Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

If you pay peanuts then you get monkeys

13 February 2023

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Recently, I noticed an article that struck me as weird: BBC impartiality at risk because journalists ‘lack understanding of basic economics’. Why would impartiality be based on more knowledge? In my view, the opposite is true: the more you know, the more you’ll be biased.

Auditing, my former profession, used to have three cornerstones: (1) expertise, (2) independence, (3) impartiality. Today, it mentions five: professionalism, integrity, objectivity, expertise & diligence, and confidentiality (NBA). Being an auditor is a well-paid but unattractive job (eg, FD-2023).

Journalism is the reverse of auditing: an attractive but low-paid job. Why would a BBC journalist need an understanding of economics? At the Financial Times, it would make sense. In my view, the only requirement for any journalist is asking the right questions (eg, how, what, when, where, who & why).

My brother and I did not want to continue our father’s business. Neither did my daughter and son want to be an auditor. In their view, auditing is boring (eg, only numbers). Most of the time, it’s not about numbers but why bother convincing them? It’s still unattractive (eg, work-life balance).

The common mindset for auditors and journalists is open-mindedness, which is related to impartiality. Stressing the high remuneration of auditors, is more likely to result in closed-mindedness (eg, greed). However, offering low salaries will not attract skilled employees (see blog title).

In my view, most of the audit education is hardly relevant for the audit profession. Moreover, the important stuff is taught very late. Hence, the solution is simple: accept any academic education and then teach them about (i) auditing and (ii) internal controls (eg, methodology, techniques, tools).

Obviously, more auditors will (eventually) result in a lower remuneration. To me, this seems like a blessing in disguise because companies are already waking up and have started complaining about the ever-increasing audit fees (eg, Bloomberg-2022).

Several decades ago, a job was attractive when it provided a high remuneration. Those days seem gone (eg, Bloomberg-2021, Brookings-2021, Time-2021, WEF-2021). Young people still want to be rich but they seem to prefer trading in crypto currencies over working hard in a decent job.

There are domains in which expertise is not possible. Stock picking is a good example. And in long-term political strategic forecasting, it’s been shown that experts are just not better than a dice-throwing monkey.”

A 2011 quote by Daniel Kahneman (b.1934), “an Israeli-American psychologist and economist” and 2002 Nobel-prize winner

Daydream Believer (1967) by The Monkees
band, lyrics, video, Wiki-band, Wiki-song

Note: all markings (bolditalicunderlining) by LO unless in quotes or stated otherwise.

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