Profit

[Serial_Apologist]

Interesting ...

I've never quite understood some's clear aversion to the notion of 'profit' because, if we work, we profit from our labours, whether mental or physical and more commonly both. We all need 'profit' to simply survive. Even if we have kindly benefactors we are gainers of 'profit' whether we are blessed with the brains to realise it or not. Beggars in the street 'profit' from simply begging in the street or they simply wouldn't bother to beg. Retirees are no different ... they have hopefully profited from a lifetimes work and will receive a well-deserved pension(s). I sincerely trust that this will be the case with ER (no, not Her Majesty!) and that he will not starve due to lack of profit!

That's because you conveniently make no distinction between a surplus, which any sensible society makes "for a rainy day", and the surplus firms make to keep afloat in the competitive world in which they have to operate.

[ahinton]

Here, I'm all eyes rather then ears ...

You appear to automatically equate 'surplus' profit with the exploitation of others. I thought the last part of my previous post had rather acknowledged that might well be the situation in some cases though, I have to say, this equation takes a rather one-sided view of 'surplus' profit. Even "excess" profit is not necessarily "a bad thing" if it is then used wisely and benefits others in the process, including charities.

How can an individual or organisation invest and make improvements for the future (to the benefit of others as well as the profiteers) if there is no financial surplus to fall back on? One can borrow from the profits of others, I suppose, but then we (well, at least most of us!) know the dangers of doing too much of that!

It's not 'surplus' profit that is the problem but more commonly the abuse of it or, alternatively, the complete lack of it!

Increased wealth, which comes with its own problems as well as not necessarily making us any happier, does give us the chance to pursue rewarding work/pastimes that may have been previously denied us. Profit and supposedly 'worthwhile' careers/pastimes are not exactly incompatible!

I'd have thought that to be a pretty uncontroversial and relatively unremarkable view but I clearly forgot where I am ...

I don't understand why it is that you seem somehow determined to evade the grasping of certain nettles when in reality I'm quite sure that you're well capable of doing so. Richard Barrett expressed very clearly, I think, the distinction between profit needed to keep going and "surplus" profit required to other purposes. You are at least right to mention that the abuse of the latter is a problem; when a private business, be it a multinational or an SME or anything else in between, allocates disproportionate amounts of its surplus profits to line the pockets of its own fat cats and shareholders rather than investing them in new plant, machinery and other resources, espcially the employees whose work helps to generate that surplus profit, such an abuse has occurred, although I also believe that more or less the same applies to a public business which its shareholders - the taxpaying public - has a right to expect effective use of funding in order to improve and expand the public services that it provides.

I'm not suggesting that private businesses should not pay its serior executives any more than those on its shop floor, offices et al or that they should not pay any dividends to its shareholding investors; it's all a matter of proportion and the judicious allocation of surplus profits.

That said, setting up a business mainly or solely in order to generate surplus profit when it could be set up instead to develop for the benefit of those who work in it and those who partake of its offerings seems to me to be on the road to nowhere worth going - the path not worth travelling, as Frost might have put it - yet Thatcher and her cronies in the 1980s did much to foster the cynical and, frankly, unrealistic notion that whatever it might be, if it was incapable of generating a surplus profit, it was of no use to anyone, regardless of the fact that, despite it being impossible for some operations to do that however efficiently they might be run, society still needs them and would be far poorer without them. This is why what MrGG says on this subject hits the nail firmly on the head; it's not simply a question of the obvious fact that there's a great deal more to life than making money, it's that there's a great deal more to life than making money for its own sake and doing little or nothing else.

[P. G. Tipps]

A VERY HAPPY EASTER TO YOU & ALL MEMBERS, AHINTON!

In response to your post, I fear that, not for the first time, I agree with most of what you say (apart from the irrelevant and unnecessary political references) and am therefore left slightly bewildered by your opening remarks about nettles.

Your good friend Mr Barrett generously acknowledged my fondness for dictionaries in a debate such as this, so that we can all agree on the meaning of a word or phrase central to the discussion before we start entering the debate. If we don't we can all end up thinking we agree/disagree with each other when the exact opposite is the case ,,, a bit like here, maybe!

If Mr GG had simply said (like your very good-self, ahinton) that there are more important things in life than simply making money I would have agreed with him wholeheartedly! But he didn't say that, even if that is what he meant. He said ... 'Making a profit is one of the reasons people have businesses, it's not the only one. Some of us do some things for a financial "loss" because we regard other things as a "gain"'..

Now, one doesn't have to be a mathematical genius to understand that if any business makes a loss it either folds or is rescued by receiving money from elsewhere via the profits of others or by government money largely raised by taxing the profits of others. If not, it is hardly in any position to do all those 'other things' which may have been the very reason for starting the business in the first place.

So my point is that it is often necessary to create wealth (profit) before we can even begin to seriously think about doing all those other things so dear to our hearts. Profit is not only a good thing but often even essential to raw survival. Like everything else profit can be misused and abused but that is surely not an argument against the desirability of profit itself?

I do part company with the otherwise canny Mr Micawber when he suggests making a profit will ensure 'happiness' ... sadly, that blissful state can sometimes prove to be rather more elusive ... but the thrust of the fictional gentleman's argument is admirably sound and correct and his use/definition of the word would appear to coincide exactly with my own!

[MrGongGong]

So I said

. 'Making a profit is one of the reasons people have businesses, it's not the only one. Some of us do some things for a financial "loss" because we regard other things as a "gain"'..

And mr Tipps understood that to mean something like.

'Making a profit is one of the reasons people have businesses, it's not the only one. Some of us do everything for a financial "loss" because we regard other things as a "gain"'.

Now, one doesn't have to be a mathematical genius to understand that if any business makes a loss it either folds or is rescued by receiving money from elsewhere via the profits of others or by government money largely raised by taxing the profits of others. If not, it is hardly in any position to do all those 'other things' which may have been the very reason for starting the business in the first place.

I guess you are only able to imagine doing one thing?

So my point is that it is often necessary to create wealth (profit) before we can even begin to seriously think about doing all those other things so dear to our hearts.

Why wait to do the things that are really important?
They don't necessarily cost money.
This type of thinking can be a recipe for total misery...

"I was going to have a small vegetable garden because i've always enjoyed being outside and like the idea of eating my own vegetables but until I have enough profit I have to stick to my spreadsheets"

[Dave2002]

A very Happy Easter to all

The last few posts have been getting somewhere. One problem is with "surplus profit" - whatever that is. Efforts to maximise profit may also cause some difficulties. In some areas of economic life over production can reduce profits to those who produce - which leads to phenomena such as Brazilian coffee farmers burning the "excess" coffee. Why would they do this? There are several reasons, and they do make economic sense.

One is that if consumers know there is a surplus, they will seek out the suppliers with the lowest price. This then means that other suppliers will not be able to make a sufficient profit as they may not get sufficient buyers. To compensate they may reduce their prices, and eventually if everything happens more or less in parallel, hardly any suppliers will be making a profit - they will all be selling at low, uneconomiic prices, and even selling below the production price.

The situation may be different with monopoly producers, as the producer can then fix the price, and is perhaps more resistant to competitive forces which could tend to reduce the prices, and hence profits. This may lead to a stock pile of production output, and in the case of a perishable product (perhaps coffee) the product would eventually have to be disposed of, so the situation is not so different from the competitive market one. For longer lived products, generally considered non-perishable, stock piling may work for a while, as eventually there may be a demand for the stock piled items, though even this is not guaranteed.
Even monopoly producers might find that it is uneconomic to maintain a large stock pile, and would eventually have to reduce their output. It's only worth stock piling if a future demand can be anticipated.

Now consider drug companies, producing some life saving drugs. The actual "need" for the drugs may be very large, and it may be very difficult to saturate the market. However, if the companies are to maximise their profits they may still have to either restrict supply in a competitive market, or price fix in a more monopolistic market. This scenario is surely somewhat different from the coffee one, as generally coffee is a product which is not essential, whereas for some people certain drugs may be vital to their survival.

[Serial_Apologist]

A very Happy Easter to all

The last few posts have been getting somewhere. One problem is with "surplus profit" - whatever that is. Efforts to maximise profit may also cause some difficulties. In some areas of economic life over production can reduce profits to those who produce - which leads to phenomena such as Brazilian coffee farmers burning the "excess" coffee. Why would they do this? There are several reasons, and they do make economic sense.

One is that if consumers know there is a surplus, they will seek out the suppliers with the lowest price. This then means that other suppliers will not be able to make a sufficient profit as they may not get sufficient buyers. To compensate they may reduce their prices, and eventually if everything happens more or less in parallel, hardly any suppliers will be making a profit - they will all be selling at low, uneconomiic prices, and even selling below the production price.

The situation may be different with monopoly producers, as the producer can then fix the price, and is perhaps more resistant to competitive forces which could tend to reduce the prices, and hence profits. This may lead to a stock pile of production output, and in the case of a perishable product (perhaps coffee) the product would eventually have to be disposed of, so the situation is not so different from the competitive market one. For longer lived products, generally considered non-perishable, stock piling may work for a while, as eventually there may be a demand for the stock piled items, though even this is not guaranteed.
Even monopoly producers might find that it is uneconomic to maintain a large stock pile, and would eventually have to reduce their output. It's only worth stock piling if a future demand can be anticipated.

Now consider drug companies, producing some life saving drugs. The actual "need" for the drugs may be very large, and it may be very difficult to saturate the market. However, if the companies are to maximise their profits they may still have to either restrict supply in a competitive market, or price fix in a more monopolistic market. This scenario is surely somewhat different from the coffee one, as generally coffee is a product which is not essential, whereas for some people certain drugs may be vital to their survival.

I think your message sums up everything that is wrong about the system you describe so comprehensively, Dave - and you haven't needed to mention needs: social and environmental.

[ahinton]

I think your message sums up everything that is wrong about the system you describe so comprehensively, Dave - and you haven't needed to mention needs: social and environmental.

I don't doubt that - but how can that be "put right"? Isn't the very obstruction to the possibility of that enshrined in the very fact of the existence of such a "system" in the first place? - and, given that such a "system" is contrived by those making the drugs, growing the coffee and almost everything else including writing the string quartets, are we not all inevitably hidebound by something of our own creation and thereby precluded from any opportunity of fundamentally overhauling it because we are it, like it or not, albeit in so very many different ways?

[P. G. Tipps]

I don't doubt that - but how can that be "put right"? Isn't the very obstruction to the possibility of that enshrined in the very fact of the existence of such a "system" in the first place? - and, given that such a "system" is contrived by those making the drugs, growing the coffee and almost everything else including writing the string quartets, are we not all inevitably hidebound by something of our own creation and thereby precluded from any opportunity of fundamentally overhauling it because we are it, like it or not, albeit in so very many different ways?

Golly, ahinton, is that your roundabout way of acknowledging the existence of 'human nature' or have I somehow misinterpreted your post ... ?

[Serial_Apologist]

Golly, ahinton, is that your roundabout way of acknowledging the existence of 'human nature' or have I somehow misinterpreted your post ... ?

Or it could be that ahinton means that we're hidebound by a system that prioritises profitability before meeting basic needs as I said before.

[P. G. Tipps]

Or it could be that ahinton means that we're hidebound by a system that prioritises profitability before meeting basic needs as I said before.

Yes, but ahinton suggested that, like it or not. we are hidebound by the 'system' because we are all responsible for it and part of it and are 'precluded from changing it'.

Well, I'm sure ahinton will explain what he actually means if he meant something else from my personal interpretation of his somewhat tortuous wording?

[MrGongGong]

Mr Tipps
You haven't answered the question about this statement of despair

So my point is that it is often necessary to create wealth (profit) before we can even begin to seriously think about doing all those other things so dear to our hearts.

[Beef Oven!]

Mr Tipps
You haven't answered the question about this statement of despair

Can we have your list of commercial high street barber shops that are 'not for profit'?

[Flosshilde]

Well, I'm sure ahinton will explain what he actually means if he meant something else from my personal interpretation of his somewhat tortuous wording?

As your "personal interpretations" are usually misinterpretations (ref your 'interpretation' of Mr GG's comment about doing some things at a loss & others for a profit) I expect that ahinton does mean something else. If he has any sense he won't waste time explaining, again, to you what he meant as it was clear the first time.

[Flosshilde]

Can we have your list of commercial high street barber shops that are 'not for profit'?

What makes you think that MrGG has such a list?

[Beef Oven!]

What makes you think that MrGG has such a list?

His beard.