Teach how accountants fail to report investor overpayments

Teach how accountants fail to report investor overpayments

Unlike the the term "economic rent", used by economists to describe the cash required to bring forth an investment, economists have no name, and accountants do not report, "surplus profits". Surplus profits are a complementary concept that describes the cash received by investors in excess of their incentive to invest. Surplus profits can be many times greater than the original investment cost to explain how inequality arises in a way not recognised by economists like Piketty. See attachment


Politicians could win government by reducing tax to democratise the wealth of nations. This counter-intuitive approach is practical become economists do not understand how investors get overpaid in a way not reported or identified by economists like Piketty. The author has raised millions of dollars by offering time limited property rights for investors in films and farming leases. Governments have demonstrate the concept on a larger scale with Build, Own, Operate and Transfer (BOOT) projects.

This sounds like a particular aspect of a more general point that is fundamental to understanding how the economy actually works but avoided in the mainstream. It was addressed recently by Mariana Mazzucato in her book on "The Value of Everything". She addresses the point by making the distinction between "adding value" and "extracting value" with the exercise of monopoly power e.g. by pharmaceutical companies as an aspect of the latter.

How would this be relevant to a master's course?

My answer to Mike Joffe is that to my knowledge this point is not taught in ANY course. Might anyone one have evidence to the contrary? If so please cite or copy and paste.

Shann, the point you are making is really interesting - I'm not doubting that. And I think that teaching economics students at masters level about basic accounting is a good idea. If done in this context, on reflection I think your point could well be included.

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