Let's see -- the bakers buy the flour, the fruit, the sugar, the pans and also pay for the electricity to bake the pies. Then there's rent on the bake shop, a business license, utilities, insurance, office supplies, etc, etc. Let's say it costs the baker $5.00 to make each pie. In order to pay himself, he needs to sell each pie for more than $5.00. The excess amount over the $5.00 in costs is called profit.
Profit is not a dirty word, it is a necessary part of the economy. Without profit, the businessman cannot pay himself. If he can't pay himself, they foreclose his mortgage, turn off his lights and water, repossess his car and he has to go on food stamps. It ain't pretty. However, profits allow him to be self supporting, to pay his mortgage, utilities, car payments, insurance, food, health care, education and entertainment. In other words, his profits not only support him and his family, they also allow many others in the economy to stay employed as well.
So if each pie costs the baker $5.00 to make, he may need to sell each one for $6.50 (as an example) in order to recover his costs and make a profit. There would be no point in selling each pie for what it cost, because then the baker would be working for nothing.
So when someone says that businesses should provide goods and services for free to put "people before profits," you are dealing with an idiot. Profits are absolutely necessary or people suffer economic want and poverty. "People Before Profits" is a rationalization for theft, a form of slavery for the working man, who must work to provide others with goods they haven't paid for.
"People Before Profits" cannot work, because no working person or business or rich guy can continue to produce goods and services without profits. When there are no profits, the business shuts down when the cash is all spent. Then that baker above closes his shop and there are no more pies for anyone, including those who are willing to pay for them.
The moral to this story is that if you want to live in a society of increasing scarcity and poverty, become a liberal and say really dumb things like "People Before Profits."
Whilst I agre with your conclusion your reasoning is a little flawed. Profit is what is left after ALL costs have been taken into account. The wages the baker pays herself is a COST to her business. Profits allow the baker to invest in new plant (machinery) and also provides the business with working capital so she can buy materials, pay fixed costs etc before she can reap a return o the investment when she sells her pies. Profit is vital to any business. The moral question (at least to some) is the amount of profit a company should be allowed to make. Profit, per se, is not in and of itself morally objectionable to most people; it is the amount of profit a business makes AND what is then done with those profits that irks some people.
ReplyDeleteThe wages the baker pays herself is a COST to her business.
ReplyDeleteThis isn't true if the baker is a sole proprietor; it can be true if the baker is a corporation; but even so, profit must be great enough to cover that cost or the business fails.
The moral question (at least to some) is the amount of profit a company should be allowed to make. Profit, per se, is not in and of itself morally objectionable to most people; it is the amount of profit a business makes AND what is then done with those profits that irks some people.
Making a great profit is not immoral, except to the ignorant and the jealous. A great profit indicates a great value that has been added to the economy; confiscation of that profit is theft, and punishes those who add great value to society. Is it immoral for a business to make great losses? Profits are not guaranteed, and those who would steal the profits through excessive taxation and anti-capitalist philosophies are not required to fund the losses of less successful businesses. No one has, or should have, the right to regulate the amount of profit a successful entrepreneur can make. If they did, perhaps Apple would not have made so many great products.