The Profit Motive

Stephen Carter had a great column in the Washington Post yesterday in defense of profit. 

It's sad that we have to constantly push back against the demagogues on this sort of thing, but we do, and Carter's column is as fearless as it is magnificent:

High profits are excellent news. When corporate earnings reach record levels, we should be celebrating. The only way a firm can make money is to sell people what they want at a price they are willing to pay. If a firm makes lots of money, lots of people are getting what they want.

To the country, profit is a benefit. Record profit means record taxes paid. But put that aside. When profits are high, firms are able to reinvest, expand and hire. And profits accrue to the benefit of those who own stocks: overwhelmingly, pension funds and mutual funds. In other words, high corporate profits today signal better retirements tomorrow.

Another reason to celebrate profit is the incentive it creates. When profits can be made, entrepreneurs provide more of needed goods and services.

A few more highlights:

When political anger over profit reduces the willingness of investors to take risks, the nation suffers.

And...

And although it is easy to be dismayed by excess, trying to regulate profit makes things worse. Capital flows to places where returns are highest. The more exercised our political leaders become when profits rise, the more investment capital will remain abroad.

Read the whole thing.

(via Hit & Run)