Most-Merciful Profit

The Free Agent once worked at a publication she will pseudoname Hippy Week.  Oh, how happy she was there, how her duties suited her, and how she enjoyed her intelligent, energetic, and humorous coworkers.  But while they tolerated her politics—they could accept any position as long as it was perceived to be on the lunatic fringe—they would routinely rumble about the annoyance of having to run the business profitably, or really about anyone having to, about America’s corporate chase “for the Almighty Dollar” (ah, would that it still were!) as even one manager lamented.  The Free Agent did not, in the spirit of workaday harmony, ask of him the question she now asks whenever “profits” is used in a derogatory manner, who benefits when a company (or industry)’s profits decline?

Certainly not the employees of the company.  Even before the FA sought greener pastures, the lavish open-bar parties Hippy Week was known for were but a memory.  An end-of-year bonus which had, in some parts of the company, been a month’s pay for every employee, was halved, then eliminated.  Other companies slash training and travel budgets.  The fact that HW was still profitable in an industry in decline made it desirable as a take-over, which it was.  The distribution and production functions were consolidated, freeing about a third of HW’s employees to find work at a less evil, less profitable, firm.  Notwithstanding these measures, the corporate parent declared bankruptcy about a year later.

A company’s customers suffer if its profits are declining.  Less money is available to improve products and services.  While rising profits signal competitors to enter a market, putting downward pressure on prices, declining profits make it harder to lower prices or attract investment.

Perhaps your audience would laugh at the mention of a company’s owners suffering?  The Free Agent will simply observe that she has never been employed by a pauper.

Someone must benefit, the world must be improved in some way, the anti-capitalist feels.  Perhaps his beloved government?  No.  For good or ill, the profitability of American business allows government to thrive and flourish, so even if you want to see a transfer of power to the government, you should be on the side of profit angels.  Not only do profits pay visible corporate income tax, real estate taxes, and numerous others, they pay the invisible portion of employment taxes (do not start the Free Agent on the subject of hiding from the American taxpayer the full extent of his denuding!), for most Americans, they provide access to health insurance at far below open market cost, as well as unfunded social mandates such as unemployment insurance and workers compensation.

The entity that most benefits from a company (or industry or country)’s decline in profits is its competitor.  But don’t dance on profit’s grave too soon—when a company produces a better product or service and beats its competitor in an honest market, the likely result will be . . . more profits.

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