one was able to figure out how the perpetrating accountants made it all happen in the first place. I still don’t know if I got took. So while I am not necessarily opposed to shooting all the lawyers, I say we start with the bean counters. Mea culpa: I actually studied with an elite accounting college about twenty years ago until, about half way through the syllabus, I realized there was no way I could do this kind of stuff for a living. There just wouldn’t be enough soap to sufficiently clean my hands at the end of the day. [Proofreader's note: this article was edited for spelling and typos on August 7, 2005]