Evil Capitalism and the Profit Motive
- 28 June 2009 by Author 0 Comments
Evil Capitalism and the Profit Motive
By Richard Larsen
Published – Idaho State Journal, 06/28/2009
A seemingly accelerating trend with Americans is to look with skepticism and a jaundiced perspective at business, capitalism, and the profit motive. In spite of efforts by some to rewrite history, those of us who are students of history recognize the critical contribution of the profit motive in the emergence of America as an economic power. The fact is, capitalism and the profit motive created a global power out of a rag-tag collection of British colonies.
Business and the profit motive have turned us from an agrarian to a high-tech, producing and consuming nation. All of us are dependent upon business and the profit motive for everything we do every day. From the manufacturer of the bed we arise from and the alarm clock we wake up to, to the toothpaste, shampoo, and comb we use in the morning. The beverage we imbibe to give us a kick-start in the morning and the vehicle we drive to work are products of once small businesses that have grown sometimes to global proportions. If any of those products or services we depend on get too expensive, we start shopping for cheaper replacements.
Most of us even work for a small business driven by that evil profit motive; those firms across the fruited plain that market and sell products, provide advice and services, and fill the needs of people from all walks of life. They pay us to fill a specific function within the company to help them service their customers more efficiently and cost-effectively. And most of them pay another 30% of our salaries or wages in the form of benefits (which Congress also wants to tax) to help retain quality employees. And according to Arthur Brooks of Syracuse University an amazing 89 percent of us are very satisfied or somewhat satisfied with our jobs with those evil profit-mongers.
As a matter of fact, according to the Small Business Administration, small businesses represent 99% of all employer firms, employ half of all private sector employees, pay 45% of total U.S. private payroll, generate 80% of new jobs annually, create more than 50% of nonfarm private GDP, comprise 97% of all identified exporters, and produce 26% of the known export value to our GDP.
Yet every time new governmental regulation is written by which companies must abide, the costs increase. Whenever the government increases taxes on companies, the costs increase again. In order to stay in business, they must pass those costs on to their customers, or find other ways to reduce costs like eliminating jobs. That’s why it makes no sense to tax companies since we all end up individually paying their taxes for them via increased prices for their products and services.
And it’s not just small business that makes our quality of life what it is, but that evil big brother of small business; BIG business. What an evil concept, to sell things that people want and need at prices that most people can afford (after all, they want to sell as many of their “widgets” as possible). And they do so with a profit motive in order to share their success with those who ponied-up the capital (investors, silent partners, share-holders) facilitating their business ventures. Remember, if they over-price their widgets, they price themselves out of the market. If they under-price their widgets, they’re not going to remain viable, and will have to lay off all their employees and won’t be able to pay all those taxes the government is requiring of them. Then their employees will have to hope they can find another widget company to replace the job they lost.
The media, Hollywood, and even some of our fellow citizens bash “big pharma,” big oil, or big retailers like Wal-Mart. But in reality what do those “big” evil companies do? They provide needed products and services at reasonable prices, enabling our national economic engine, and our quality of life, to keep chugging along. They have limited control over much of their expenses, but to be able to continue doing what they do, they charge a modest profit to ensure their viability in future years, and allow us to have a job!
Right here in the Pocatello area, over 30,000 jobs are supported by these evil profit-motive-driven companies. That includes over 600 jobs at On Semiconductor, 350 at Simplot, 550 at Union Pacific Railroad, and over 400 at Wal-Mart. The Bureau of Labor Statistics indicates there are 2,346 employers in Pocatello. The Private Sector includes 2,233 firms, which make up 95.18% of companies hiring in Pocatello
Too many of us rely on fallacious typecasts and stereotypes of what business and the profit motive do. Rather than relying on our empirical observations of their contributions to our quality of life, we allow the media, Hollywood, or anti-business kvetching to taint our perceptions. The profit motive, capitalism, and the free-enterprise system (which frankly we haven’t truly had for nearly 70 years because of intense governmental regulation), are the backbone to our economic system, and as such, are the key to future growth and prosperity individually and collectively. Government encroachment and increased regulation stymie future potential growth, our quality of life, and our job security.
Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, and is a graduate of Idaho State University with a BA in Political Science and History and former member of the Idaho State Journal Editorial Board. He can be reached at firstname.lastname@example.org.