Views on economics: profit, what is it good for?

„The only real security that a man can have in this world is a reserve of knowledge, experience and ability.” – Henry Ford

To answer the title question, a functioning economy is what profit is good for. Efficient allocation of resources. Satisfying human needs and human nature. Being rewarded for entrepreneurial risk. This is just for starters.

Just as prices are essential signals in the economy, so is profit. Profit tells the entrepreneur whether he is effective at delivering to the consumer. If you make a change in business, and profit increases, this tells you the change was good. If it decreases, it means the change was bad. Profit is what makes the business concentrate on customers and also increase efficiency so that more, better, cheaper goods are produced. How do you know a factory runs efficiently without profit?

The proof is again in communism - factories build stocks of bad or unnecessary products, did not make enough wanted things, had no idea what to produce, in what quantity and weather the production process is efficient. In fact all communist countries tried to imitate prices from western economies, but failed miserably. They would have failed even worse without trying to fake a semblance of market.

Big government economies often managed to survive because of the market, which constantly tries to repair the damage socialist ideas cause through taxation, regulations, and inflation. The market self-repairs, re-connects, and re-organizes itself — spontaneously.

Business is seen by leftists as bad as opposed to the oh so altruistic governments or charities. The latter, apparently, help people. This is a very short-sighted point of view. All of the increases in standard of living come from industry and commerce, and it’s the poor who benefit the most from cheap quality goods and services. The rich could always afford what they wanted.

Charities can redistribute some wealth from those with some surplus to those with some need. But all that wealth, goods and services people value, must be created first, otherwise what can you redistribute? Air?

Poverty is the default state of human existence, has been for thousands of years. Wealth is not found in nature; it must be created, and this is precisely the role of entrepreneurs. Everything we consume must be produced beforehand, as efficiently as humanly possible. And this is where profit is essential.

Where would we be without them?

Washing machines or vacuum cleaners improved the lives of millions of people by drastically reducing the amount of labor required keep a house clean The impact of business is enormous, even though the intent of said business was to make a profit.

I often hear stupid slogans like people before profit. This is meaningless. It has no metrics, no clear way to define and evaluate it. In a free market you profit exactly by providing what people want. A company that makes no profit goes out of business, fires every employee and no longer provides goods and services. An economy without profit does not accumulate capital. An inefficient economy cannot provide enough low cost products for the previously mentioned people. You get profit by putting customers first.

How can you put price on a human life? You can't really, but in certain circumstances, saving a human can have a clear cost. And if you try to save everyone no matter the cost, you soon run out of resources.

Must be a good businessman

Another slogan you should not make profit off of [ insert left-wing sacred cow here]. Why not? If you can provide better service for the same money and make profit, what’s the problem? Oh profit takes money from providing the services? Not really. Profit motives make the money better used. You can have someone spend a ton providing crappy stuff, and not make a profit. How is that good?

Profit is good. Profit is great. Why begrudge someone who offers quality goods a profit? They deserve it! Business success is something to be admired.

The fact of the matter is, in all economies resources are limited. If they are not properly allocated, if a lot is wasted, it will lead to problems. And wishful thinking and empty slogans will not allocate resources efficiently.