Pluralistic: The long sleep of capitalism's watchdogs (26 Jan 2024)

Today’s links The long sleep of capitalism’s watchdogs: “Self-regulation is to regulation as self-importance is to importance.” Hey look at this: Delights to delectate. This day in history: 2004, 2009, 2014, 2019, 2023 Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading The long sleep of capitalism’s watchdogs (permalink) One of the weirdest aspect of end-stage capitalism is the collapse of auditing, the lynchpin of investing. Auditors – independent professionals who sign off on a company’s finances – are the only way that investors can be sure they’re not handing their money over to failing businesses run by crooks. It’s just not feasible for investors to talk to supply-chain partners and retailers and verify that a company’s orders and costs are real. Investors can’t walk into a company’s bank and demand to see their account histories. Auditors – who are paid by companies, but work for themselves – are how investors avoid shoveling money into Ponzi-pits. Attentive readers will have noticed that there is an intrinsic tension in an arrangement where someone is paid by a company to certify its honesty. The company gets to decide who its auditors are, and those auditors are dependent on the company for future business. To manage this conflict of interest, auditors swear fealty to a professional code of ethics, and are themselves overseen by professional boards with the power to issue fines and ban cheaters. Enter monopolization. Over the past 40 years, the US government conducted a failed experiment in allowing companies…Pluralistic: The long sleep of capitalism's watchdogs (26 Jan 2024)

Leave a Reply

Your email address will not be published. Required fields are marked *