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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (67352)	9/8/1999 1:26:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Mike, Regarding the new changes to the GDP calculations and perhaps corporate earnings in the future, I'm in the middle on this one. I think there ARE software and R&D assets that are not being properly accounted for by either corporate accounting rules or GDP. Though I think in the grand scheme of things it's not that important to the values. I also think there are clear differences between software and R&D expenditures and spending on physical assets like land, plants, office buildings, furniture, etc... Leaving aside the normal depreciation issues, the purpose of some if not much of the spending on software and R&D is not to accumulate more assets or capital, it's to destroy the existing assets or those of your competitors with something new or better. So in many ways the assets are not accumulating they are just being replaced. Examples: A new revolutionary high blood pressure drug will destroy the intangible asset value of the prior version, not add to it. The same can be said of new operating systems, inventory packages, trading software, and other in house software that is developed once but distributed throughout the organization. In addition, much of this spending adds NO business value and is an acknowledged or unacknowledged waste. On the other hand, even though spending on buildings, land, and other hard assets occasionally turn out to be an error too, some if not most of the cost is recoverable. Wayne