Give Profits a Chance
As I was driving on Santa Fe in Littleton, I passed a light rail station and read this on an RTD car, “Caring for people, not profits.” Is that a good motto for Denver’s light rail system? Or is it a false dichotomy? I am not complaining about the RTD service per se. Rather, I am raising the basic issue of profits and social benefit—a question germane to Colorado politics and to all politics.
To many, “profit” is a dirty word and must be paired with “greed,” which is always vice. So, if you want to make a profit, you are greedy or will become greedy if you make profits. Is that right? We need to move beyond images of the greedy old Mr. Potter of “It’s a Wonderful Life” to get a better picture.
First, to greed. Even if someone is greedy (which is a vice), he still needs to provide goods or services that are markable to people’s needs. His greed may lead him to expand production and thus hire new workers who would otherwise be unemployed. Yes, his greed is a moral vice, but it may translate to a public good. But one may seek profit and not be greedy, but rather act out of legitimate self-interest. As Adam Smith said in The Wealth of Nations (1776).
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.”
Those who make vast amounts of money through savvy self-interest may also become great benefactors. Whatever you think of Bill Gates, and whatever his motives may have been, his great wealth came from profits made through Microsoft products. These products benefitted his many workers and consumers. He and his wife now dedicate much of their time and give large sums to philanthropic enterprises.
Second, let’s get clear on what making a profit means and what it does not mean. Profits indicate economic success and allow businesses to produce goods and services demanded by the market, and the consumers generally benefit from this. A business’s profit is not like stealing that amount from the consumer.
Third, to make a profit in a fair market means that the producer is providing goods or services to consumers who find these items worthwhile enough to purchase. Businesses have to care about people to the extent that they provide them with items they desire and can afford to purchase. Further, some measure of profit is needed for a business to stay in business at all.
Fourth, profits fuel innovation. If business merely break even or fail to make significant profits, they are unable to dedicate much money to research and development in the products they provide. Had Apple gone broke in 2000, there would be no iPhone.
Fifth, if a service like RTD is controlled by the civil government– which does not need to make a profit—that does not automatically make the service better than what private profit-making business might do. The saying, “Close enough for government work,” may ring true. When services are not accountable to consumers in order to make profits, and when they are not in competition with other private businesses providing the same service, the quality of these services may suffer. Why should be think that the motto, “Caring about People, not Profits,” will motivate RTD managers and workers to care more about people than the profit motive would motivate them?
Since Colorado has turned from blue to red, the prevailing mentality of politicians is to take a dim view of profit-making ventures and to favor government-run services. I say, give profits a chance to profit people.