Thu, 19 Aug 2004

Profit

It's surprising how many people don't understand the nature of profit. They think that people who are wealthy must have become so at the expense of other people. They think that if you have more than other people, it must be that you profited at the expense of another. I don't mean to dismiss their objections or their outrage. But surely it can't be "profit" that they object to. Look at this:

Orange and profit, as attributes of human action, may be related. That is, there may be actions which result in neither orange nor profit, and actions which result in both orange and profit. If that's the case, then they are related to each other, or said to be co-related, correlated, or positively correlated. On the other hand, it may also be that you have actions that result in orange but not profit, and actions which result in profit but not orange. If that's always the case, then they are negatively correlated. They're still correlated because if profit is present, then orange is not, and if orange, then not profit. It's just that the relationship is negative.

When profit is created by some actions, and other actions create profit and orange, then there is no correlation between profit and orange, because the presence of orange has nothing to do with the presence of profit. Profit is always present, and only orange depends on which action is chosen.

My point here being that you have profit without orange. Presumably, since people are objecting to orange and calling it profit, then you can have orange and profit at the same time. Profit and orange are not correlated with each other, and yet people criticize profit for being orange. I think they do this because most actions are neither profitable nor orangable, and then lump the remainder into just one category: profit or orange. The critics miss the cases where profit is present but not orange.

Why don't they see those cases? Because, surely, not seeing those cases is a symptom of bad economicing. Perhaps we can come closer to identifying the nature of orange if we can discover why the case of profit without orange is invisible to them or otherwise not a part of their experience? I need to ruminate more on this, so I'll pick this topic up later and link forward to it, and back to here. Comments and guesses welcomed.

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