Thursday, April 7, 2011

Ship of Theseus as a Metaphor for Replacement Cost

Looking at the Parthenon being restored, it reminds me of another Greek concept: the ship of Theseus. It is essentially an identity dilemma: If you take care of something, but are forced to replace parts due to decay over time, is that object still the same? This is something I’m sure archeologists wrestle with when they rebuild replica parts to restore murals or structures for which the original parts are long gone. Even if they use the same material, artistry and methods, the original has lost something ineffable.

This concept has been extended several times with several unique spins, my favourite being Plato’s carriage, where Socrates and Plato exchange parts on their carriages until finally “Socrates’” carriage is made entirely of Plato’s original carriage and vice versa. At what point did the identity of the carriage change?

In a vain attempt to bring all my philosophizing back into the MBA realm of finance, it’s sort of interesting when you think about it in the context of the idea in accounting principle of replacement cost or M&A. While accounting will capture the physical quantities contained within a company’s finances, there also exists value beyond the sum of its parts in the same way you would expect an M&A transaction’s synergies to broaden the qualities of the combined entities: that seemingly ineffable quality.

3 comments:

Anonymous said...

Loving these latest posts. Love seeing your thought process and breadth of knowledge and so interesting to combine it with your experiences in Greece.

Joshua Wong said...

Thanks so much! Your comment is really appreciated!

usman jin said...

The objective of the first stage of this quest is to destroy the three generators on the ship. They are in the hangar, cryo lab/|cryo storage, and robot assembly....
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