If pollution costs were incorporated into the prices we see on grocery store shelves, our buying habits would change. But under the current economic model, external costs like pollution are dismissed and passed on to future generations. This is a distortion of the market and it must be remedied.

The prices of goods and services need to reflect the financial, ecological and social costs of their production, use and disposal. The price of food needs to include the environmental impact of long-haul transport, animal waste in the water supply and government compensation for diseased animal culls. The price of a car needs to include the cost of oil spill cleanups, road construction and maintenance and the protection of petroleum supply lines.

Using full-cost accounting, environmentally-conscious producers would no longer be undercut by those concerned exclusively with the bottom line. Entrepreneurial energy would drive the creation of new ecologically-friendly products, local and bioregional economies would prosper, and the Earth would be a cleaner place.

One of the most common “When I was a kid” stories goes something like this: I had to walk two miles to school. Even in the depths of winter. And it was uphill both ways.

Embellishment aside, walking to school is a basic rite of passage for countless children around the world. But these days, horror stories of child abductions have many urban and suburban parents in such a state of anxiety that they insist on driving their children everywhere. So, even if the school is just down the block, everyone hops in the minivan for the five-minute drive. Five times a week, twice a day, vehicles queue and idle in front of schools throughout North America and beyond.

We all knew there was an emotional and psychological toll to living in fear. Now we have to consider the environmental and economic costs. What does it cost to live in a society where you can no longer let your child walk to school?

Public treasuries around the world are smarting from the effects of tax havens – shadowy millionaire safe houses that attract foreign capital with strict banking secrecy and low or non-existent tax levies. And it’s getting worse. Thirty years ago there were only 25 tax havens, now there are at least 63. Every year, 150,000 tax haven companies spring up. The investigation into Enron after its collapse revealed that the company had 881 offshore subsidiaries, 692 of which were in the Cayman Islands. US Commerce Department data show that in 2002, American companies stashed $149 billion of profits in 18 tax havens, up 68 percent from $88 billion in 1999. To top it off, the US general accounting office revealed that 61 percent of US corporations didn’t pay any federal income tax during the boom years of 1996 to 2000.

Some tax analysts use these figures to argue that corporate income tax be abolished altogether. With a liberalized, laissez-faire global economic system, nothing can stop the sheltering of profits. But why should corporations get a free ride? Under a full-cost accounting system, they would no longer be able to skip out on pollution clean-up costs that are passed on to people who actually have the courtesy to pay their taxes.

I challenge all accountants to join me in publicly burning our CPA certificates and quitting this lousy profession. We’re as bad as economists. The underlying general ledger that we all use omits externalities. Sellers of goods or services are rewarded for what they deliver, and for avoiding and minimizing their costs. Costs to the commons, future generations and faraway people are not paid.

Accountants happily continue in this lie. Ask them about externalities and they’ll respond with a yawn or “So what?” A corporation is a public enterprise, granted an astonishing array of powers, operating internationally and permanently with rights of personhood and limited liability. These powers are granted under the assumption that they benefit the whole society. As such, financial statements pretend to represent the costs and benefits to stakeholders, i.e. society. But being deliberately incomplete, these statements are nothing but artifacts, maintained by those with an upper hand, to justify allocations of society’s resources benefiting themselves. Any talk of accounting reform needs to consider this.

The ledger is not complete until all the externalities are published.

Todd Boyle