In praise of profit

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Filed Under General on Dec 1 

As the public spectacle of the increasingly bizarre Occupy movements continues to unfold before our eyes, one overriding theme is becoming apparent:

Big Business (and their relentless pursuit of profits) is bad, evil, and inherently untrustworthy.

Is that really the lesson we want to take away from this mess? The same old clichés, presented for the same old reasons? How trite. How tired. How wrong.

Let’s take a closer look. There is no question that this whole Occupy situation has the anti-Big-Business crowd in a huff. This has been a veritable field day for the anti-business faction to jump into the public fray with their hand-wringing cries of how, once again, Big Business has stuck it to the everyday little guy: 99% vs. 1%. Forgive our student loans. Income disparity.

But is it true? Are all large businesses automatically bad? Well, hold onto your spotted owl and consider the following:

Big Businesses are the economic engines of any civilized society. They make possible all the things that make our lives enjoyable, safe, and convenient. The car companies make products like the Ford Fusion and Honda Accord—reliable, safe, affordable personal transportation, easily serviced anywhere with readily-available inexpensive parts. How would life be if instead of a few major car companies, there were 87 different, small-scale car companies, each with costly, unique designs and specific parts, not mass-produced in the 100’s of thousands for low-cost economies of scale, but instead, produced at high cost in the low 1000’s, available only in a restricted geographic location? How would you like it if you couldn’t drive from Boston to Ft. Lauderdale, because the parts needed to fix your car would be unavailable once you got past New Jersey? Or how would air travel be affected if we couldn’t fly to Europe or South America or the Far East because each region used an incompatible jet fuel?

Big Business makes life-saving medical technology seem routine today. The pharmaceutical companies deliver one life-saving or life-enhancing product after another, made possible by tremendous research and development expenditures—funded by profits—and armies of scientists spending untold hours in the lab. Take a look inside your grandparents’ medicine cabinet next time you’re there. They have products that keep their blood pressure under control, lower their cholesterol, control their diabetes, relieve their arthritis, keep their heart beating regularly—all unavailable only a short time ago.

Large, multi-national companies heat and air-condition our homes and workplaces at astonishingly low cost without our giving it so much as a second thought. Do you stop and thank Honeywell, GE, and Carrier every time you step into your crisp 68-degree office on a sweltering 95-degree day? No, chances are you complain to your facilities manager that you feel a little draft coming over and could he please re-direct the ceiling vent.

Big Business makes it possible to produce and distribute vast quantities of food all over the world. No Coca-Cola? No Kellogg’s Corn Flakes? No Purdue chicken? No Campbell’s Chunky Soup? Tough to imagine. In reality, America’s food industries are so efficient and produce so much that we actually regard some foods as “unworthy” of consumption.

Do you acknowledge Mitsubishi and Sony when you play the latest Blu-ray disc on your big screen TV? Do you tip your hat in amazement to those computer/tablet/smart phone companies whose millions of apps have made Star Trek’s 1967 science fiction fantasies into today’s take-it-for-granted reality? You probably don’t even notice. Without profits to fund those development efforts—and hire the necessary people—none of that would exist.

Profit enables banks to lend money, so people can buy houses, cars, and finance college educations.

If a bank’s expenses are higher, they have to pass that added cost along to their customers, in this case in the form of higher interest rates on loans, higher fees, and lower interest rates paid out on savings accounts. It does impact people directly. Misguided legislation like the Dodd-Frank act reduces those companies’ profit and increases their costs. All because a few self-appointed Democrats feel they’re G-d and they feel they’re qualified to decide—totally arbitrarily—who is entitled to make how much money.

Profitable companies enrich our lives and raise our standard of living. What if Apple hadn’t been able to get low-cost financing a few years ago–from a bank!—when they were struggling, and they weren’t able to develop the iMac which led to the iPod which led to the iTouch which led to the iPhone which led to the iPad?

A profitable bank lent them the money and Apple made profits and developed great products that make our lives better, while they (Apple) made big profits to develop more great products that we’ll enjoy (and come to regard as essential, like iTV) in the near future.

The conveniences and advancements that we’ve come to expect—indeed, demand—are possible because of the competitive nature of capitalism and the profits that companies put back into research and development in their efforts to win new customers and capture market share. It’s easy for people to focus on highly-publicized executive salaries and bonuses, but those don’t really amount to anything in comparison to the amount spent on market research and R&D for new products, and the risks any company takes when entering a new market.

Big Business (and Small Business, too, for that matter) employs tens of millions of people in this country. Their suppliers employ millions more. Their associated service/support and transportation/warehousing industries employ millions more. The ripple effect of these workers’ personal spending in every imaginable tangent business is incalculable. Big Business is the engine that keeps the world working and moving.

Profit is the fuel. Without it, everything grinds to an instant and permanent halt. It’s not for Barney Frank or Chris Dodd to say how much money you’re entitled to make from your hard work, ingenuity, and creativity. Their responsibility is to stay out of the way (once there are some common-sense—not punitive— regulations in place), and let you decide where and how to spend your money. The good companies will succeed and profit; the bad ones will fall by the wayside. The consumer determines the winners and losers, not the Government.

Change that and our economic system collapses. Have a nice day.

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