Right Accounting Keeps Human Reality
Within Business Balance Sheets and P/L

Right accounting does away with the days when simplistic thinking that anything that reduces cash wages and benefits must increase productivity and profits. Right accounting represents a commitment to transparency and respect for all aspects of the economy within a global system without artificial lines or theoretical limitations of property responsibilities.

Hourly wages and benefits are subtracted from net inventory sales revenue to determine gross profit margin in traditional accounting. The lure of slavery is the absence of cash wages and the simplistic expectations that therefore profits would soar. However, economic historians are still unable to demonstrate Confederate era slavery was profitable. Slaves are still subject to the same requirements that their cost of living be paid which reduces overall profitability. Slave productivity is also notoriously low.

Contemporary adjustments such as outsourcing to extreme low wages places or hiring fugitive or illegal immigrant labor still can not overcome the fundamental problems. Folks will not, and cannot work for less than they require to support their family since that is the reason that they work at all. Focusing upon only the cash wages paid and ignoring everything else ignores the global realities and costs involved. Right accounting includes those costs of the local situation and the additional costs of the global transport to evade them.

Currently class expectations are built into the accounting categories. Blue collar hourly workers paid for precise production with their wages (including benefits) being deducted from the net sales revenue to determine gross margin, a major factor in an enterprise being able to keep their bank loan and survive. This makes squeezing these workers to the max the most important factor in overall long term success.

Commission salespeople are paid a percentage of the revenue they are able to generate by turning over inventory to result in cash receipts. No connection to production at all. Their job is to liquidate inventory at the best terms available from customers or the market. If sales are slow and inventory high and old, even a discounted sale is better than no cash receipts at all. It is only when inventory is sold that profit or loss can be calculated and cash returned to the enterprise to begin the next cycle. Such sales are more psychology and personal relationship than anything involving real costs, benefits or right accounting principles. The recent real estate and stock market bubbles and financial Ponzi schemes illustrate this.

White collar, middle class salaries are part of general overhead and operating expenses which are allocated to the entire gross margin of the enterprise. As long as enough blue collar workers are being squeezed hard enough, that gross margin category can be spent upon whatever top management likes. Traditionally, that maintained good middle class incomes, but now as more and more of these middle management functions can be programmed into computers, it is the perqs, playthings and personal pockets of the Board and top management that picks up most of the loose cash of the enterprise.

Investors buy shares expecting returns through cash dividends and share price appreciation. A poor quarter and investors may well sell out to chase a better quarterly result. This led to all sorts of tricks to inflate quarterly results, until the bubble burst and the reality behind the traditional accounting tricks started to be exposed.

Bankers are expected to loan out the stored up wealth in the bank vaults to earn interest to pay to their depositors and to run their operations. Successful bankers realize, always throughout history, that if they write more loans they make more money although they only need to pay depositors the same interest rates. Eventually, the bankers get carried away with what they can make for themselves loaning out other folks’ stored wealth and when the percentage growth rate collapses, they are unable to call enough loans to collect enough cash to satisfy depositors’ demands to return their wealth.

In normal times, business runs on percentage rate magic. If an enterprise can borrow $1,000 @ 5% interest, then it only costs them $50 to have that $1,000 in their checking account as good as cash. That gives them 20 to 1 leverage so that they can spend $950 that year and still pay the interest on their loan. In order to keep that loan they need to show accounting statements showing they were profitable or at least that their gross margin was good. If times go bad, then they must repay the bank $1,050 as soon as the loan is called. This is the heart of the traditional boom and bust business cycle.

Right accounting starts with a few simple principles. The Planet Earth is constantly revolving and everything upon it naturally must be a cycling or recycling or else it is piling up costs and problems. The local horizon is the limit of what can be conveniently seen and dealt with although it is only a small slice of the entire globe.

Right accounting recognizes that cities grow and develop wealth on the basis of their ability to successfully export beyond their local horizon. That wealth enables their residents to purchase import goods from the rest of the global economy which is the requirement universally for growth and development.

When business tries to reduce costs and obtain resources and input materials through exploitation and coercion global trade becomes global occupation and exploitation. Local communities are responsible for the well-being and development of the local environment, Planet Earth topography and population. Business exists in a locale to provide for the needs within that local horizon within the global system of mutual beneficial trade.

Blind percentage rates of increase can not be sustained. They result in exponential consequences that eventually become destructive and catastrophic. Stable state systems can continue forever. Percentage rate increasing systems must find new and unknown territory to exploit to survive. Such growth enterprises are operating on the model of mold colonies and cancer cells and their success brings about their collapse. Right accounting takes these dangers and puts them into its accounting principles.

Businesses are responsible for the positive development of their surroundings and their communities. They are entitled to tax credits for what they do for their communities in terms of jobs, benefits, civic improvements and community resources—and taxes to pay others to provide what the community needs that they do not. Right accounting involves noting all costs and connecting them to their localities where they live as part of the global economy of myriad local horizons all part of the same globe.

Is this fearsome ‘socialism’ giving rise to business flight to safer low-tax havens? Ultimately, it is simple global reality. The so-called free market model has its purest example in piracy and other forms of violent exploitation (such as the old British maritime profit empire). The goods are stolen so only the sales are highlighted and the costs are left to the rest of the world. Right accounting simply recognizes these realities and seeks to begin to develop transparent recognition of real costs and values.

Under capitalism, all wealth is sent to banks for safekeeping to avoid security fears and earn interest to counteract inflation. This is a reaction to the aftermath of the recovery from the Black Death when surviving workers demanded a living wage. As wages rose, the landlords who owned the harvest raised the price of food, creating unlimited and continuing inflation.

Percentage rates are used as the simplest mathematics to reduce everything to the same standard—pennies of a total dollar. However, this ignores the reality of scale. This assumes everything is a small, local matter and ten percent increase is an absolute good and all you need to know to keep ahead of the inflation. Clearing a dime of profit upon a dollar’s worth of business is very different from making one hundred million on a billion dollars through individual sales globally. Right accounting seeks to include scale and locality in business planning and not just the simplest of mathematical tricks.

Fear of inflation and other horrors which might steal one's wealth drove all of society to put their wealth in bank vaults and rely upon bankers to make the loans and credit to run all financial transactions. The bankers’ job is to decide who gets the loans backed by bank deposits as business capital for the next while and whose loans get called from fear that money will be demanded back by depositors.

Even the best run, most successful business must fold if its bank loans are called back rather than renewed. Accounting principles determine survival of all capitalist businesses. Clearly the fight over how to control the financial statements based upon accounting principles is a big money game.

Bankers look at a company's most recent financial statements when they make the fundamental decisions whether a business survives, expands its capital loans or is ordered to return its capital and go out of business. These decisions are made upon the fundamental basis of fear or greed. Right accounting uses objective Planet Earth reality instead of fearful bank clerk myopia.

The fear is that something will go wrong, and the bankers will be blamed for the resulting loss of wealth under their management. Out of fear, bankers develop financial statements to protect themselves in case of catastrophic results. Everything in banker accounting is based upon fear of possible retribution for unexpected losses.

The perspective of avoiding fearsome problems causes many fundamental accounting assumptions. Employees might do things humans do and thus are a cause of fear. Machines are hard material that can be seized and sold at salvage auction, thus a cause of relief. Whatever doesn’t produce asset or profit entries that can be taken off the books and ignored is better than being there to maybe cause problems.

Stockholders and investors closely examine financial statements to check a company's most recent performance. They want to know if they can make more from this investment or by dump it for another. Everything is geared to forcing the business to produce financial statements that look better than others to survive at all. This encourages sharp accounting tricks rather than right accounting and honest reporting.

Eventually, every successful capitalist system is undone by the lack of oversight over their bank clerks. All that wealth lying around which the smart banker could use for just awhile, make far better profits on and return before anyone was the wiser is just too tempting. Success encourages the watchdogs to nap. Greed excites everyone to reach for the greater profit despite the risks.

Once fear is eclipsed by greed things run amok. The first successful risk shows the way to more and greater profits. This offers opportunities for everyone in the know, watchdog and banker and market trading insider. Together they are off the races to see who can pile up the greatest possible profit while they don’t watch for problems.

This is always and in all ways the result of a capitalist economy. Right accounting is an antidote to these problems by putting actual conditions in place of sharp accounting tricks. The real conditions are the people involved, the local situation and the Planet Earth background to it all. But first a quick look at the laws governing banker based capitalist accounting principles.

The 3 laws of capitalism are:

1) Operate on borrowed money

2) Show a profit on your accounting spreadsheet

3) Keep both and more from bankers and investors.

Which business survives and which is destroyed depends mostly upon the Generally Accepted Accounting Principles (GAAP) used to determine whether your accounting spreadsheet is good or not. Those principles see workers as difficult and expanding costs, while tangible objects are useful, valuable, and credit worthy assets.

These GAAP rules are now a technical contest on which accounting scams have already blown up and which is still available for the next sharpie to use. They all are based on antique assumptions and obsolete principles that still operate to make big profits for either the bulls on the upswing or the bears when the new scam bubble bursts.

Marx assumed the boom and bust of capitalism was exhausting and would give way of its own absurdity. The global stock markets have given this process new and expanded life. Boom brings general prosperity; bust brings great profits for the insider in the know who can make the right short sale before the rest of the market figures out the collapse.

The leverage of stock market deals adds huge profits to these swings, far greater than is possible from any concrete business deal. The accounting principles are now tied to the magic leverage of the securities markets for even bigger bubbles since they bring such lovely profits to insiders when they burst.

Right accounting first and foremost must ground financial statements into Planet Earth

reality to prevent this driving markets while intoxicated by greed. The cash available through markets and bank credits overwhelms any and all reasonable business principles. As with any out of control addict to intoxication, the only possible correction comes when they are forced to realize the catastrophe befalling them.

Global warming and environmental issues should be that insightful catastrophe; however, for market types only a market catastrophe seems to draw their attention. Now that the Crash of ’29 and that of ’87 are seen as great profit opportunities for those in the know, it is even more difficult. But Pres. Bush43 seems just the Captain of the Titanic type to race the Ship of State to the necessary catastrophe.

Right accounting is all about making sensible business decisions that succeed for ongoing profits here and now that also contribute to a human reality on Planet Earth that avoids immediate extinction. The first insight is to realize that good business is part of its local community. The multi-national global system was developed to focus upon abstract profits while being exempt for all local regulation.

A global corporation needs to be a good neighbor to every locality where it operates, including within its own corporate organization. If the human quality of life is included as a profit concern, then all business is on an even footing. The small family business has the most intractable of internal quality of life issues since they are an expression of dysfunction family dynamics.

Business rightly must be recognized as the means to supply ALL the needs of society which include the employment of its citizen, the development of its localities, and the extension of policy and principles into the daily situation everywhere under the control of society. The false dichotomy of local control and nasty government interference is the result of bad feelings from prior catastrophes.

Most of the current conservative Republican opposition to the Federal government is an emotional carryover from the first U.S. Civil War. The rest is a misunderstanding of what government truly is—the organization of citizens to provide for their universal needs from their total resources. Government needs to operate better, not just be reviled for being imperfect.

Right accounting starts by realizing the best local situation develops in light of what makes sense within any and all local horizons within the context of our shared Planet Earth and its limited and interconnected resources and environment. We have used the perspective our local situation is so small we can do whatever we want without affecting the whole Planet—until now the consequences have re-appeared as environmental pollution and global warming.

Every person has similar needs and requirements to live a decent and improving life for themselves and their family. Ignoring some folks because they aren’t your family or friends doesn’t change that. Folks left out of the available society have no stake in that society and easily become agents of destructive tendencies afflicting that society. Whether it is crime, suffering, terrorism or simply lack of active support and contribution to society—the results are bad.

Right accounting starts by recognizing it is essential to be aware of all the people and all the local topography within the local horizon. What you ignore is free to do things you can only imagine with results you must fear since you know nothing about them. It is simple logic although it apparently challenges simple self-interest.

The problem with even the best current accounting principles is that each business is assumed to exist in isolation. Resources stolen from other ecosystems which then are abandoned, destroyed and exhausted, pollution dumped into the global atmosphere or water table have no cost associated to them. Like pirate booty they are accounted as all profit and little cost.

The workers are seen not as citizens and valuable assets, but only potential difficulties and escalating costs. Machinery is seen as valuable since it is a tangible asset, easy to think of selling in bankruptcy. The fear of people and the greed for useful inanimate objects is a personal and social problem.

The solution to these individual problems is the appearance of a universal crisis sufficiently terrible and immediate to make that common enemy change our mental gears to working together to survive. Each of us, each community and each level of government makes their own choice when they notice the catastrophe impending and begin to seek workable solutions NOW.

Right accounting is common sense for a human global community no longer able to continue as they used to in prior millennia to have a chance to survive this century. As conditions deteriorate it will become more universally recognized.The difficulties of late realization will have to be balanced with the advantages of clearly seeing the past disappear and the impending future demanding change or death for us all.

The next big step will be accepting those who claim conservative or fundamentalist objections as the least able and most terrified and overwhelmed of all. They are the preschoolers crying for their parental relief. They need loving care once they can be brought out of their tantrums and relaxed into sensible attention.

Changing to an integrated global system of real cost accounting requires putting a true fair market value cost for everything currently ignored—and generally dumped into costly and destructive Planetary pollution. If it does not move in an eternal cycle, everything that comes into a business and everything it dumps out has a corrective cost belonging to it.

Mapping those cycles and the points where garbage of one kind or another piles up is getting easier as the results pile up. What comes from mines and oil wells and destroying local ecosystems is also a cycling (and recycling) cost point that must be accounted for. As available resources become more scarce, the right accounting of them becomes simpler.

The current focus upon petroleum reserves is engendering resistance in ever greater extent and intensity. This is a form of right accounting putting a higher value than previously recognized upon not using these resources. Another step comes as the need of the Globalized economy to an abstract percentage rate increase each quarter conflicts with the limited scale of the Planet Earth.

Ten percent of a small family enterprise is a simple tax rate for ancient times. Ten percent of a massive economy of over one billion population is an acceleration of pollution and destruction of an unsustainable and catastrophic disaster unfolding. Scale matters. Human scale is what we humans notice. Planet Earth scale is all the more we have access to overall. Without scale we are industrializing the Sorcerer’s Apprentice for immediate destruction.

Right accounting is where the cost of cleaning the polluted exhaust must be deducted from the profit accounting. It is an absolute expense that must be paid to survive. Running away from that future becomes less and less reasonable as the Planetary pollutions starts to blow back upon us from where we hoped to escape.

As China is learning, those costs will have to be paid to maintain a livable environment for society. As they are also learning, thae new technology to prevent pollution is a source of high wage jobs and economic profits. Right accounting leads quickly to a better economy as well as a sustainable culture. It is the intelligent choice which pops up as the stupid ones fail and disappear.

What makes for so much resistance if the green economy is such an improvement? Society benefits, individuals benefit, but those currently in positions of power would have to accept and allow change. They just don’t want to do things any differently. They will not allow any change voluntarily. However, as China is learning so painfully nowadays. Just plowing ahead in the “old” ways will not survive much longer at all.

These polluting, fossil-fuel guzzling, pollution spewomg ways are not very old. Petroleum was of no little use to anyone before the kerosene lantern of the 19th century. That industry was replaced by Edison’s electric light. The Petroleum Empire decided that never again would they allow new technology to interfere with their business model.

What else is required for right accounting? Beyond costing waste exhausted and the destruction involved in ripping off, repackaging and transporting Planetary resources to market sales? Recognizing that social policies and human purposes are the goal and motivation for all business activity begins right accounting.

Abstract percentage rate profit is just a simplistic mathematical technique to judge small scale enterprise. Put into a global stock market it is a dangerous intoxicant leading to terrible catastrophes on all levels. Accounting principles and business finance need to be grounded in the human scale realities that they serve.

The key realization is that the point of a business enterprise is to employ people to supply the material needs and desires of human society. Outsourcing is maximized in terms of getting as close as possible to slave or fugitive labor without cash cost. It is also without concern with the global warming implications of such transport to avoid producing goods where wages are high and to maximize selling goods where the customers have cash to spend.

Business runs on sales revenues. Sales revenues come from consumer purchases. Consumers buy things with the money they earn working in the economy. If business operates to minimize as much as possible their labor expense they are also reducing their local customers’ income. The replacement for that recently has been the creation of vast fortunes built on financial paper derivatives sold on the global market as a wild Ponzi scheme financial bubble.

The long term alternative is right accounting with human scale considerations and Planet Earth perspectives of one sun shining above each one of us and local horizons in our exact topography controlling everything. The abstract number intoxication just runs faster and faster until it crashes, every time always.

The original economists, the Physiocrats of pre-revolutionary France worked out that the best way to maximize the cash in the economy available for the elite to pocket was to keep the cost of the necessary requirements of their workers as low as possible. The necessary cost subtracted from the money in circulation is the cost for sustaining the population of workers who require a certain level of wages to maintain the standard of living they expect for them to keep working.

To have a human economy you must serve human needs. If you avoid the masses for the purity of numbers, you end up living in mad fantasy. Getting rid of the workers leaves the people poor and starving. They survive anyway by interfering with the economy of those still having goods and money. Survival for the economy requires peace with all the population. It is just too cheap to cause disruption today to simply ignore the have-nots.

In an economy requiring percentage rate increases, these masses are your essential new customers. Bringing them into the productive economy is the only way to keep growing. As the global economy grows throughout the Planet it is held hostage to those on the outside who only have enough resources to buy a one-way ticket and some high explosives.

Global capitalism, says just use transport to ship goods from other places where labor is cheaper and dump your local workforce. However, those distant workers don’t buy your products. One of the tricks is to have the goods sold to the government sector. This puts the sales revenue as sovereign national debt which can be sold to foreign governments in exchange for their worker’s wages.

Not a problem at the point of sale; however, the entire sales revenue is converted to debt plus accumulating interest that keeps growing and looming as a future catastrophe. The whole system is tottering already. It is being driven to its logical conclusions by the current mix of incompetence, avoidance, ignorance and corruption.

This is all the simple result of an economy built upon market speculation of stocks and bonds. Stocks based in accounting spreadsheets of companies minimizing costs and maximizing government sales. The bonds are the government debt instruments used to finance the sales which support the stock prices. A self-aggrandizing government-military-industrial complex is already driving policy over a cliff in headlong folly.

Stock and bond prices run on market sales of those securities. Like all capitalist business those sales are run on borrowed money which requires a showing of profit on their accounting spreadsheets to continue in business. Lowering interest rates and capital gains taxes improves the profit spreadsheets and allows for a faster turnover of securities market sales.

This whets the appetite for greed that demands more profits at a faster rate. This encourages war, drugs and monopolies to get new profits more and faster. However, every success just brings craving for even more next quarter. Bubbles are inevitable in this market environment and collapses are also unavoidable.

Right accounting and anything human scale is the way to survive, but the drunk on a bender isn’t interested in surviving. What happens to the real national economy and the real territory of the nation? Terrible things, but that is not part of current GAAP since it does not show up on corporate profit spreadsheets.

Right accounting merges with humane public policy. To do so would only require a fair market value cost accounting of the basic needs of the residents in every locality where a corporation does business. The population needs for employment, health care, decent housing, security and opportunity are clear and essential costs. Someone has to pay them or the society deteriorates. The costs and problems of social decay are mounting daily in an exponential math of destruction.

If a business can extract profitable sales without responsibility for the society there, they are encouraged to be robbers in the current system. Pirates bring finished goods to market without paying for the production of those goods. The fundamental understanding of what makes for a survivable economy has been known for centuries. Right accounting simply adds rules against theft, robbery and piracy to modern global business.

What makes the difference between a dangerous slum and a thriving tourist hot spot? Jane Jacobs in her classic book demonstrates it is little shops and pleasant streets policed mostly by the self-interest of the shopkeepers. In good neighborhoods with pedestrians on the streets and basic social control (including occasional police intervention) business thrives and society blossoms.

Preparing the ground, from a neglected or war-torn Beirut, Baghdad, North End Boston or Detroit requires major effort. The same type of major effort required to prepare raw ground to become fertile and productive fields. Lousy conditions promote decay and destruction. Improving conditions bring rebirth and hope. The question is bringing reasonable business and judgment or just more expensive munitions to the situation.

How does the situation change? By a change in the thinking and expectations of the citizens, that’s the only thing that works. Right accounting is the rational way to lay out in accounting principles what works and what makes sense. It’s simplicity is obvious. Include everyone in the local community. Accept the needs of all the people as the needs and policy of the government. Insist business provide for its own profit by meeting the needs of the community.

Totally simple, right accounting is just a change in perspective and an inclusive attitude backed up by a profit accounting and tax policy that makes the old, isolated perspective expensive, profitless and highly taxed. It follows quickly and easily once it is noticed.

Impossible, those in power are too rigid, too entrenched and too corrupt with too many military supporters for anything to change. Right accounting also involves keeping track of how such things change as war and hurricanes and drought make the old ways impossible to continue. The essence of the modern is the modus hodie, the way things are today.

The first indigenous person to take over leadership of a nation (Evo Morales of Bolivia) adopted the program he campaigned on within eight months of his election. Told by John Stewart (25 September 2007) on his Daily Show (Comedy Central Network) that in the U.S. elections are rigged against individuals without major money backing, Morales said, “Why don’t you change that?”

With each passing year the choice for each of us becomes clearer and clearer. Either YOU learn to live by the principles or opportunities that have sustained human societies for millennia or our fossil fuel powered, petrochemical bloom of the last few centuries will take us with it into oblivion within these next few decades.

What can YOU, an individual do? First and foremost reclaim your place as a person living free upon Mother Earth under the sunshine above. Be aware of the cycles of the seasons, the moon, and the changing hours of daylight through the year. Renounce the quest to get 10% more without any notion of what that means. Look at what you are doing with fresh eyes. Right accounting is seeing with your own eyes what is going on in the world around you NOW.

Do you really need to be burning fossil fuels at over 1000 degrees to keep yourself comfortable in your home at 72 degrees? Raising fuel efficiency standards for our autos could eliminate the need to import petroleum from the Middle East. Right accounting means not buying into the obsolete science and engineering of the fossil fuel engine lobby.

In a disposable society every thing and every one is expendable. Everything you throw away becomes part of your karma and it will come back to haunt you soon. Right accounting simply puts that into generally accepted accounting principles whether there is a recycling tax yet or not.

Life in quaint villages with Internet connections, or hip urban neighborhoods can even reduce the need to own a fossil fuel automobile at all. Consumer interest and demand controls a capitalist economy, you vote powerfully every time you buy something. In Thomas Friedman’s Flat World of Global competition, YOU are exposed to every threat anywhere upon this entire Planet Earth. Knowing about those threats is what Right accounting is all about.

Right accounting is the first step of simple awareness combined with personal reflection. The rest will appear to you later. What about right now? Turn inward, feel your own inner reality. Dwell with Self and Source. That inner calm is the fastest available route to meaningful solutions both personally and globally. Try it! It works! Right accounting involves bringing yourself right within your Self first.

The dice-face patterns (Pythagorean computer images (gestalten, Eidos) are a guide for each person to understand and live together under the same Father Sun, Mother Earth within their local horizon. The horoscope, I Ching hexagram, dice oracle are all techniques of this Right accounting universal perspective. A novel and preferable lifestyle is available to us each and all.

Right accounting brings the principles of the water cycle (the interaction of sunshine with the local topography of the Planet Earth) into financial statements. It is financial profit accounting for the long term, not just the next quarter. Right accounting is part of the entire world view and perspective of all Indigenous people or more generally—the folks who have survived on this Planet more than a few millennia.

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