Why Profit is Necessary

The latest closing of a social do-gooder restaurant sent me on a tirade on my second-latest podcast where I explained that if you don't put profits first, then your company will fail (and you will fail your employees or whatever do-gooder lefty cause you happened to be championing that week).

Many of you on the left may disagree with this and even write it off as capitalist, right-wing propaganda, but the point transcends politics, even economics, and approaches one of physics, even simple logic.  Also, whereas most non-leftists may intuitively know why profit is necessary for a company to survive, one might wonder if the socialists might possibly be right in some obscure philosophical way.  IS there a way for a company to exist without profit?  "I know it sorta seems like profit should be necessary, but I haven't got through and developed an economic proof or theorem that proves it so."  And so let us delve into the boring world of profits and learn a vital economics lesson we all need to learn...that no doubt the leftist ideologues will choose to completely ignore.

The simplest way to understand why profits are necessary is to understand it from a perspective of providing goods and services.  This is an oft forgotten or ignored aspect of economics because everybody seems to focus on MONEY and not the things that actually matter - GOODS AND SERVICES.

I cannot eat a dollar.
A Yen will not provide you surgery.
A pound will not feed your dog.
And a Euro will not fuel your car.

However, these currencies WILL buy us the goods and services that provide ultimate value and utility in life.  A dollar will buy me an apple that I can eat.  A Yen will buy me some gas that will fuel my car.  A Euro will buy a dentist's services to repair your teeth.  And a pound will buy some dental floss after your dentists lectures you for not flossing.  So the whole point and purpose of an economy is to produce the stuff, not the money nor necessarily profits in the process of doing so.

Since it is the stuff that needs producing that ultimately matters you need to ask how stuff gets produced, and the answer is "not charitably."

In order for things to get produced, somebody has to inevitably forfeit some of their time to produce them.  This can be done on an individual level as per subsistence type craphole economies like Africa, or in the awesome 1st world through organizations, namely, corporations and companies.  Large and complex systems organizing capital and labor to produce an amazing plethora of things all on the cheap.  But regardless of the size of the company, it has to ultimately be started.  And since time is ultimately the ONLY resource that matters to humans, any sane and self-respecting human is going to demand he or she be compensated for it.

Thus introducing profit.

This is the problem most people who have a problem with profit face.  They look at it backwards.  The issue isn't whether somebody deserves profit or whether profit should exist.  NOTHING would exist unless it was for profit.  And the insurance industry explains this incredibly well.

NOBODY likes paying for insurance.  It's a necessary evil, and it's so evil illegal aliens often go without it as they ram their cars into us otherwise law abiding, superior people.  But what really irks most people is that insurance companies...GASP!!!!  MAKE A PROFIT! This means they charge us MORE than the damages and payouts they actually have to pay out.  HOW DARE THEY!!!???

But think about it.  If they DIDN'T charge more than they paid out, then why would anybody start an insurance company?  The only reason an individual or a group of investors would start an insurance company would be to make a profit for themselves.  They put their time, money, and risk into the venture, so you're damn right they're going to charge more than they pay out.  But while you may detest that profit, if it wasn't there, then there would be no insurance at all.  And not only insurance, but no

food
gas
video games
cell phones
clothes
housing
dog food
cat food
medicine
surgeries
cars
buses
trucks
and coffee

NOTHING in this world would exist without profit, and a world with nothing being produced (no matter how much money is printed) will look more like Soviet Russia, Venezuela, North Korea, or Zimbabwe (much as those places make leftists wet).

Now let's ignore the fact the track record of socialism and communism is horrendous and makes the nazis look like saints.  Let's ignore the fact that Mugabe of Zimbabwe is begging those evil capitalist white farmers to come back and make food again for his idiot electorate.  Let's ignore Venezuelans eating pets to stay alive.  And let's ignore practically everything about North Korea.

Let's go completely theoretical.

Is there a way to replace profit with a socialist model where the government provides the capital or resources and profits are either retained in government coffers or redistributed amongst the workers (which explains why former communist workers are so rich).  Does there need to be the incentive for profit, or can a government company merely be efficient and produce the goods and services in the variations and amounts necessary to sustain (forget satisfy) an entire society?

In this situation a government would merely print off the money, buy the capital and equipment necessary to start a company, produce widgets, and (assuming it's an efficient widget company) all profits would go back to paying single moms to breed more bastards as they get their Masters in Health Administration degrees.  There's just a couple problems that will more or less ensure this leftist-whetting utopia doesn't ever manifest.

First, communists are too nice.  The whole point of communism is to make everything "free."  This not only means charging nothing for the ultimate good or service produced, but overpaying employees because, well we all need a living wage!  This naive (albeit) kindness dooms nearly every communist/government company to being inefficient.  It's why Byte failed, it's why Bartertown failed, it's why the Soviet Union failed.  In making things free (and paying your employees more than they produce) you ensure your companies/system are inefficient forever needing more infusions of cash to balance your books.  Bailing out the occasional pizza store is one thing, but when you're entire economy is government owned and inefficient, you need to print off trillions which only causes hyper-inflation, and ultimately never increases production.

Second, there is no competition.  Without somebody nipping at your heels and threatening to take away your profit, you have no incentive to work harder, better, faster, or stronger.  And communism ensures there are only monopolies, and not competitors.  This results in not so much lazy, but unincentivized people which are a hallmark of government workers.  Government workers have no competition.  They have no hustle.  They are fat, lazy, and slothful creatures that deserve the mockery and ridicule their parasitic asses attract.  But imagine if the incompetent fuckery going on at the DMV....

WAS EVERYWHERE.

It would take 4 hours to get a Big Mac.
It would take 3 hours and $400 to fill your tank with gas.
Have fun shopping at Best Buy as you wait in line to get your government issued computer.
And if you didn't like it, tough cookies, there's no other competitors or companies in town to "take your business elsewhere."  You simply have the "company" store.

Competition, specifically the threat that profits will be earned away by a competitor, is precisely what keeps the entirety of society's producers and entrepreneurs 100% completely focused on making you happy, condemning them to a life of constantly improving and creating new products at cheaper prices till they're dead just for you (ironically delivering on more of communism's promises than communism itself!).  They're practically slaves to the rest of society, and you dare get upset they make "profit" as you leftist sheep line up to buy the iPhone X?

In the end a world without profit is like a woman without a vagina, a man without money, a car without gas, or a plane without wings.  Nobody wants it and it has no value.  You may not like the idea of profit, you may not like the idea of "greed" or "human nature," but like death, disease, mortality, and hipsters, it's just an unfortunately reality of life.  I suggest you accept it instead of trying to futilely fight against it.

Enjoy the decline!