Jamesian Philosophy Refreshed

"Given how ubiquitous and central the CBO has become to government policy, it's surprising how recently it was created [in 1974]....The CBO is responsible for analyzing the effects of spending and of commitments to spend on the long-term federal budget. As the federal government began to rely on deficit spending in the 1980s, the Congressional Budget Office was anointed the official keeper of budget statistics, along with the OMB. This was formalized in 1985, when the rising public anxiety about mounting deficits -- a foreshadowing of much higher levels of concern after 2008 --le to the passage of a bipartisan bill to keep the deficit in check. "...One of the core functions of the CBO is to estimate how much the government will spend on health care and Social Security. Though the CBO is staffed by nonpartisan economists and accountants, its analysis is based almost entirely on guesstimates about the future rate of inflation, the future rate of growth, and the future...

The prohibition of pyramid schemes does not amount to a prohibition of all multi-level marketing (MLM). Tupperware lawfully sells storage and serving products branded with its name and the well-known “burp” on the one hand. It also lawfully offers to some individuals the right to offer its products to other potential customers in return for initial entry costs (in effect, purchasing a Tupperware franchise) on the other. That much is uncontroversial. Nor is the sale of a Tupperware franchise a security requiring registration as such. Where controversy begins to enter the picture is when these individuals are themselves empowered to sell the right to sell the product to third parties, creating another downstream level, and where the second level retailer not only thereafter gets a commission from the sale of the company’s products herself; she gets a share of the downstream profits: she shares in the proceeds of sales made by individuals she recruited to be sales people. This k...

The other central document of accounting is an income statement.   This represents a period of time, rather than the moment-in-time of the balance sheet. If all is working properly, the income statement should give investors an idea of the underlying processes that have made the present condition of the company what it is.   We won’t spend a lot of time on the income statement, simply because much of what we might say about it we’ve already said. The issues that arise in compiling an income statement look familiar to anyone who understands the latest balance sheet.   For example, the expenses part of an income statement should indicate the costs of goods sold (COGS), that is, the costs directly attributable to such of the goods that have gone out the door in the hands of a customer over the past year or quarter, separately from all the other costs, especially the “general and administrative expenses.” The issues that arise when valuing COGS are the same is...

To our earlier discussions in this blog of the various items on a balance sheet we must add this: many important liabilities and assets – important, that is, for the future of the company – never get on the balance sheet at all. The rules governing what may be kept “off book” generated a good deal of controversy associated with the demise of Enron at the turn of the millennium. Enron, you may remember, created special purpose entities (SPEs) and supplied these off-book entities with Enron stock. Then it dealt with those entities in ways that spruced up its own books.   The SPEs could be kept off book, under then extant rules, so long as 3 percent of their equity belonged to someone who was neither Enron nor an Enron “related entity.” The 3 percent figure may seem modest under the circumstances. But the point of it was that someone else had to be willing to put their own investment at risk. Indeed, as a matter of corporate law throughout the English speaking world, a ...