Trainwreck of Economic Logic
Study the logic in the following exchange from this doctor's blog:
Several years ago a wise man said something to me
that really impacted my life. He was a Pharma drug rep, but prior to
that, he was an accountant for a financial service company. One day,
during his old career, he had an epiphany of sorts when he was
conversing with an investment banker. The accountant lamented to the
banker, "How come you make so many times what I make?" The banker
responded, off handedly, "Because I make money and you cost money."
"Because I make money and you cost money." Wow!
Several weeks later, this accountant left his company and went into sales so he could "make money."
He
told me that story over dinner one night and I had epiphany of my own.
There are 2 types of people in the world: those who make money and
those who cost money. People that make money will always be worth more
than those who cost money. Most of us fall into the cost money
category. Think about it. The dichotomy really has truth to it. Movie
stars, investment bankers, top professional athletes, even top doctors
and lawyers, all validate their incomes because they produce wealth for
others as well. They make money. Nurses, medical assistance,
accountants, teachers, police officers, fire-fighters, in fact most of
the rest of us, are in more of a support role and don't really bring in
the bacon. Not to say that our jobs are not important. They are. It is
just that we cost money, rather than make it.
...
Michael Rack, MD
said...
Rian,
some physicians create money, and some cost money. Many proceduralists
(eg invasive cardiologists) create large sums of money both for
themselves and the hospital where they do the procedure. Specialists
tend to create money, while primary care doctors tend to cost money.
This is one reason why specialists make more money than primary care
docs.
Now is your inner economist nodding her head sagely at the above wisdom, or recoiling and wretching in horror at the one-dimensional take on consumption, investment and economics in general?
I'm not going to Fisk the posting, but I'll just say this: if your accountant is costing you more money than she is earning, saving, or generating, then either you have a rubbish accountant or you have difficulty tracking your costs and benefits. Of course, sometimes the latter is caused by the former, but that's another story entirely.