ProfitThe economic downturn has become a distressing reality for most people around the globe regardless of their socioeconomic status or nation of citizenship. It has been an equal opportunity decline for everyone across the board in one form or another as trillions of dollars have been wiped from the earth as prosperity has faded and appears to be a remnant of the past. As we began to navigate through this unfortunate time we were admonished by our President with his message that stated that there will be a time for profits, but now is not that time. I am not sure what made him share this opinion, but I have an idea. Would he rather see companies not running their businesses effectively thereby intentionally wasting money by not managing their resources? I doubt this is the reason or intention of his message, for it is more likely that the truth is found with his likely association of profit with greed, and it is greed that he felt should be sidelined. It is unfortunate that this belief is so ubiquitous in our society because profits are the reason why a business operates in the first place thus allowing it to exist for the benefit of both investors and employees. Profits are a defining metric that determines the viability of a business, if money can not be invested to employ labor that will profitably produce a product then that business ceases to exist and the jobs vanish unless the Government chooses to interfere. A very important thought that should be considered before denigrating profits is that investors can not be forced to invest their money; they can only be enticed, and guess what does that?

Business is not an altruistic entity that exists solely for the employment of people with total disregard for the risk investors assume. It does not even make it to the planning stages without someone willing to risk their money on the endeavor. In essence, there is an implicit contract established that labor will offer their services and investors will offer their capital and if profits are attained then both parties may continue such pursuit. There are a lot of things that have to be done right in operating a business before it can earn a profit and it is here that the true value is represented. It requires a product to be produced that the public will buy in sufficient quantity to maximize the revenues into the company, and all aspects of that product must be planned and managed. It also requires that the entire operation of the company must be applied efficiently to contain the cost for the revenue that is generated. In short, profit is a number that captures the effectiveness of employing people and resources to produce a product by focusing all aspects of operations into a measurable goal that either justifies its existence or not. Making statements proclaiming that now is not the time for profits is dead wrong because it is always the right time for profits since that is what keeps business sharp and focused hence making it as efficient and competitive as possible.

It is the profit motive that differentiates private industry from the Government, and it is the reason why private industry is so much more productive and efficient. The Government does not care about such things as revenues or costs, making a payroll, or any other component of profitability. They simply do whatever they desire and the cost is just something that is the taxpayer’s problem. They have no appreciation for optimizing all the various functions that must happen to produce a profit. It is easy for our Government to tell business to ignore profits because that is the simple world in which they reside. Selling their distorted judgment to the public is all too easy by simply tagging it with the image of greediness. However, as one can see it entails much more than that, it is both necessary and important in the business community to ensure the competitiveness of their companies around the world. We should have a greater understanding for the essential role that the profit motive serves in our society, for it certainly is not about fat-cats getting rich at the expense of the little guy as the Government would have you believe.