Friday, February 06, 2015

Externalities and the $200 Big Mac

According to one economist, a Big Mac should have cost $200...
 
 
Accountants, the Real Revolutionaries
 
January 23, 2015

accountant drawing

Could accountants help save the world? Credit: simpleillustrations / Flickr Creative Commons

There's perhaps no job more mundane in our imaginations than accountant. Even if it's what your mom thinks of as a good, solid career.

But how many kids – who tend to imagine themselves as future Tom Bradys or Beyonces – harbor dreams of working for Ernst and Young?

Funny thing, though: Accountants may be poised to change the world.

Modern business and governments have evolved to use one particular kind of bookkeeping. In today's world, though, accountants might start taking other factors into, well, account.

Jane Gleeson-White, author of author of Six Capitals, or Can Accountants Save the Planet?, points to externalities as the major costs not currently included in the bottom line.

A Big Mac, for example, would actually be $200 if all the costs were included in the price tag, according to a study by one economist.

How is that possible?

For starters, Costa Rica cleared large swaths of land a few decades ago to make room for cattle farms. But as time has gone by, the country realized that clearing the jungle meant a lot of unforeseen environmental costs.

"The cost of that should be factored into a Big Mac, not just the cost of the tomatoes and the meat that is bought," says Gleeson-White. "The real cost of producing that meat is environmental destruction and various social costs."

But economists have suggested a new way of bookkeeping for companies and governments – one that would account for all of these external costs as well. Some entities have already gotten on board – from France to the sporting goods company Puma.

"Puma published the first environmental profit and loss account in 2012 ever in the world. What it attempted to do was to take account for the carbon it uses, the water it pollutes, right down the supply chain – right down to the rubber trees that are grown in Asia that are used in their sporting shoes," explains Gleeson-White.

At the moment they're using that information to appeal to customers, but costs to the environment may soon start affecting price tags everywhere.

 

Sumber:  http://blogs.wgbh.org/innovation-hub/2015/1/23/accountants-real-revolutionaries/