Accounting for Infrastructure Service Delivery by Government: Generational Issues

Infrastructure service provision by government creates huge distributional issues about service availability and performance over time and the relative funding burdens borne by successive generations of consumers across time. But providing financial disclosure on these issues through inter-generational accounting pre-supposes that accounting measurement is both generationally neutral (temporal neutrality) and does not legitimate any particular pattern of distribution. At the very least, accounting measurements of service provision costs should possess the attribute of distributional fairness. They should not bias the inter-generational allocation of cost or funding burdens. We argue that the forced application of inappropriate commercial accounting concepts of asset valuation, depreciation and capital maintenance does produce significant generational bias. More flexibility is required to produce the necessary accounting measurement attributes for financial disclosure on whether government has discharged its continuing accountability for inter-generational equity in burden sharing. We discuss three conceptual issues and illustrate the need for flexibility by proposing an alternative 'flow of obligations' approach which does not require reference to valuations of community service resources or arbitrary cost allocations under depreciation.     

Efficiency-Wage Unemployment and Intersectoral Wage Differentials in a Heckscher–Ohlin Model

The paper analyzes a Heckscher–Ohlin (HO) model with efficiency-wage unemployment (henceforth HOe model). We show that all HO results have close HOe analogues. Additionally, conditions are derived under which immigrants might not only find employment for themselves but also raise employment for natives. Moreover, we analyze the ranking of countries with respect to their rate of unemployment, showing that this ranking may be reversed as countries move from autarky to trade. All results are clearly linked to factor intensities and the pattern of intersectoral wage differentials.     

Ethical breakdowns

Companies are spending a great deal of time and money to install codes of ethics, ethics training, compliance programs, and in-house watchdogs. If these efforts worked, the money would be well spent. But unethical behavior appears to be on the rise. The authors observe that even the best-intentioned executives may be unaware of their own or their employees' unethical behavior. Drawing from extensive research on cognitive biases, they offer five reasons for this blindness and suggest what to do about them. Ill-conceived goals may actually encourage negative behavior. Brainstorm unintended consequences when devising your targets. Motivated blindness makes us overlook unethical behavior when remaining ignorant would benefit us. Root out conflicts of interest. Indirect blindness softens our assessment of unethical behavior when it's carried out by third parties. Take ownership of the implications when you outsource work. The slippery slope mutes our awareness when unethical behavior develops gradually. Be alert for even trivial infractions and investigate them immediately. Overvaluing outcomes may lead us to give a pass to unethical behavior. Examine good outcomes to ensure they're not driven by unethical tactics.     

Medicare bundled payment program: meaningful risk and limited reward

CMS's Bundled Payments for Care Improvement initiative is accepting applications from healthcare provider organizations that would like to participate in the one of four alternative payment models under the initiative. Three of these models-the All MS-DRG Hospital Model, the Global Hospitalization Model, and the Global Episode Model-target care delivered in an acute care setting. Hospitals contemplating participation in one of the models should weigh the benefits and risks of participation; it is likely the significant risk and limited financial benefit associated with the program will dissuade most providers from participating inthe initiative.     

Ambulance Economics: The Pros and Cons of Fiscal Stimuli

The world economy has had a heart attack and the Keynesian ambulance has come to the rescue. How are the present and the future affected by debt-financed fiscal stimuli policies? What are the practical problems? Seven arguments against fiscal stimuli are critically examined, including Ricardian equivalence.     

The Theory of Knowledge Spillover Entrepreneurship*

abstract The prevailing theories of entrepreneurship have typically revolved around the ability of individuals to recognize opportunities and then to act on them by starting a new venture. This has generated a literature asking why entrepreneurial behaviour varies across individuals with different characteristics while implicitly holding constant the external context in which the individual finds herself. Thus, where the opportunities come from, or the source of entrepreneurial opportunities, is also implicitly taken as given. By contrast, in this paper an important source of entrepreneurial opportunities is identified – knowledge and ideas created in an incumbent organization. By commercializing knowledge that otherwise would remain uncommercialized through the start‐up of a new venture, entrepreneurship serves as a conduit of knowledge spillovers. According to the theory of knowledge spillover entrepreneurship, a context with more knowledge will generate more entrepreneurial opportunities. By contrast, a context with less knowledge will generate fewer entrepreneurial opportunities. Based on a data set linking entrepreneurship to the knowledge context, empirical evidence is provided that is consistent with the proposition that entrepreneurial opportunities are not exogenous but rather systematically created by investments in knowledge by incumbent organizations.