» posted on Sunday, September 20th, 2009 at 4:01 pm by Andy D
Of Government and Men: Industry + Profit = Good
I intended this series to be about fundamentals. This week’s post is no different. It’s good for our country when business (both large and small) make money. To me this seems obvious, but to a number of politicians, I believe this may be a new concept. Because of that, if this sounds a little simple, I apologize ahead of time.
For the most part, we benefit as a nation and as a community when businesses make profits. When American oil companies make a profit, it’s good for us. When pharmaceutical companies make a profit, also good. When Wal-Mart has a good year, it’s very good. Remember, these companies do what they do because they are in the business to make money. You don’t go to work expecting to donate your time to your employer. You expect to get paid. Why should the oil industry be any different?
Why is it good? When Wal-Mart makes money, their stock goes up and their stockholders make money. Typically, we think of stockholders as stuffy rich white guys who smoke cigars in their personal libraries at home. In some cases this is true. However, teachers unions often invest in successful companies. State Employees Unions do as well. As do many 401 k and retirement funds. Not to mention the employee that has worked at a store their entire career and has been able to purchase stock.
When companies make a profit, they are able to expand their businesses. These expansions create jobs. You might be tempted at this point to say, “Ah! But what if those jobs go overseas?!” Fair point. However, if they are going overseas for reasons we can change, then we should make changes to make the U.S. more appealing for business. For example, instead of punishing business through tax laws, why not make our tax system more appealing to business? If more businesses are here, that creates a larger tax base and higher employment.
When we talk about free health care or windfall profit taxes on any business, we are forgetting that these businesses exist to make a profit. Why are we punishing this? The American Dream has been to create a business, become successful at that business, and make money doing something you love. The government shouldn’t punish this.
One last point. In most cases, businesses have a financial incentive to do what their customer’s want. If their customers want more fuel efficient vehicles, auto manufacturers will make more fuel efficient vehicles. If their customers want it, they can sell more, and that is why they exist in the first place. The only time government needs to mandate something like this is when customers don’t want it in the first place.
The government makes a number of laws that cut into business, stifle business, or just force companies to close up shop. There are only a few representatives who started out in business and understand what businesses go through. Many of these career politicians should spend some time understanding the businesses (especially in their district) before discussing topics like “windfall profit taxes”.
Without business, where would we be? If we crush business by forbidding them from making a profit, who will stay in business?
filed under Government | 5 comments
Gerrit said:
Aug 04, 11 at 4:46 pmI think we’re on very different points in the spectrum regarding this. I have no problem with people chasing a career and wanting to be succesful in that career. But let’s not forget the utopic thought where each person has the desire and means to start a business, is unrealistic. Not everyone is able to do that or has the desire to do so. Some people, due to different circumstances, fail to get a job or get a job that is insufficient to have the bills paid. Should we let down those people and see them struggle to pay the rent, have to get loans to pay their healthcare in case of a serious illness, … ?? The problem with a totally unregulated and open market is that a tiny portion of the population gets a large share of the profit and that a large share of the population lower in the hierarchy gets a small portion of the wealth. The wealth is unfairly distributed, which leads to many people struggling to get the bills paid and ending up in deep troubles the moment their health goes wrong. I don’t think competitiveness and profit contribute to much good the moment they become priority above human values and caring for one another. The wealth is unfairly distributed.
Andy D said:
Aug 08, 11 at 4:53 amFirst, it isn’t the government’s job to distribute wealth. There are some regulations that need to be in place, but those should be kept to a minimum.
I would also argue that we shouldn’t let those who can’t provide for themselves due to some physical or mental handicap suffer. They should be provided for. However, you shouldn’t rely on the government to take care of you. You should work hard and achieve so that you are a productive member of society. The only incentive for that is if you can get those items you need or want through hard work. If the government provides them for you, there is no incentive to be productive.
Gerrit said:
Aug 08, 11 at 2:03 pmBut then if hard work is the essence of life, then your life is centered around careering. Not everyone is career-focused and career-orientated. That said, I am glad to see we agree on the fact that those with a handicap need to be looked after.
I do think people will still be motivated to work in case the government distributes the wealth. The left side of the political spectrum doesn’t want a society of equals, we want an egalitarian society. Big difference. We don’t want classes ; no upper class, middle class and working class. That does not mean everyone should own or earn exactly the same, of course not. But there can be restrictions in place on exactly how big the salary gap can be between let’s say a CEO and his staff (this is just a random example, since I support the state providing the jobs rather than the private sector it is not the ideal scenario for me but anyways…). The persons taking the biggest responsabilities would still be rewarded with a higher wage or bigger incentives, but that higher wage does not have to be 50x the salary the company’s cleaner earns. Reducing the gap between the rich and the poor is what I would like to see happening. No society of equals, but also no society in which a tiny upper class is far out of the way of a large working class. That doesn’t mean the hardest workers should not be rewarded as such ; of course they should. But there is no need for grotesque differences in incomes like it exists now in many cases.
Another way to guarantee no person is left homeless or without proper health provided, is to simply calculate the taxes based on one’s income. Let the CEO earn no matter how much he wants, but if he earns 10x as much as his secretary he should also be taxed much more than his secretary. That way his tax money can be invested by the State in free healthcare, accessible social housing, and free education. (plus, put every private business under strict government surveillance to avoid exploitation, where a business can be nationalised when certain rules are broken, this forces a CEO into treating his staff in a way that is honest)
Andy D said:
Aug 09, 11 at 5:01 amBut then if hard work is the essence of life, then your life is centered around careering. Not everyone is career-focused and career-orientated.
This is true. People should be allowed to be as dedicated to their job as they want. Those who are more dedicated will probably (though not always) make more money. Those who are less dedicated may not make as much, but may find rewards in other aspects of life. It is your responsibility to provide for yourself, not the governments. How you do that, and what trade off’s you make along the way are a part of controlling your own life. I am not rich, and probably won’t ever become rich. However, I value the time I spend with my family, and want the ability to order my life based on what I believe is important, not someone else’s decision of what I should think is important.
Healthcare, a good home, the basic necessities of life; these are not rights. These are things as grown adults people must provide for themselves. Those who are physically unable to may not assistance from private charities or from the government. However the moment you start defining these items as “rights” you start down a slippery slope. If healthcare is a right, does that include emergency procedures only, or anytime I feel a little under the weather? Should I be able to get pain medicine for a headache, allergy medicine to combat the pollen, and hangover medicine for a long night of drinking whenever I want it for free? If a “good home” is a right, who gets to define a good home? Is it a $1 Million manson, a rent controlled apartment, a small hut with 3 other families, or a 3 bedroom house? And which ever one you pick, why is it that fair. if I have a “right” to a good home, shouldn’t it be the best the government can confiscate for me?
While healthcare, a good home, and basic necessities are desirable things, they are not rights.
Gerrit said:
Aug 09, 11 at 9:54 amI think here we have to agree to disagree, although again I must say I appreciate this site allows for debate in a respectful way and that is something not many political sites offer (in many political sites I visit there is often heated debate including insults, whereas it seems your site allows debate in a serene atmosphere, which is great !)
The thing is, not everyone has the honest chance to provide for a good home, education or healthcare. Some people are born without caring parents, or born in very poor families who simply cannot provide them with the things they need. So should a child be born without an honest chance? I think there are some things the State should provide, healthcare, housing and education being the most important.
Of course there have to be regulations. I do believe all healthcare should be free but that if someone runs to the doctor every time he sneezes he should be denied any prescription for medication. It’s not a candy store after all. However, if someone has high fever or is in need of urgent surgery (appendix problem to name a random example) I do think the State has the duty to care for its people rather than sending a person in horrible pain away if he cannot pay the hospital bill. So yes, I do think education, healthcare and housing should be basic rights, and that in education and healthcare there should be no private insitutions but just state-run ones.
I don’t believe this would de-motivate people from working. Someone who works hard will be able to earn a higher wage and thus afford more nice holidays, a bigger house, more recreational activities etc… than someone whose only income is an unemployment benefit and who lives in a small social apartment. The difference is that while the hard working man is rewarded for his work, the other person isn’t left alone on the streets without a place to sleep or without a person looking after him. I happen to live opposite of a social housing area. Ironically, the social housing is in a better state than my (expensive) apartment that I rent because the social housing is relatively newly built. However, often you find families of 3 or 4 sharing a very small apartment in those social housing blocks, while I have a relatively well-sized flat for myself alone. So I am rewarded for the work I do, with that difference that those who don’t have a job don’t need to sleep on the streets. Either the hard working persons will earn more money and thus be able to afford nicer things, or either you can more or less keep salaries in balance and give access to leisure amenities and such as reward for those who work hardest. Of course the hard workers should be rewarded, but I disagree that the State should not look after those who are left behind.
Also, you have to keep in mind everyone can be upper class one day and poor class the other day. What happens if you get into an accident and have physical damage which means you can no longer continue your job and end up unemployed? What happens if the house you spent a lot of money on, is lost in a fire? What happens if someone becomes a parent of a child with special needs? Suddenly from one moment to the other, he will have a lot more expenses or have lost the things he spent his saved money on. In my opinion it would be very cruel if the State would not come in between and just look the other way. Nobody deserves to live in misery, and those with bad luck in life don’t need to be severely punished for that and deserve to be helped. I realise this system allows abuse by those not willing to work, but I rather accept that fact than to see genuinely honest people who have bad luck end up homeless or in bad health.
My preference for the State being the employer or having a very strict surveillance of privately owned businesses is to avoid exploitation. Again applying the principles of what I consider to be honest: it is fair enough a CEO makes more money than an office clerk, but if we talk about 10x more money I think a line is crossed of what is acceptable. In such cases the State should be able to sanction this as exploitation and nationalise that business, this rule would force business owners to treat their staff with due respect.