Tuesday, 24 April 2018

ELECTION TIME: No Accountability: The Second Deadly Governmental Sin

by Jefferson Pinto
When I first attended junior high I had six different teachers for six different subjects. We were taking a test in U.S. History and another student broke the silence and said, "Does spelling count?" And the teacher replied, "Of course spelling counts! Why wouldn't it?" Much to the dismay of the student asking the question, his plan to compartmentalize the academic disciplines (English-Spelling and History) failed. Up until this time we had one teacher all day and we couldn't play the divide and conquer game.

"The election banter and smear campaigns are anecdotally entertaining, but bear little resemblance to the facts."

This sort of begs the question, for what are we accountable and to whom? Let me state it simply: You (elected law officials included) are accountable for everything to everyone. We are all accountable to ourselves, our family, our neighbors, our fellow citizens, our government and our higher power. With my first career as an accountant, I think accountability, (or in the case of our elected officials’' lack of accountability) is one of the biggest contributing factors on the road that got this country where it is today.

The election banter and smear campaigns are anecdotally entertaining, but bear little resemblance to the facts. Suppose we decided the winner of the World Series by the cleanliness of their uniforms or the quality of the hot dogs at the concession stand in their home stadium. Nice try. The current baseball score keeping system is pure, simple, and accurate. The first to win four of the seven games wins the series.

"Our elected officials have all the authority and little or no accountability..."

Authority vs. Accountability
In a perfect world there is symmetry between authority and accountability. This is sort of why oral contraceptives for men don't work. "Oh yeah honey, I took my pill." That's nice except when the "system" fails, she is left fully accountable with the baby. Our current political system isn't much different. Our elected officials have all the authority and little or no accountability and we are stuck with the consequences.

Case and point - Term Limits: Our ever growing federal deficit. Here's an idea, how about balancing your check book after you die? What's the point? Then does it make any sense that senators, congressional representatives and the president have asynchronous terms that don't coincide? Senators have a 6 year term, the president has a 4 year term and congressional representatives' terms are 2 years. How well would the game of musical chairs work if elected officials had a reserved chair so they were never left standing when the music stopped? This reeks of the villain named "super delegate." So much for "one man (citizen) one vote."
Compare Apples with Apples
My father used to tell a story of a man who walked into his office building gasping for air. His co-worker said, "Why are you so winded?" He replied, "You'd be so proud of me. I ran home behind the bus and saved ninety cents." His co-worker replied, "You moron, should have run home behind a taxi and saved twenty five bucks." Duh! You only "save" as much money as the next least expensive alternative. Ronald Reagan correctly pointed out the deficiency of the term "budget cut". So, if last years' budget was $100 and this years' budget is $110 and you modify this year's budget to be $105 that is often called a budget cut. WRONG. When you go from $100 to $105 that's in increase folks!

My point: Without out consistent standards it is all but impossible to determine what's going on. It is equally important to use the same standard for making comparisons. The current governmental system of accounting uses a governmental version of Generally Accepted Accounting Principles (GAAP) that in many ways obscures the financial transactions and position of this country. It seems the current use of government accounting is more like Creatively Rigged Accounting Ploys (You can figure out the acronym).

"...a page out of Marie Antoinette’s book and are saying "let them eat cake."

By Way of Example
To keep it simple, let's ignore depreciation. With the current government accounting standards, if you buy a car for $100 and sell if for $40, the net result appears as an increase in the general fund of $40. By contrast with for-profit accounting standards, if you buy a car for $100 and sell it for $40 the net result is a loss of $60.
The Double Standard
During his run for president, Ross Perot said, the cafeteria at his company where most everyone ate had mediocre food at best. The remedy: Eliminate the executive dining room. It was sort of amazing how quickly the food improved. Show me employees that have to fight for a parking spot each day and I'll show you segregated executive parking. This same scenario holds true for our elected officials. Yet it's true they have their own health insurance program that is indeed substantially different (better) than the one for the rest of the citizens (the common folk). They effectively took a page out of Marie Antoinette’s book and are saying "let them eat cake." Folks if the executives won't eat at their own cafeteria, there's a problem. In realty, a "double standard" effectively isn't a standard.
Funny Money?
During a business ethics class my instructor raised the question, "Is it ethical to charge a dehydrated man walking through the desert one hundred dollars for a glass of water?" We all agreed it was indeed unconscionable. Last month Wellpoint Inc. Anthem Blue Cross of California raised its health insurance premiums by 39 percent. That's sort of like paying $3.00 per gallon today and the next day paying $4.17. Chief Executive Angela Brawley said the rate increases are caused by rising health care costs and not motivated by profits. The rationalization is the obfuscation, and raises a healthy skepticism their costs actually increased by anything close to 39 percent. I wouldn't have the unmitigated gall to increase prices that much that quickly and tell such a bold face story to my customers, fellow citizens, at a congressional hearing. I don't know what method of accounting Wellpoint was using but it smells like funny money to me. You know sort of like a funny bone. It's not funny at all, when you hit it you get electric-like shocks of pain up your arm until if feels like it's on fire. There's nothing funny about a 39 percent price increase. The fact that the CEO has no idea that such a colossal price increase would be a problem is indicative of a managerial team that is either operating completely in a vacuum or is in complete denial about the economic realities facing the citizens in this country. I realize the CEO must be accountable to the stock holders and creditors, but they must also be accountable to their customers and the citizens in this country. The middle class is experiencing a famine while the financial services sector goes to banquet. I'm sort of thinking it might be time to shop around for another health insurance company. Don't forget, you can always "vote" with your feet... if you can still walk.
Synchronization and Standardization
It's time for a new era of accountability not "transparency." Yeah I can see my sandwich in the clear plastic bag. I can see it decompose, but I need to know when it starts to decompose and is no longer fit for human consumption. Far beyond financial accountability, we need performance standards: How many people were paid unemployment benefits? How is the quality of our water? How often is your garbage picked up? How long do you have to stand in line to get your driver’s license? How much do you have to pay for your passport?

Term Limits: Albeit a tough pill to swallow, the most effective way to force accountability on our elected federal officials is to synchronize all elections and terms in office with the end of the fiscal year. For example, all representatives and the president have 5 year terms that start on Jan. 1st, runs for 5 years, and ends on Dec. 31st. This "triple witching" would leave no room for speculation. There would be little room for "finger pointing" about previous administrations, Democrats this or Republicans that. The asynchronous terms and elections were originally designed to promote continuity of leadership. I'm willing to trade accountability for continuity any day.
Jefferson Pinto is a retired CPA and holds an MBA from
one of the finer accredited universities in this country.

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