C is for Clay Balls

Inventory. Tax records. Rations of bread and beer to the workers. Storage of food during the winter. The earliest civilizations were built on keeping track of things.

Accounting via clay tablet, tokens, cuneiform. Photo from the Oriental Institute at the University of Chicago

Before data warehouses. Before the invention of the steam engine, calculus, banking, or even the ox-drawn plow, somewhere between the wheel and the pyramids, the Mesopotamians created tracking systems.

We tend to think about the earliest people as hunter-gatherers. But nomadic hunters are the antithesis of foragers. Gatherers figured out eventually that if they stayed in the place with lots of bushes, bare survival turns into surplus food. Domestic the cow rather than chasing after it, figure out how to plant barley, and you have farming. Farming leads to population growth, and suddenly you have 40,000 people living in the Fertile Crescent, building cities and empires. You need armies to protect your grain, which requires the farmers to give surplus to a central authority to pay soldiers. Now you’ve invented taxation and a centralized administration.

Photo of broken clay ball with tokens inside, from the Oriental Institute, @8000 BCE.
Continue reading “C is for Clay Balls”

B is for Banking

Banks are like good hygiene, like brushing teeth and wearing underwear. A thankless resource, though someone needs to do it. People don’t like bankers, but they need them. People don’t like bankers because they need them. I explained why in the second post I ever wrote. But how does banking work?

Gringott’s Vault at Warner Bros. Studio tours, London

What Is a Bank?

Essentially, banks take your money and give it to somebody else. You could put your money in a sock under the mattress, but it’s a bit safer to choose someplace with big steel vault doors and complicated locks. Like Gringott’s. A bank might hold a Philosopher’s Stone, the royal treasury of the Lannisters, or the wealth of the InterGalactic Empire (who had Storm Troopers handling security). Modern banks spend huge sums on strong encryption systems–online vault doors–to keep your money safe.

Suppose your cousin Marvin wants to open a business, a combination sushi and ice cream store. Hey, they both need ice, right?! That’s Marvin’s business plan. The bank gives your money to Marvin as a loan.

Two problems here. First, Marvin may need more dough than your puny deposits, so the bank has to convince more friends and gather enough deposits in order to give out loans. Secondly, you may need some of your money back before Marvin can attract enough customers. He’s trying–he’s got the slogan: Come for the Eels, Stay for the Sprinkles! This is called a problem of liquidity.

Continue reading “B is for Banking”

A is for Accounting

You think accounting is boring? Propaganda! It’s the circulatory system of everything. Follow the money.

If you’re here, get ready to find out the interesting things about accounting. There will be little technical accounting explained, other than to describe it in plain English. Accounting involves a lot more philosophy than you might think. Want proof? Zero comes from the Hindu idea of the void, of the essence of balance, of the Dark Side, if you want to get pop-culturey about it.

The first office mug I ever bought.

Accountants invented writing, money, international commerce, the middle class, and spreadsheets. When Genghis Khan would take over a city, the first people he’d send in would be the accountants. The Egyptians, the Babylonians, the Romans, the Tang dynasty–most of the huge empires and great civilizations thrived because of their accountants.

perhaps “E is for Embezzle”?

Truly, as Max Bialystock says to Leo Bloom in “The Producers”:

You’re an accountant! You’re in a noble profession! The word “count” is part of your title!

Get ready for 26 topics on the history, sociology, fun facts, and weird stories about Accounting, my noble profession.

Continue reading “A is for Accounting”