Profit is a word today full of emotional charge, quickly conjuring images of greedy corporate "profiteers" destroying the environment and exploiting the poorest of laborers. Yet it should be neutral. Profit should be an area devoid of political consideration. It should be universally heralded as a bi-partisan good. Every action everybody takes every second of every day is done for one purpose: profit. Where "profiteers" should be vilified is from the harm they purport onto others, not the simple fact that they are turning profits. In fact, a good legal system should protect profit at all costs. Of course, the true qualifier is WHOSE. Whose profit should be protected? Everyone. Where "profiteers" harm the property and lives of others through devious ways, they should be held liable for the damage they cause, because they are preventing others from profiting, not because of non-sensical positions that profit is bad or motivates evil. Again, everybody every second of every day makes a choice designed to be profitable.
Profit is simply the value of results minus the value of inputs. When we spend our time and labor making a mud pie, after just one taste we realize that this action was a mistake. Our time and labor could have been spent in a better way, for instance, making an apple pie, which we would enjoy very much. Similarly, if we spent two difficult hours making an exquisitely ornate apple pie vs. 20 minutes making an average apple pie and the ornate pie doesn't satisfy us much more than the average one, we could say it was a mistake to make the 2 hour pie vs. the 20 minute pie. As satisfaction-desiring humans, profit is the unavoidable consequence of choice. We naturally attempt to receive the most satisfaction for the least amount of work.
Profit is often associated with cutting corners, laziness, or deviousness lacking respect for others. This is not implied by what profit is, efficiency. If an action or choice is profitable, this does not deter hard work; it simply makes hard work yield more satisfying results. For example, one might vilify using a machine that produces food with just the push of a button, saying that it will make people lazy. Yet, this same machine, if used laboriously, would make huge quantities of food, which could be given to the poor. Similarly, purposefully dumping toxic chemicals onto others' land and other such practices used to reduce costs may improve a business's profit margin, but this is a deceptive view. Once this action is discovered, the company and responsible management's name will be tarnished. Further, if the harmed parties discover the damage and hold those responsible liable, such actions will doubtfully be considered profitable, both fiscally and socially. In any case, we could consider such actions profitable only as long as we dismiss the negatively effected values of the damaged parties. True profit delivers benefits without imposing external consequences.
Profit is often associated with material greed, or selfishness. This is due to two causes. First is its view as individual satisfaction, which is often viewed in the puritan sense of hedonistic slavery to the desires of the flesh or pride. Second is its use solely as a business term, a measurement made in dollars, an indicator of economic power.
From the self-satisfaction perspective, profit is not the root problem, where there is one. Satisfaction can take a variety of forms that many would agree are virtuous. For example, if you get a good feeling by feeding the poor or unable, few would say pleasing your desires as efficiently as possible would be a bad thing. Self-satisfaction can take ugly forms that impose dissatisfaction onto others. Yet, this problem has nothing to do with profit. We could again say such isn't even true profit, when you take into account those harmed. The true problem is why we occasionally desire evil over good. Attempting to blame profit for evil is no different than blaming free choice.
From the business perspective, profit should not be treated adversely. Large profits often receive a negative public light, yet the most profitable businesses best serve the public. They buy things that not many people want and turn it into something that people highly desire.
The argument against this is that they would better serve the public by aiming for no profit by reducing prices, so that revenue matches costs. Thus, their pricing reflects simply their desire to make tremendous gains for themselves. This is simply ignorance of how free market pricing works.
Prices are set by supply and demand, not price gougers. In other words, producers cannot increase their profit simply by selling their products for ever-increasing prices. Prices attempt to match the amount people will buy at a certain price over a given time period with however much producers can supply in a given time frame. In this view, prices attempt to limit the number of buyers to those who truly value the end good. If price is too high, supply will exceed demand, and there will be surplus supply to be dealt with, perhaps requiring additional costs for warehousing. If price is too low, demand will exceed supply, and there will be a shortage. While many believe shortages are ok, as long as more are able to afford ___ when it is in stock, they are missing a bigger picture. Shortages hurt profit margins, and profit margins increase the available future quantity of goods while decreasing their price. In other words, equilibrium pricing is the most beneficial to the public in the long-run.
Let's think a little more about this. Let's do it in terms of filet mignon burgers. Filet is expensive meat, rarely used to make a hamburger. Obviously, most people prefer filet cooked as a steak instead of as a burger. If one attempted to run a business making filet burgers, he would find few orders for $18 burgers, almost surely greater than the amount of burgers he can make in a work day. So, he decreases the price until he finds a price where he sells the same amount of burgers he makes everyday. However, at this price, his revenue is less than his costs; he has negative profit. Thus, he will go out of business. What this is really saying is that given some limited resource, the public would rather purchase the raw ingredient, filet mignon, than the final product, the filet burger. Thus, the public is better off without this business.
Now, consider the opposite: a guy who makes filet-quality steaks out of ordinary ground meat somehow. If he prices his steaks at cost, he finds he runs out of steaks very quickly. Rather, he increases prices until they are competing with other steak restaurants. Yet, because his costs are much lower, his profit margin is much higher than his competitors. This highly favors the public, as it effectively reduces their cost for steak.
High profit margins tend to reduce the price per quantity of any good, not raise it. Profits can be used to expand production and supply, which will require a lower price to clear the market. Where business owners choose to keep their profits rather than re-invest, there will likely be competitors to enter the field, expanding the total supply of such products, lowering the price.
The only means around this is to restrict competition. The best means to do that is via coercion, or the threat of violent force. Such actions and privileges are virtually always associated with government, the largest coercive monopoly found in any society. Today, government regulations, tax schemes, subsidies, and other market distortions are used by big businesses to restrict their competition and thus supply, allowing them to yield higher profits. But profit isn't the problem. Profit is good. It's the market restrictions that are bad.
...and again, I wouldn't call that true profit because it doesn't factor in the negative externalities.
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