Sound as the Pound: Currency, Nationlism, and Our Tribal Tendencies

One of my fellow MSA students made the observation that "it would probably be easier to just use one international or world wide monetary unit." I agreed. Unfortunately, people attach an inordinate value to symbols of their affiliation, such as flags, high school mascots, and yes, even currency. It is quite idiotic, but we are tribal creatures; it requires no more effort on our part to be born to any ethnic group than it does to be born in any country. No status is earned, thus none should accrue. Bigotry comes in many flavors, but if I should make such an accusation of patriotism in this post-September 11th world, I would immediately be branded with a variety of unsavory labels. But why should I love my fellow man more or less because of where he was born - or where I was?

Is this rhetoric too high-flown to be of interest to the accounting profession? I don't think so. Accountants deal with numbers, which know no loyalty, owe no fealty, and brag of no nationality. Introduce currency, and things become complicated. Not because conversion is difficult - it isn't - but because currency valuations fluctuate with factors such as supply, thus the conversion factor never remains the same.

This problem has been addressed elsewhere with the introduction of the euro. Europeans don't enjoy the same level of self-absorption that Americans do, having long since realized that economics is not a zero-sum game (Smith, 1904), and the erection of tit-for-tat trade barriers only results in an economic holocaust ("Protectionism," n.d.). Fifteen European nations have adopted the euro, helping to create a more predictable economic environment for business, and eliminating a heap of headaches for European accountants. While the British have resisted the push to the euro, the pound continues to lose ground in currency trading, as reported in tomorrow's news (Errington, 2008). (Yes, tomorrow's news; the report was posted at 12:02 am, Saturday, December 13, in the U.K. Love those time zones.) Brits are now plagued with parity problems, most notably expats but prospective vacationers as well. Additionally, the dollar hasn't been able to buy a euro for some time, and American currency continues to weaken.

References

Errington, U. (2008, December 13). Pound won't even buy single euro. Retrieved December 12, 2008, from Sky News Web site: http://news.sky.com/skynews/Home/Business/Sky-News-Analysis-The-Winners-And-Losers-As-Pound-Crashes-To-Record-Low-Against-Euro/Article/200812215178645

Protectionism in the interwar period. (n.d.) Retrieved December 12, 2008, from the U.S. Department of State Web site: http://www.state.gov/r/pa/ho/time/id/17606.htm

Smith, A. (1904). An inquiry into the wealth and fate of nations (5th ed.). London: Methuen and Co., Ltd.

Note on Adam Smith's An Inquiry Into the Wealth and Fate of Nations, Fifth Edition: although Smith's final edition was originally published in 1789, the version edited by Edwin Cannan and published in 1904 is one of the most readily versions available today.