Tue, 10 May 2005

Saving this country at a profit

Howard L. Hunt said "If this country is worth saving, it's worth saving at a profit." It seems like a somewhat cynical thing to say. It seems to put profit before people; a usual complaint of the humane leftists. The more hopeful thing to say might be "If this country is worth saving, people will donate their time to save it."

Profit is important. Profit is the measure that you are succeeding at doing something. You can created something that people want to buy. Profit simply means that your revenues exceed your expenses. You are producing more than you are costing. There is nothing intrinsically worthwhile about a non-profit (non-taxable) or not-for-profit (taxable) entity. Any entity can eliminate its profits simply by donating all of its profits to charity. This would not be sufficient to make the enterprise worthwhile in many people's eyes.

Profit has two pleasant characteristics. First is that profit attracts capital investment. If a company is making money, then more people are going to enter into the business. If the business of the company is saving the world, then the world will be saved all the faster. Second, profit tells you that you are actually helping people. Take, for example, the case of Christian missionaries who teach people how to read....the Bible. While the ability to read is surely a good thing, it's not clear that the people who now know how to read the Bible are better off. A primary tenet of profits in a free market is that everyone who trades is better off. Somebody who runs around a third world country teaching people how to use contraception because their country is overpopulated is not clearly doing them a favor.

Charity surely has its place, but profits are better than charity, always.

Posted [09:20] [Filed in: economics] [permalink] [Google for the title] [digg this]