Platt Perspective on Business and Technology

Reexamining business school fundamentals (reconsidered) 9: reading between the microeconomics lines

Posted in reexamining the fundamentals by Timothy Platt on March 5, 2017

This is my ninth installment to a series of brief, single issue sketches in which I reconsider each of a set of core issues that I first addressed in this format in a 2010 series. See Section II of my directory: Reexamining the Fundamentals for that earlier related series, and in particular see my earlier same-name counterpart posting to this one as included there: Reexamining Business School Fundamentals – reading between the microeconomics lines.

I wrote that 2010 counterpart to this note, in terms of what types of data are collected, how it is organized and processed into functionally informative and useful knowledge, and how it is developed into organized reports. And I focused in that, on how businesses and organizations in different countries, operating under their own locally established national generally accepted accounting principles (GAAP), can and do differ in detail, and even in ways that would be codified as required in their national legal systems.

This becomes important for any organization that operates trans-nationally, and with operations that are located in multiple countries, each with their own separately and individually drafted law regulating how businesses organize and report their financials and to whom. And it becomes equally important for businesses that are based entirely within single nations, when they enter into supply chain agreements with partner businesses that are located in other countries with differing laws regarding this, and whenever their involvement with them calls for accurate and consistent reporting of financial and accounting data, and its organized presentation as that might be used by more than just single enterprises in these systems – and where consistency in what is reported and how, would be required.

As I have noted repeatedly in my earlier postings in this 2017 series, I offer it at a time of greatly increased challenge to global opening up and connectedness, and to global flattening, where that was an actively advancing and largely unopposed trend in 2010. And I return to this basic, fundamental set of issues here, with that sociopolitical and socioeconomic shift in mind.

We are currently going through a period of pull-back and retrenchment, and a period of uncertainty as that concomitantly arises from this. And I would argue that that raises the level of importance in arriving at single essentially universally accepted and agreed to GAAP standards and processes and certainly where accounting practices need to be reconciled across international boundaries and between enterprises that locally, within their own areas of legal jurisprudence, would be required to follow differing GAAP processes. This, I add, is a type of perhaps technically dry detail that might not catch the raptly attentive interest of a general public, but it is one that at least should be deemed centrally important in actually drafting the operational and strategic infrastructure of any well-drafted free trade or similar agreement – that participating nation-based businesses can all in effect speak the same language here.

But I re-approach this topic here in this reconsiderations series, from a slightly different direction, and with the issues of confidence and trust in mind. Right now certainly, it is vitally important that people who need to communicate and work across our dividing boundaries, have a common accounting and microeconomic language and a commonly held framework for understanding basic microeconomic data and findings, so they can work and communicate together without differences there, adding to challenges faced.

A smooth, predictable, and essentially consistently accepted path forward in doing business, and in carrying out other socioeconomically connecting activities, engenders an increased level of basic trust. And that trust facilitates a mutually agreed-to resolution of differences and disagreements and uncertainties. When the marketplace, and for goods and services, and for ideas and understanding are clouded by doubt and suspicion, that flexibility is the first thing to go.

I am going to continue this series and its ongoing installment-by-installment narrative in a next posting to it in a few days, where I will reconsider the issues of macroeconomics, microeconomics and the gap between. And in that, I will build my next step of discussion here, at least in part from my 2010 counterpart to that posting to come: Reexamining Business School Fundamentals – macroeconomics, microeconomics and the gap between.

Meanwhile, you can find this and other related postings and series at Reexamining the Fundamentals, with this series offered as a new Section VII in that directory.

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