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How One Accounting Rule Wrecked The Middle Class
Submitted by Daniel Drew of Dark Bid
How One Accounting Rule Wrecked The Middle Class
Maybe you heard your CEO say, "Our people are our greatest asset." He's probably lying. That's not how he really feels about you. Despite how much management talks about "human capital" as if it were an asset, it's not. The accounting system that the whole world uses classifies labor as an expense.
Anyone who has studied accounting even briefly can see that it's a lot of bullshit designed to appear objective. In reality, it is filled with assumptions, estimates, and sometimes, fraud. Yes, it is rule-based, but with any system, who makes the rules is often more important than the rules themselves. Accounting is the language of business, and in the mouth of a double-talking CEO, it's just another way to promote their own interests.
One of the most insidious rules in accounting is that labor must be classified as an expense on the income statement. Actually, it should be classified as an asset on the balance sheet. The accounting profession has rigged the system against the worker. The misclassification of labor as an expense has branded every employee with a negative dollar sign. The way the accounting system defines labor causes CEOs and upper management to view employees as expendable. When profits decline, the CEO says, "It must be those damned employees dragging us down! Let's fire a few thousand of them. That will get us on track again."
According to current accounting rules, inanimate objects like pencils, clothing, or any type of inventory are assets, but people are expenses. The CEOs want you to believe that a pen is an asset, but a person with knowledge, skills, and experience is an expense, something that should be avoided. This is actually what they teach business students in school all around the world, and the students just accept it as fact. Have we all gone insane? We are being held captive by dumbass accountants and shrewd CEOs who realize the whole system is rigged in their favor.
The proper way to account for labor would be to classify it as an asset on the balance sheet. The employee would be valued with mark to market accounting at every reporting period, and the value would be determined by calculating the profit per employee, the average tenure, and the net present value of this amount. This would accurately account for the true value of labor. If this rule were implemented, balance sheets would be dramatically altered. Some companies that appeared valuable before might look like complete garbage. Other companies would prove to be much more valuable than previously thought.
One company that understands the true value of employees is Costco. Their full-time employees make $43,000 per year, which is very high for the retail industry. The turnover there is only 5% for employees who have been there a year or longer. In 2004, The Wall Street Journal published an article about Costco's skeptics. Bill Dreher, retail analyst at Deutsche Bank, said, "From the perspective of investors, Costco's benefits are overly generous. Public companies need to care for shareholders first." Dreher said profit margins weren't as high as they should be.
However, Costco CEO Jim Sinegal, who owned 3.2 million shares of Costco at the time, said,
The last thing I want people to believe is that I don't care about the shareholder. But I happen to believe that in order to reward the shareholder in the long term, you have to please your customers and workers.
The CFO, Richard Galanti, agreed,
From day one, we've run the company with the philosophy that if we pay better than average, provide a salary people can live on, have a positive environment and good benefits, we'll be able to hire better people, they'll stay longer and be more efficient.
A study in the Harvard Business Review showed that Costco generated $21,805 in U.S. operating profit per hourly employee, compared with $11,615 at Sam's Club, a Walmart subsidiary. John Bowen, an investment manager and Costco shareholder, said, "Happy employees make for happy customers, which in the long run is ultimately reflected in the share price."
Fortunately, the Costco CEO didn't listen to the Deutsche Bank analyst who was complaining about their labor investments. In the last 5 years, Costco stock has risen by 139%. Walmart has only gained 41%.
What's interesting about the reclassification of labor as an asset is the implication for central bank policy. The federal minimum wage is only $7.25. Those in power don't see that as a problem. However, when asset prices decline, all of a sudden, they start worrying about deflation. That's why the Federal Reserve launched multiple rounds of quantitative easing, a policy which has essentially become QE Infinity.
While there is no official minimum stock market level like there is with the minimum wage, it's quite clear there is a de facto minimum level, and I guarantee you it's not $7.25. The Chicago Mercantile Exchange's "central bank incentive program" has proven that central banks buy S&P 500 futures to prop up the market. If labor is no longer misclassified as an expense, would the value of labor rise with all the other assets being inflated by quantitative easing?
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People are a company's greatest liability.
Comany's have forgotten that an employee is also a consumer.
Thus over the last x number of years they have loaded the consumer with as many useless items as is possible and whn it seemed no more could be bought they lent him money and when tat limit was reached they lwered interest rates so the wealth effect of higher house prices woukd enable them to spend even more.
As I tell my kids, that society is not interested in you unless you are buying or borrowing.
Classify labor as assest, then print money to fund wages.
That Deutsche Bank analyst is definitely overpaid. He should have his wages cut to the bone. After all, wtf good is he to anyone?
This will not change (even the title is past tense). As soon as a machine can replace you, it will. Whether building the pyramids or building cars, people are expendable. We have lots of weird beliefs in births but, we are overpopulated for any quality of life for all (in the modern age). It is also in our human nature to collectively ignore this and continue breeding and keep people existing far longer than any quality of life can provide (windfall for big pharma/medical equip makers/nursing homes etc.)
I'll bet that human relpacing machine will be on the books as an asset.
The only way laborers could be an asset would be if they were slaves.
Ding ding ding.
Until they are not worth feeding.
Welcome aboard, grab an oar.
First off, some people are an asset, though if you were talking about the low wage workers, well you'd have to go to China or India to find them, because tight fisted Corporate leaders are never going to give you anything unless they can capitalize on your job. Secondly, corporations will extract all of the intellectual property they can from people & then throw them away, hence when you work for a corporation, every idea you have is theirs, and if you can't come up with creative intelligent solutions, well you're history...
It's not that people aren't an asset, it's just that Corporations love to use people, and when they no longer have a use for them, they cut them off, and they don't care if you have a family to feed, that's not their business. (Impersonal, selfish, assholes to the max, and if you don't believe, try saying high to one of them... Perferrably one you don't work for...)
The wealthy class have a real air about them, snobbery maximus, and they answer roughly to underlings... (always)
Secondly Costco tailors to the middle class & rich, you won't find no EBT holders up in there, nope...
Lastly accounting is nothing but financial foolery that bean counters have mastered to evade taxes and increase the "Perceivable Value" of the corporation to increase stock value, and everything else is simply a casualty of war (Read Business, where they'll gladly put a dagger in your back as soon as you turn it).
Big government leaders love to use people, get them to fight their wars for them, and when they no longer have a use for them, they cut them off, and they don't care if you have a family to feed, that's not their business.
At least in the military they classify people as "organic assets." They classifiy weapons and vehicles as "inorganic assets." That make the DoD more humane than business.
To count humans as assets they would have to quantify how much incremental profit is generated from trained staff compared to untrained staff, then to an NPV on that. That would require a lot of guesswork but in theory the concept has merit, it is just impossible to implement and obtain a reliable number.
The main Accounting difference between assets and expenses is the timing of when a company can utilize the cash outlaw as a tax deductible expense.
An expense is deductible in the year incurred.
An asset is expensed through a mechanism called depreciation, where the total cost of said asset of spread across the useful life (typically measured in time or units of production) of the asset.
Reclassification of employees as assets will only limit the availability of tax deductible expenses available to lower Taxable income. Ergo, everybody has higher Taxable income keteris paribus. Oh, and we can start calling our payroll expenses our payroll assets. Should be a magical feel good moment, especially in the finance department, as Payroll is typically the single highest line item expense for many SMBs.
Ps did you ever wonder why your employer gave you a bonus in Q1? It's because tax law allows such bonuses to roll back to prior year expense and further reduce Taxable income for the year- companies pay it as a way to shape their Taxable income and reduce tax expense. Congrats, I think your capitalization of labor costs just eliminated the Q1 bonus plan. But at least they can be called ASSets now.
Please Don't Give These Sociopaths Any More Ideas.
A laborer is a slave. Just like representative government is arbitrary and capricious. There is no difference between slavery and laboring just as there is no difference between a representative government or dictatorship. The who(se) doesn't change the what.
The whole matrix and illusion is enforced through positive law as opposed to natural law. Natural law is and can't be refuted by logic and science, positive law isn't and can be refuted by logic and science. Therefore positive law is arbitrary and capricious.
They pay you in credits or cash because carbon paper costs too much as an outlay for your labour. They get to print, you get paid in pretty pieces of paper. What a mind-blowing scam to come up with. Wish I could do it.
You too can print e-coins!
We’ve derivatived some folks on Pension, Social Security, and new income prospects.
Corporations are the greatest liability of the people.
Yesterday I went over to the sawmill not far from me that I heard about word of mouth. It is very remote, you could almost say it's something out of "Deliverence". Anyway, I passed an abandoned house on the way that has been empty for a few years I'm told.
Sure enough, there was a van there doing something with a "Blackrock" sign on it. There's almost nowhere these motherfuckers haven't fucked shit up.
Was Larry Fink putting the sign up himself - sort of like a country doctor putting out his own shingle? Or was Mr. Fink inside the mill getting himself dirty and figuring out how to operate the saws and its supporting machinery? They haven't fucked shit up. They are acquiring assets on the extreme cheap to retool and CONTROL the prices of near basic survival necessities - lumber being one those necessities ( unless one can live off the land naturally like a fellow named Tom Brown down in the Pine Barrens of NJ ).
The Blackrock house was on the way to the mill. Anybody that looked like Larry Fink on that dirt road probably would never be seen again. The road I live on is named after our closest neighbor and they've been farming the area since the civil war. Turns out the sawmill brothers are really nice guys but I got a "heads up" on my behalf by my neighbor "Junior" before I went down there. There are Confederate flags everywhere and they do not like "fancy people". Open carry is very common.
Big governments are the greatest liability of the people.
Assets are expended (expense) to create income with the hope of creating more assets. Every asset becomes an expense at some point in the process. Hopefully the asset is expended in the most productive way possible. If it isn't it becomes a liability. This article shows a profound lack of knowledge about accounting.
Watching companies force employees to take vacation to get it off the books where it is a liability is almost insane. Many of the vacation days will sit on the books for a long time while if left alone. During a time when a company needs all the income it can get is not the time to tell the misguided dedicated employee to take off.
The author is beyond moronic.....you don't have to pay the pencil a salary. The pencil doesn't get health insurance, nor can it quit. I think the author prefers slavery. "We demand to be treated like pencils, NOW"
Uh... show me a pencil that produces anything.
Moronic indeed...
Or any asset for that matter. That's a very good point you make.
The problem is that people are niether assets nor expenses... they produce and consume all that they produce. Salaries can be expenses. Insurance can be expenses. Heating and cooling can be expenses... but people can't.
I think there needs to be a third catagory - the producer/consumer. There has to be a way for a company to determine when an employee is either a net positive or a net negative for the company without just measuring dollars. Essentially, the idea would be to keep the valuable employees and remove the deadwood.
"Figures lie, and liars do a lot of figuring." -old saying
It turns out that the Government and Banks are the biggest Liability of a business. Because... unlike them, employees are an expense that generates revenue.
Get Clarity, and keep your Focus, Resolve and Courage to Act -- to get the Parasites and Usurpers off our Balance Sheets and our lives.
The author is a dumb ass and I will explain why: an asset is something one owns.
If a business classifies labor as an asset, then it owns the fucking labor, and if you own the fucking labor, you own the employee that outputs it. Sorry you fucking businesses and you fucking author, but no business owns me.
Labor is the asset of the employee and only of the employee. The employee rents that asset to a business, much like I rented a car last week. That car I rented is an asset of Avis and an expense to me; it was NOT an asset of mine.
So fuck you, author - quit being a braindead dumbfuck. If businesses classified employees as assets, the same stupid fucking author would write a diatribe bitching about people being property. Mind you I know accounting well and principally disagree with a number of the concepts as well as the stupid shits polluting the profession, but labor being an expense to a business is not one of them.
And by the way, find me one fucking business that classifies routine office expenses like pencils and erasers as an asset (other than manufacturers or resellers who inventory them for sale). Those are office supplies, and are also expensed. That author is a lying faggot.
You could argue that while the company doesn't own the human being, it does own the labor of that human, so while the human is under the company's employ, the value of the human that provides that labor could be listed as an asset.
Another perspective: arguably, human beings with similar levels of skill, intelligence, and experience could be considered fungible, to a certain degree. One could list the "qualified human" as an asset on the books and if the current "qualified human" leaves the company and goes off the books, presumably he/she could be replaced with a human of similar skill/intelligence/experience. Remember that a hard asset like a machine or a building costs money to replace, while the hiring costs of a human are rather less. So once the value-creating "space" is created in a company for a particular type of human, one could consider that "space" to be an asset, presuming of course that the human required is available (to some degree) in the labor marketplace.
If one follows this line of thinking, one starts to understand a scenario where a company would subsequently have a real vested interest in a wide variety of social concerns such as education, religious and moral values, justice, etc. The CostCo example is illuminating in this respect. Certainly the attitude that human beings are an expense leads inexorably to a corporate attitude that is anti-human, which we certainly see today.
All that said, I don't necessarily disagree with your point of view, but the idea the author brings up is certainly worth thinking about.
Actually one can not argue that the labor of an employee is an asset to a business. It is always an expense. Your arguments above are stretched and esoteric, though I appreciate the attempt.
The business does not own the "labor of that human" as you state, rather it owns the output of that labor as determined and utilized by the business. It is the same as if I rent a jackhammer from Home Depot - Home Depot owns the jackhammer as the asset, I rent it (expense to me), and the hole I dig (the output of the jackhammer as utilized by me) on my land belongs to me and not Home Depot. If that hole adds value to me, that is my asset, but the utility of the jackhammer is still Home Depot's. If I provide the space on my property to deploy the jackhammer, that space is my asset, but the rented equipment is not, and if Home Depot wants it back then I must return it (barring any time-dependent contract, which is rarely the case in labor markets). And if I rent the jackhammer but just park it in my garage for a day and obtain no output, it is still my expense for that day and Home Depot's asset, and I have no claim on its future productivity (as I would with an asset) unless I continue the rental (aka "expense") relationship with the asset owner.
There are accounting principles for assetizing labor expenses, actually. Capitalization of qualifying engineering expenses such as R&D, or other labor costs that are part of a qualifying project associated with future long-term definable benefits come to mind, but the labor costs of the cleaning lady, the secretary, the person bolting planks together or stocking shelves or flipping burgers, running cash registers, or selling wash machines do not qualify. The R&D rules, however, only assetize the labor expenses, and not the labor itself ... there is a big difference.
Agree that the company owns the marketable residue of that labor, not the labor itself. That is an important point-- otherwise we devolve into Marxism
If you consider that a company is an aggregation of human skill and physical plant, the synergistic combination of which creates value greatly in excess than the value of the individual parts, then the corporate asset in question is the embedded productivity of the human asset. We can agree that humans without any phsyical assets can form a company, but that a company cannot be formed solely of physical plant. Human beings are required to at least some degree, therefore, the value of a company is strictly defined by how much it can leverage the human input into market value. If that is the case then the human resource must be considered to be an asset in some way.
You are making an interesting point about how R&D expenses can be capitalized. Similarly, marketing and advertising expenses can be capitalized as well. So the accounting system does accommodate this to a certain extent.
Interesting topic.
ASSETS are NOT always owned.
Company Aplus has 100 employees and a gross income of $5 million a year.
Company X has 100 employees and a gross income of $1 million a year.
Both companies have similar equipment.
Both companies are roofing companies.
Why does Company Aplus do 5 times as much business as Company X? Because Company Aplus's employees are much more experienced and much more motivated. And because those experienced motivated employees have built a better, happier company base for Company Aplus. Something called "Good Will"?
This happens always and everywhere. Roofers, plumbers, tree trimmers, stores, mechanics, lawyers, consultants, brokers, engineers and architects.
Now suppose that I personally inherit a bunch of cash and want to buy a company. I would be willing to pay more for for Company Aplus than for Company X. So, again, Company Aplus's employees are an ASSET.
An INTANGIBLE asset. VERY important distinction.
No. PINKO FASCIST COMMIES (aka Ginsengbull) are humanity's greatest liability. Why don't you take your Punk Ass greedy self to North Korea where you will live in an environment you can thrive in, fool.
Client: "how much is two plus two?"
CPA: "how much do you want it to be?"
What's really funny is accounting labels "housing" (so defined as a financial product now) as an asset.
I think the "we're not counting that" profession has a lot more problems than how they are told to classify labor.
Still..the girls love it!
"Who did you fire today!" is always the first words out of their mouth when the fucking cunts pour the first beer to Boss Asahole from out of State.
I would argue "good business insurance" as a better approach.
Pretty much.
But I tend to agree with the authors premise, that the corporate propaganda is as deep as its ever been. From the Rah Rah!-Go Team! bullshit (instead of the decent wage deserved to keep the employee happy & on their payroll) to ahhh, yep, we had a bad quarter so lets lop some heads off "The Team" in order to justify our (board members) bonuses & salaries.
A pink slip, oh really?...lol.
It is (Team Spirit) totally contrived & manipulative to keep these goofball kiddies in-line and cheering until their time comes.
Us "old timers" know it ;-)
Remain Calm. Mind the GAAP.
Yet banks can ignore FASB and marked to market rules. Because accounting is always an honest account of the situation. :eyeroll:
Mathematician: "four, for average values of two."
Right. Everything is therefore an asset. Wheee. Up is down, left is right. Democrats are small l liberals, Repubnicants are small state conservatives, cats are dogs. Children are adults. The sun is cold. Global warming has never happened before in the geological history of the earth, it is totally something new and must therefore be caused by man. Global warming models accurately predict the future. Ok. I get it now.
How did actual people become the managed assets of a legal person called THE CORPORATION ?!
But that is Managerial Accounting, isn't it. SPOKEN managerial accounting.
In Financial Accounting, actual people are a costly (and wasteful?) expense to Mr./Ms. CORPORATION.
How did housing become a "financial product."
What part of "we're Wall Street and we only have money because the accountants say we do" do the professors keep forgetting to put in their financial textbooks?
That and "constructing a proper bailout regime as your business model."
Many think the same way (and rightly so) about "the people" employed by the corporation called .gov.
Its costly & wasteful ;-)
It's all mark to fucking fantasy and fuedal lords...
As a "limited liability person" I really don't give a fuck because moral hazard is a real motherfucker.
Get long sharecropping guillotine manufacturing, beat the rush.
Customers are a company's biggest asset.
I am a motivational speaker.
lol
We are the customers, and THEY OWN US.
Hmmmmm....you "rent" employees, you dont "own" them. There can be no NPV. Nuturing them with respect, decent pay and conditions does improve your prospects , but they remain an expense.
You don't "rent" employees, but their knowledge, craftsmanship and/or manual labor. Outside the workspace an employee is an ordinary civilian, not under corporate custody.
A much better accounting practice would be to put productivity per hour on the asset side vs. the employment expenses on the liabilities side of the equation.
Economists problem is they lack common sense...
"Outside the workspace an employee is an ordinary civilian, not under corporate custody."
Until they fail a drug test.
Or write something on fakebook.
I was forced to terminate a very good young employee for venting on his private fakebook page after someone in his 'friends' list showed the company owners. Surprisingly I quit the company a few weeks after.
But certainly under corporate surveillance, just to "protect" the corporation from harm.
Note also the employment agreements that "legally" suspend civil rights, in particular mandatory arbitration of employee grievances (such as age discrimination, exercising a protected right, harassment, sexual/gender discrimination, illegal prid-quo-pro offers,) to prohibit more effective court/jury remedies, while the corporation retains the right to take legal action against a "misbehaving" employee.
Note also prohibition of Free Speech on social media--getting caught saying anything about an employer can be a zero-tolerance firing offense and may result in the employer taking legal action.
Note also the (now more common) arbitrary prohibition of the use of certain prescribed medications, detected by "random" testing. Why is this illegal at the office when in many organizations corporate supplied alcohol is not? Nor are they any random drug tests for tobacco or alcohol use outside the office!
Finally, if you have worked in a corporation then you ought to know from experience that employees from different groups with the corporation often engage (within the organization) in behavior that would be highly illegal if it occurred outside the organization between people, or between a person and an organization. Fraud and misrepresentation come to mind, but also extortion, harassment, breach of contract, theft, .... Just think about the experience of working in a big office environment. (Only applies to those who have corporation experience!)
Corporations are people. Unfortunately, many corporations act like autocratic people who would never be tolerated if they had 2 arms and 2 legs.
Another accounting gimmick is that the destruction of public air, water, fisheries, forests, etc. is not counted as a cost (inventory loss) for the business doing the destruction (or euphemistically "use" ).
It's not counted as a cost because private property rights do not apply. Only taxes, regulations and government fines to cover violations. The very system you want is in place and you don't even know it. Duke Energy loves you baby.
This is BS. In business personell are both an asset as well as a liability as an on-going cost. Big deal. Trying to make an us against them scenario out of nothing. If this is all too much for you start your own business.
Why just think how much those on-going costs could be trimmed by reducing the CEO's pay to say $12,000 a year. That should be plenty for them to make it on. And oh, defund their pension and health insurance too...
Size counts. So does common ethics.
I'll believe that my employees shoud be viewed, from an accounting perspective, as an asset when I have the right to trade them to another company for money or exchange.
This article is terrible because it seems more of a whine about poor systemic view of workers than an actual review of accounting principles.
What's tour view on business insurance and usury?
"All in the day of the life of a good Chrisitian man?"
Is there a law saying you can't?
In the US I think that's called the 13th amendment.
Sad, is it not, when we are reduced to whining about the obvious injustices of language.
You DO trade them to other companies for money, when you bill other companies for their time at the "hourly billing rate" you are able to charge for them because they are productive, experienced, and professional.
this guy is nots. Must be pure liberal. I hope he was being sarcastic.
Treating employees as an asset is an attitude.
Companies write off via depreciation fixed assets
So employee cost is a "period" cost .
The problem with accounting is rewarding companies doing buybacks by increasing eps when there was no change in operations. Making recurring expenses into non recurring and excluding from P&L. mark to fantasy toxic assets for not just banks but for the Fed, masking problems from the public and thus the middle class which will lose their asses on what few investible assets they have.
however, if wages are the single largest costs (alongwith benefits, capitalizing them with say a life expectancy of 30 years woudl raise profits to a level where the Dow goes to 62,380 (thats technical resistance). Of course, the money is spent and the company wil take a deduction.
some people are just morons.
Don't overthink this Hal. Accounting today is in fact all mark to fantasy.
There once was a time when owners and management would have to pay back creditors with their own wealth if they drove a company into the ground (NO BAILOUTS) too.
Get long sharecropping and guillotine manufacturing, beat the rush.
How about we decide if we use Non-GAAP and take your 250k home and write it down as 90k deprecation. You still pay loan vaule and I collect interest and principal. Go ahead and get a short term mortgage rate. You don't hold the deed.
Blah, blah.
How much money would you make without employess?
Everything on this Earth is in a perpetual state of decay, once it has been created.
Except Gold, of course.
A third of Wal-Mart employees are in training at any given time. Their turnover is in the hundreds of thousands of people per year.
Happy Costco workers don't feel the need to steal from the company either. Shrinkage and spoilage are a fraction of Wal-Mart's. Paying $15/hour at WMT isn't going to change things. They will still be treated as slaves.
1/3 of them are always in training because it takes extensive guidance to instill the proper Walmart je ne sais quoi of surliness combined with indifference into their employees. The turnover is high since many just cannot make the grade.
Costco stands for:
C - China
O - Off
S - Shore
T - Trading
CO - Company
Costco's merchandise is mostly made by Chinese slaves
Tru dat:
"According to current accounting rules, inanimate objects like pencils, clothing, or any type of inventory are assets, but people are expenses."
In the grand scheme of things, all we are is a number which is appropriated to a certain 'class'.
That is how we are judged and dealt with. If your class is low, such as unemployed long term and poor, you aren't worth anything to anyone according to society, but you may be a great human being who has helped and sacrificed for others.
On the other end of the spectrum you may be in the upper class, a CEO who robs from employees to feed his or her own needs and ego and is willing to ride roughshod over anyone deemed 'beneath' him or her. As a human being this person is despicable but judged to be 'respectable'.
The above doesn't hold true 100% of the time, there are always the exceptions, but they are rare.
My labor is a product and I sell it to an employer for an agreed upon price. What else is there?
Tension between employers and employees is only aggravated by government interferring in their ability to contract equitably. The law is stacked in favor of employees and therefore creates an adversarial relationship, employers look at every employee as a potential lawsuit, workman's comp claim, etc.
Oh btw...This article is fucking stupid.
"The law is stacked in favor of employees and therefore creates an adversarial relationship, employers look at every employee as a potential lawsuit..."
Guess that's why they moved everything to low wage country's. The Chinese must be much better at bargaining for their $1.27 per day wage and no benefits than the mean u.s worker.
Yessiree,,, the corporations are all benevolent and good and only want a fair deal ....
Yessiree,,, big governments are all benevolent and good and only want a fair deal ....
Good point until our last comment.
Why did you read it then-because your fucking stupid?
Perhaps accounting rules should insist that companies declare sales and profit by employee (or total wage). I would guess that in a way the value of good will for a company goes up with the value of their employees. It becomes a question as how to measure the value. The Costco vs Sam's Club example given in the article is a good example.
Mo employees. Mo problems.
Regulation G for Gang raped.
http://www.businessinsider.com/gaap-vs-non-gaap-earnings-eps-2013-12
https://www.sec.gov/rules/final/33-8176.htm
You've been fucked by Alan Greenspan, Ben Bernanke, and Janet Yellen. The nigger in the White House knows this. That's why the secrecy for trade deal.
People owning people?
Hmm
I think maybe sit the next one out, champ.
So where do I put all those debits on payday?
Asset Definition: A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit.
http://www.investopedia.com/terms/a/asset.asp
If it's okay with the author this reader would rather not be considered an asset.
AND like everything else we tend to elevate authorities Poll, Kings, Queens
I hate to tell these CEO's and management in general... They are employes also.
And the most dangerous threat to a company is not the lowly worker.... it's management that will bankrupt them.
^^^this. The first step to bankrupting a company is overcompensated management. Remember when owners and management would have to pay back the creditors when they drove a company into the ground? This is how it should be motherfuckers, no risk no reward right?
"If it's okay with the author this reader would rather not be considered an asset."
Correct, they can't claim the employee as an asset as the "asset" can walk out anytime "it" wants and show the company in reality, it owns nothing in that regard.
In a bean counters theoretical world I suppose some think it would work but its more smoke & mirrors. What they really want is to have it both/all ways, they can't take a loss (the "asset" packing his shit & leaving) PLUS showing the expense of the wage no longer being paid out of profits, thats double counting to me, a fascists wet dream.
And (on the other side of the coin) as a consequence of all this I suppose some enterprising gnomish federal tax employee in the future will say, ya know, this new corporate accounting structure derived from valuing "people" as assets is bringing in moar net revenue to government coffers!
Its like a socio-economic ponzi built upon nothing...or sumpin ;-)
LOL!!! Accounting?!?!?! Accounting today is in fact mark to fantasy!!!! Totally stupid. For those of us who provide essential services and real products of real value the problem is simple. Far too many fucking useless overcompensated middlemen. Fine, so be it, this will only make guillotine manufacturing that much more profitable...
same as it ever was...
An asset is generally entered on the books at its purchase price, and then depreciated over its useful life. When an asset has outlived its usefulness it is either discarded or sold to the junk dealer. How would the author account for an employee who quits and joins the competition?
Actually, in the old days the accounting system did account for people as assets -- it was called slavery.
The Anglo-Saxon cultural inheritance treats labor as a black hole expense because for centuries labor consisted of slaves and serfs. Slaves have to be fed, minimally housed and if beaten too hard productivity plummets. There has never, in this tradition, been a focus on developing communities for the long term. Management itself is transient and assumes it can jump to any location on the globe to exploit the cheapest resources, then move on like locusts. Problem is that real value-added manufacturing and services require real value-added people to make it happen. Unless you can somehow condition your customers to accept schlock and super cheap garbage. Good customers, who pay top dollar for whatever it is you sell and keep coming back, will not put up with shoddy goods and substandard services provided by rock bottom H1B foreign peasants. Really.
My pen is an asset.
The space between "pen" and "is" is crucial.
There's a grain of truth to what our masters say when they say their proles are their greatest asset. Not all of the work their minions do can be outsourced (yet), and they lose when one of their minions who comes up with the good ideas that make them rich leaves for a competitor, or becomes the competition, deciding he wants to be rich himself. But it would be the ideas that they would miss, not the employee as such.
Assets are generally things that the firm could sell to pay debts (liabilities) or use as collateral for credit if it had to. You can't actually sell or pawn your employees.
At my first job out of college in a clothing factory, one of the old timers told me "sonny, it went downhill when they changed it from Personnel to Human Resources".
At the time I didn't understand what he meant.
Humans are not resources to be exploited for maximum profit. Or are they? Corps think they are and that's how you are treated if you work for them outside of the C-Suite.
Corporations exploit resources. They strip mine, clear cut, and fish out. The predicament of a single human resource is a microcosm of what corporations do the world and natural resources.
I am not a coal seam to be strip mined, polluted, and left in ruin once the coal is gone. BTDT.
None of us should be considered in those terms but sadly we all are.
Awesome concept! Makes alot of sense. Low and stagnant wages/interest rates is why inflation is non-existent.
This is a very interesting line of thought. I'm not sure I agree, but I have to think more about it.
I've been self-employed for 11 years now. I've been working since I was 9 (no child labor issues in Agricultural areas); full-time since I was 16. I'm 48 now. I've had a couple dozen jobs. Of all the employers I've had, none had more than 50 employees, and only 2 are still in business. I've quit every job I had, except the two where I showed up and the doors were locked and the place was out of business.
Every time I've left a job, it was either because I had something better drop in my lap, or because I got to the point where I realized I would never earn any more money or have more control over my work, and I had come to believe I understood something about the business that my boss did not, and that my boss' misunderstanding would lead to the demise of the company. I'd say I've been right and all but two of my bosses were wrong.
What I've come to believe is that the employer/employee relationship is bad for people in the short term and the long term. It turns employees into infants, and employers into dysfunctional parents. Employees only see the amount of money on the check and have no idea what it really costs, in terms of sales, to keep them at a job. By the same token, most employees have no idea what proportion of the business' revenue comes from their work. They don't know what their work is really worth. It's been a lot easier for me to get an idea of this, because I've worked for small companies almost exclusively. I've started at the bottom each time and worked my way up to very close to the top. Each time, I got to the point where I realized the business simply couldn't pay me what I wanted to earn, or they'd have to cut the boss' pay, or revamp their methods in ways they didn't feel like doing. So I worked my way into a field where all I needed was my accumulated knowledge, reputation and contacts; a good computer, and a cell phone. Then I quit my last job and went out on my own.
I'm not big on specific goals. Every time I make them I find out pretty shortly there was some factor I hadn't fully understood which rendered the goals irrelevant. That last time, though, I did set goals. I decided I wanted to start my own business, regain the same level of income as at my last job withing 24 months, double it within 48 months, and pay off my starter-home mortgage within 72 months. I struck out on my own in June, 2004. By the time I was doing my 2005 taxes in January, 2006, I realized I had already doubled my income in 18 months. Before 72 months were up, I had decided not to pay off the starter-home mortgage but sell it and buy the next home, and a few other things.
But the goals served their purpose. I realized I could work less but do a better job, and still earn nearly double what I had been earning because I didn't have to support my boss, his boss, their families, and the squadron of Assistants they seemed to need. I also drive a 2007 Toyota Yaris which works just fine and does what I need it to do, instead of my former boss' Audi S8 and his boss' Mercedes S-Class. No wonder they needed me to work so much and couldn't pay me more.
And, as an added bonus, I actually know what health insurance costs; what it cost 30 years ago; how pricing and policies have changed, etc. I don't even work in that field; I just pay attention. So I know the entire "ObamaCare" topic is complete and utter bullshit from all angles. The very idea of getting health insurance through employment is a recipe for disaster, as we're all seeing.
The Accounting system is just a symptom of the underlying problem. No matter where you get your paychecks, a fully-actualized human being always works for himself, to his own standards, to support himself and his own family. Most bosses aren't sophisticated to understand this, and many who do don't like it. Their loss, I say. I'd rather have 20 bosses in a year, each providing me with 5% of my income, than 1 boss all year providing 100% of my income. And, truly, the only boss I really have to answer to is myself I mean, my wife.
Employees only see the amount of money on the check and have no idea what it really costs, in terms of sales, to keep them at a job...
I've never actually "owned" my own business but was raised in a home that was a family / construction business run by mom and dad. I was taught early on I must be worth more to my employer than I was being paid. Logic 101.
Every job I ever held always involved an initial investment by my employer to get me up to speed and it always weighed heavily on me to be worth their investment.
One difference employers must take into account is that ever since the abolition of slavery in the US, workers are free to leave whenever he / she wants.
I have held many management positions throughout the years and have been sure to relay the same sentiment to those I've overseen. While I appreciate the work performed by professional Union Ironworkers and Electricians, as well as warehouse sweepers, it's still an open marketplace, and if anyone really insists on complaining about their pay, I've been quite vocal in asking that particular individual to do the rest of us a favor and ply their wares elsewhere. People can and do develop, even beyond what a union wage and profession can provide.
It's actually quite awesome to watch.
jmo.
I couldn't agree more. Seeing someone "get it" is great. In my mind, it's the realization that they are actually responsible to themselves, for themselves, and have the power to do (or not do) bigger and better things.
I've had issues with managers, as I said. The last manager I had was probably the worst. The (small) company I worked for reorganized and I then reported to the CEO, whom I'd known and talked to every day in the 6+ years I worked there. We had a meeting to discuss how we'd work things, now that I reported directly to him. I told him, "I'll tell you what I've told everybody else who's ever managed me; if you have an issue with what I'm doing, don't save it for the annual review. Tell me right then and there, and let me ask questions until I understand what I was doing wrong, how to do it right, and what's the difference so I can anticipate how to handle situations in general." He really didn't like that. It made him super-uncomfortable to realize that I really did take employment as a two-way street.
But I had plenty of good managers, too. Those were the jobs I left because I knew they couldn't pay me more or give me more responsibility or room to advance simply due to the nature of the business and my position. Those jobs I left on good terms, and have kept in touch over the years with the people there, and when possible, used their services in later situations whenever I could. I worked for one guy 4 times in my 20s and early 30s because while he never had a suitable permanent position available for me, he found me useful in one-off situations and I was deeply grateful to have a place to turn when something had gone sour and I needed to make rent that month. When I later had the chance to hire his firm on one of my projects, I made certain to do it.
I think in general many people who look and seem like adults are in some deep-down way still toddlers, and are afraid to take responsibility for themselves. They need a parental figure to handle the big things for them, like their health insurance, their income, the way they structure their lives, etc. I had enough of that in my childhood and looked forward to adulthood to take those things into my own hands. Today, I know plenty of people who complain constantly about how they hate their jobs, hate their boss, live in fear of getting laid off, reassigned, or otherwise humiliated. I tell them they have the skills they need to go out on their own (I mostly know Creative professionals in one form or another). They say, "Oh, I could never do that. I need the Security!" Yeah. Sounds great to me. I think they're afraid to hold themselves responsible, and need that boss to blame if they're not happy.
Feudalism went on as long as it did because it gave everybody a place where they belonged, with clear responsibilities and expectations. No wonder I see it coming back, updated for the times, all around us.
CEO's and other useless parasites form a visible slice of the revenue pie chart. If this was really an issue of caring about your shareholders, you would get rid of all such useless expenses.
Look at how every single instance of talking about making the system work (making sure the people who do the actual work can afford to live) is treated as insane fantasy these days.
These assholes talk about caring to distract from the fact they don't give a shit about anything. People like this are the reason things are falling apart. What's funny is that most of them don't think their precious system, the one they inherited and are busy destroying, can ever break. It will be a good day when all these pricks finally get theirs.
Taking the playbook of Sunbeam chainsaw Al.
http://www.businessweek.com/1998/27/b3585090.htm
Nonsense. Labour is an expense because there is a vast supply of it available and it has to be sourced at the lowest cost. It's not exactly in short supply...!
skilled or unskilled? details matter as you most certatinly will get what pay for...
Your thinking is an example of the problem. This is about calculating an employees product value first, then deducting his wage to mark his value on balance. Its an ackowlegement that he is the producer. The product isn't created by paper work.
You see a way to cheapen your supply by cutting wages, but where do you get your demand? More fraudulant advertising??
Supply AND demand. Business requires BOTH, and collectively employers need to pay a living wage to enable demand. The reason we need to stop seeing emplyees as an expense is so we can focus on the real parasitic expenses, like licensing, local taxes, transport costs.. all things that cost the company without creating product.
Re-read article for details and proof.
Kreditanstalt,
We can split cunt hairs all day long. What is the difference between U3 and U6 BLS unemployment levels?
http://www.bls.gov/news.release/empsit.t15.htm
Economists earn money as false prophets of the future. Accountants earn money as apologists for the past and present. The most relevant fact is that next year's accountants are hired by those whom they audit this year.
Workers are only an asset if the company owns them. Those are also known as slaves.
Whacky article.
1. A pen is not an asset. Office supplies are expenses.
2. To classify something as an asset, you must pay for the value of that asset and then depreciate it over its useful life as an expense.
Everything is an expense it just depends on the timing.
I think you are correct. An asset is a depreciable item. But, I also think that the author is trying to say, in a very awkward way, that employees are simply not APPRECIATED as valuable components of a business and the Costco case really drove that home.
Employees are dispensible and burdon the product as an expense vs pencils are always necessary and listed as assets.
The West needs to throw off all government burdons at all levels, get lean and healthy and then start competing in this hyper-competitive, overpopulated world. Ayn Rand principles of private contracts among paying individuals, guns and shame will substitute for the wasteful coercive government arrangements of the past.
We can compete in this new lean environment but it's going to take lean, healthy employees with small demands where shipping costs become the make or break expense fending off competition from imports.
The future belongs to the low cost producer of goods. The sick, obese, fearful and dependent will die-off first leaving the healthy, detoxified, courageous, resourceful and independent people to rebuild a brave new healthy and lean world that's aware and eternally vigilant of take-over plots by sick parasites like the Fed owners.
The government should pay everybody to stay home and have a car and a girlfriend and a small dog or cat.
You don't "own" labor like a you might own a pencil. You pay for the pencil, it becomes an asset. Office equipment expenses, the same as the cost of labor, become part of the Cost Of Goods Sold for the products the business produces. If you prepaid for your labor, you would probably be able to classify it as an asset somewhere on a balance sheet, but I've never really heard of it being done this way.
Unfortunately, labor is an expense that must be accounted for in order to properly calculate a business's profit. It has always been this way. If a business can pay less for labor, all other things being the same, it leads to increased profit. I don't know how this "theory" could be changed.
A car you own is an asset. A car you just rented from Enterprise is not. The 13th Amendment says you can't own people, therefore they are not assets.
What utter nonsense. Accounting isn't a philosophy nor a moral system. It is just a way to ACCOUNT for tangible assets. It's imposes FINANCIAL discipline not MORAL discipline. How do you quantify the intangible value of employees? It is NOT a suitable balance sheet category.
This is very probably the worst post I have ever read on this site. What is going on?
I really don't think you understand the article for reasons I just explained to Kredistandt
Dude. Read the article again
It's posts like these that really piss me off. Had Mr Drew bothered to even take an accounting class at some point in his life, or at least at something other than a degree farm, he would know that labor /is/ reflected on the balance sheet as goodwill. And to the extent that an aquistion hasn't occured, it'll either show up as equity or in some higher-than-book market valuation.
Who's greenlighting these articles? I mean, for fuck's sake, this is intro to financial accounting, not a CPA exam topic or rocket surgery. There are only so many places value can exist on a company's financial statements.
Talk about a bush league...
The cost of labor is a genuine expense.
Something you have to pay to aquire in order to produce a product or provide a service. Having paid to aquire and train your labor, you can now choose to maintain it or waste it.
If the author wants to spend a lot of bits promoting the idea that many outfits are wasting their labor unnecessarily and callously, I'm probably, mostly in.
This piece on the other hand is a lot of silliness going nowhere.
Employees are expenses but they are also the market, no wages allowing for discretionary spending, no market
Yes! someone else gets it :)
Well, it's an interesting idea Of course since you have to pay for it, if you carried it on the balance sheet at all it would seem to be a liability as it's already on the P&L as a liability/expense.
But it should be listed as an asset. Especially for high-tech companies, they say the assets all walk out the door every night. So, how do we list them that way, in such a way that it benefits them? Allow them to be listed as assets in GAAP accounting, pro-rated for experience!? Allow a 5% a year depreciation in addition to direct expenses? Require that depreciation be *paid* to employees?
Something like this might work.
Yeah, I'm sorry too, that it's come to this, but the old "social contract" on work that we had in the US through most of the twentieth century is so broken now, "labor" is little brown aliens we bring in and pay under the table and then try to keep from voting, wtf. We need some alternative.
"A study in the Harvard Business Review showed that Costco generated $21,805 in U.S. operating profit per hourly employee, compared with $11,615 at Sam's Club, a Walmart subsidiary."
Are they carbon copies?
Don't know about Sam's Club, but Walmart has a different clientel than Costco. Do they compare directly?
Back in the day, Stongsville, OH Costco. You pay for a card, then they would upsell a AMEX credit card. We declined the debt slave card. Its a fun place to shop. Mrs. Atomizer would suppliment her tape worm food appetite for the freebie food tasting stop zones. I would just shake my head and spout.. Time to leave.. I loathe shopping. But I enjoy the quality time spent with her.
pretty much. yoou should tyake a look and don't compare them to Walmart.
Deleted duplicate post.
Somewhat related:
Does anyone know what the profit margin of Costco is?
I heard it was 2 - 3%, but not sure.
I also heard that the average net profit on each passenger in the airline business was $14.
How could I verify this?
As I see it, the politicians, CEOs, executives, accountants all claim they need to be paid top dollar to "attract talent". Now this seems to not apply to everyone else, engineers, trades, workers, etc.
So what we have is a tiny group at the top hoarding the wealth for themselves, while trying to screw those that actually do the work.
I'm sorry, this is kind of ridiculous hyperbole. The salary you pay someone for continued operations is an operating expense, clearly. If the employee is working on something that will generate additional income, then that's capex, ie accounted as an asset. Nothing insidious here.
When we had to vacate HHI to return to Charleston so Mrs. Atomizer could fly to Taipei because her grandma is dying , we stopped at a Walmart to pick up basic needs. This checkout dumbfuck couldn’t scan my orange juice.
I told her that she’ll lose her job. She denied losing her job. I asked her to turn around and look at the self-service check-out isle. Reaffirming, I check-out with a human being (her). Walmart is going to hire low wage employees managing 3-4 checkout isles to reduce staffing. Also, told her that I just returned from South Forest Beach Hilton Head at three months stay. The local BI-LO has hired Smile, Earth, etc. Korean girls to check you out.
Once the guy brought up a new orange juice with a scannable label, she could process the order by dragging it over the photo eye inventory scanner. The clerk became meek, didn’t pressure. I believe she saw her future.
Intense paradoxes make it politically impossible to overcome the general ways that we have fundamentally fraudulent financial accounting systems, within which the value of human beings as employees is only another tiny tip of the enormous iceberg of ENFORCED FRAUDS.
It would be theoretically possible to develop human accounting systems which were consistent with the physically existing accounting system of nature, namely the conservation of energy, flowing through energy systems. However, when one pursues that path of regarding human beings and civilizations as general energy systems it becomes clear that those actually match the principles and methods of organized crime, and therefore, the ways that human beings practice monetary accounting is actually a manifestation of organized crime, where the SOURCE of the public "money" supply is that the government ENFORCES FRAUDS by privately controlled banks.
Given that everything that thereafter is done within those monetary accounting systems is based on its SOURCE ENFORCING FRAUDS, of course, everything afterwards is a Bizarro World, or Wonderland Matrix which everything appears backwards and absurd. However, it is politically impossible to fix those problems, due to the intense paradox that the existing systems developed through the history of successful warfare being based on backing up deceits with destruction, to become the current political economy being based upon enforced frauds.
The most important labour that employees do is when soldiers kill other people. That is the form of destruction that most controls all subsequent destruction. That is repeated on level after level, where the lies are different at every level, as fractal patterns of organized crime, which is what actually works, and therefore, is what actually exists. Since there is only one energy, there is only one system. All of the rest of the languages that have been developed to discuss this or that "ism" are variations upon hiding that the basic system underlying all others is organized crime. Those who are pretending to do various kinds of GAAP "accounting" are more or less taking for granted that they are doing a sort of hermetically sealed away puzzle solving, and bean counting, within the world where those doing that deliberately ignore and disregard the fundamental puzzle regarding how those "beans," as units of MAD Money As Debt, are being created out of nothing, and can disappear back to nothing, because of their ENFORCED FRAUD SOURCE.
To have a monetary system where its accounting could be rationally reconciled with the natural and industrial world, where energy can not be created out of nothing, nor sent to nothing, would require admitting and addressing the ways that money is measurement backed by murder. However, it is politically impossible to do that, since the established systems are based upon being able to continue to take for granted that more than 99% of the people act like incompetent political idiots, and want to stay that way.
In theory, "We the People" run the murder system, that backs up the public money system, which should also be run by "We the People." However, since most of "the People" have been reduced to Zombie Sheeple, the public "money" supply has been about 99% privatized, while the public murder systems are headed in the same direction, as the democratic republic's rule of law is systematically destroyed due to the best organized gangs of criminals capturing control over the political processes, which continues to be possible because of the ways that the vast majority of "We the People" have become nothing more than Zombie Sheeple. The vicious feedback loops through the FUNDING OF POLITICS have driven the political processes to become extremely unbalanced forms of organized crime, due to the vast majority of people not understanding that, because they have been conditioned to not want understand that, while the real FUNDING OF POLITICS has resulted in every branch of government, and every social institution, being systematically subverted by the effective privatization of the public "money" supply driving fundamentally fraudulent financially accounting systems into worsening vicious feedback loops ...
Employees should be citizens first and foremost. Thus, as citizens, their primary jobs are to participate in directing the murder systems that back up the monetary systems. However, since the vast majority of citizens and taxpayers have become incompetent political idiots, who are so brainwashed to believe in bullshit that they want to continue to believe in bullshit, thus there is no longer much left of their real roles as competent citizens. Instead, they are employees functioning in an increasingly fascist system, where legal fictions control every aspect of their lives, more and more, and therefore, they suffer within those systems of enforced frauds.
Since we are operating through fundamentally fraudulent financial accounting systems, based on a long history of the development of integrated systems of legalized lies, backed by legalized violence, which the vast majority of people do not understand, because they do not want to understand, there has been a cascading set of consequences whereby their incompetence as citizens has had ramifications manifesting as their marginalization as employees. Too bad, so sad, but there are no politically possible ways to promote more radical truths which would be necessary to have a human accounting system based upon an energy standard, which could be rationally integrated with natural and industrial systems which transform energy. While human beings and civilizations are actually also general energy systems, which operate as entropic pumps of energy flows, the ways that those really work necessarily match the principles and methods of organized crime, which is the basic social fact that ought to be channeled through the democratic republics' rule of law, but has actually ended up being more and more covertly captured and controlled, in ways which have effectively privatized those public powers, to the degree that the vast majority of the public are incapable of understanding any of that, because they have been conditioned to feel like they do not want to understand.
All "isms," including GAAP, are based on various ways of avoiding the facts that money is measurement backed by murder, by those "isms" creating an elaborate superstructure of bullshit, which superficially appears to be solving puzzles and counting beans, but actually is participating in ENFORCING FRAUDS, while that kind of fundamentally fraudulent financial accounting system, of course, pretends to be something else, and deliberately misrepresents itself as much as possible, in ways which are as absurd and backward as possible.
An article like the one above I find to be ridiculously superficial in the ways that it mentions one of tiny tips of the ICEBERG OF ENFORCED FRAUDS. Similarly, every other discussion that proposes "solutions" to political problems that deliberately ignores the death control systems is going to be just more bullshit piled on top of bullshit. In theory "We the People" should be supervising and empowering the murder systems that back up the monetary systems, within which any accounting takes place. However, since the vast majority of those "People" have become more and more incompetent political idiots, employed inside of established systems of legalized lies, backed by legalized violence, that they have gradually had take more and more control over their lives, and while they will not do anything politically revolutionary to take back control, the vast majority of people are debt slaves, inside of systems that have become runaway debt insanities, where their roles as employees are pathetic results of that long history of them becoming more and more incompetent political idiots.
The overall existing systems are and must necessarily be based on the methods of organized crime, because those are what actually match human beings living as entropic pumps of energy flows. However, the intense paradoxes with respect to those systems have been the ways that those were done with the most social success through the maximum possible deceits and frauds. Hence, the currently established monetary system based upon governments ENFORCING FRAUDS by privately controlled banks, which public "money" supply is then used by GAAP, as fundamentally fraudulent accounting.
To not have accounting be so extremely fraudulent would require including accounting for the force that backs up the fraud. However, those who were most successful at actually backing up their frauds with force were most socially successful in promoting their bullshit social stories about that, whereby the meaning of pretty well everything was inverted and perverted, such as that the words "money" and "dollar" now mean nothing remotely close to what those words meant a couple of Centuries ago. Similarly, the intense paradox is that despite human beings basically living as entropic pumps of energy flows, the meaning of the word entropy was inverted, and that reversed meaning then ended up being taking for granted by almost everyone, who generally was used to taking for granted the biggest bullies' bullshit world view regarding everything else.
Theoretically, it would be possible to develop a monetary accounting system which endeavoured to become as consistent as possible with the physical science regarding the flows of energy, and which respected the conservation of energy. However, in order to do that, enough people would have to understand that they were tricked into thinking about the concept of entropy backwards, so that they thought in absurd ways, because those ways were what enabled the established systems of legalized lies and legalized violence to enable financial success to become based upon enforcing frauds.
There is no way around the basic underlying issue that the debt controls are backed by the death controls. In theory, both should be public responsibilities, whereby competent citizens supervise the combined money/murder systems that they empower. However, obviously, more than 99% of those citizens are NOT competent, and therefore, the public powers have become more and more privatized, due to the successful application of the methods of organized crime through the political processes, ending up, later, with most employees being employed inside of fundamentally fraudulent financial accounting systems.
Si! If I considered the men behind me en the Ejercito del Norte "Expenses" rather than assets they would not fight for me!
They would Shoot me!
My great grandfather Beauregard C, Calhoun (not his real name) employed such an accounting standard in running his Jamaican sugar and indigo plantation. However his "employees" were (literally) bought and paid for and showed up not only as assets but in the liabilities side of the ledger (having been paid for by Beau's monies or by borrowing. Applying such a method to the modern corporation could make a modicum of sense in that we are all in a sense "debt slaves". However I do not see where the amount paid for the employee would show up? current liabilities, leases, etc.?
Please site a family link.
Sugar Cane in Dominican Republic explained
The better way to look at it is through rent theory.
For example, national income and product accounts (NIPA) show increasing housing value as increasing GDP. Yet, the stock of housing didn’t really change; just that accounting shows a price increase as false GDP.
Rents are costs above the true cost of production, and that leads to higher prices. For example, a large oil company with two XX’s in its name ships a supertanker of crude to Texas Gulf Coast. The accounting goes to Panama, because it is a panama flagged ship. In Panama there is no income tax, and accounting is done in dollars. On the ledger in panama, there are four columns: Americas, Europe, International, and International. The fourth international column is where all the real profits are taken. En-route to Gulf Coast, input costs of crude is increased to Gulf refinery. In this way, input/output costs of refinery are held to a minimum, and thus income is shown as minimal. All the profits are taken in panama, and are hence “off book.”
There are accounting gimmicks to shield income from land rents. For example, a large apartment complex will generate rental income, yet the entire value of the property can be depreciated. But, as we all know, land is fixed and doesn’t depreciate- it usually appreciates. Fiction and stealing is always behind rents, and rents should be taxed. This gimmick funds Leona Helmsley like behavior, where only the little people pay taxes.
The other issue is the cost of money as rents. For example an industrial concern borrows credit from a bank; and said bank creates this credit from nothing. Industrial concern uses this credit to buy equipment, and then it must increase prices to accommodate banking usury. Waste and wear and tear on machines is also included in prices. The total amount of prices means that labor cannot buy what they create; their wages are always priced less than their outputs. Therefore all goods and services are overpriced as rents are taken in the form of paying for the gap. Labor cannot buy what they produce, so something has to break, and usually it is government having to deficit spend; that or people go bankrupt. Finance capitalism is inherently unstable and rent seeking.
Allowing labor to get benefit of their true value, instead of having the money/price system steal and fund oligarchy, would go a long way toward solving problems.
For example, in a proper money system, the gap is dealt with by injection of debt free, this then goes on to become savings, and labor can then start their own business. Competing businesses will then keep prices low and thwart rent seeking. (Think about it, if money were allowed to be wealth and accrue as savings, people would simply band together and take on big business. Also economies would tend to be local rather than international.)
Big businesses are the body parts of many small businesses, where patents and property were busted out by rent seeking. For example, vulture investors will take a company’s pension, and then use it as basis for new loans, to then buy out a company. They then dismember the company, aggregate it into something bigger, and then overturn former pensions. Those who took on low wages in exchange for a pension are screwed in a rent scheme. Big companies then try to monopolize and take rents in prices. Said big companies will work to make TPP like trade agreements and codify their monopoly control forever.
A proper money system would have negative feedback on rent seekers.
Wow. I didn't realize:
There were so many accountants reading Zerohedge.
Accountants were THAT divorced from the day-to-day front-line reality of actually providing service to customers, to get income for the company.
The question and the concepts it is based upon are bogus in so many ways.
I have a question. How can a legal * fiction like a corporation really own anything, including physical stuff like machinery, thus have assets and liabilities?
* legal is just a fraudulent impersonation of real law; real law is the agreed simple common sense rules to try and avoid harming other people and being a decent person to deal with including earned trust.
Only a living being can really own things ** especially themselves; to say otherwise is nonsense, including the fictional societies and fictional laws (statues and regulations) which deluded and psychopathic people assumed we agreed to, but without fully informed consent, or even any consent!
** i.e. collected and modified matter and energy, not bogus, state-granted, monopoly privileges like so-called "Intellectual Property".
Thus accounting for corporations seems to all be fraud, whereas accounting for living human beings is not, provided it ignores fictions.
If living human beings need to work together, this should be as a cooperative not in a corporation, so that all the members have joint ownership and responsibility, not be dis-empowered or corrupted in some hierarchical, psychopathic fiction.
I only barely tolerate corporate documentation I am asked/coerced to sign with the name I am called by (not me), and regard them as fundamentally worthless fictions which I'd rather see replaced by something decent and valid.
Within a Corporatocracy all language in business works to dehumanize and objectify that which is human in opposition to a Corporate entity that subordinates that which is human to a status that is subservient to business interests that are Corporate. This serves to elevate the status of Corporate entities above people that work for corporations.