The purpose of profits

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the-purpose-of-profits

There's still a desperate and really rather sad misunderstanding of the purpose of profits out there. Our first example is about rubbish and recycling:

It is far more profitable and much less labour intensive to dump unsorted garbage in a landfill than it is to separate it for compost or recycling.

Quite contrary to the imputation of the author this means that we should indeed be throwing the garbage into a hole in the ground. It isn't just that time is one of the things we are all short of, that three score and ten passing by much too quickly to want to spend unnecessary time sorting rubbish. Here profit is showing that we are using fewer resources by dumping unsorted than by sorting. This is a good thing, profit is telling us that we are being more efficient: and more efficient with our scarce resources means that we get more out of whatever resources are scarce. In short, profit is showing us what makes us richer.

Our second example is about schools (and cries of "rubbish!" in regard of the UK educational system will be ignored, however true they might be):

The Conservatives, however, are planning to keep their "Swedish schools" profit-free and rely on charities, voluntary groups and other philanthropic types.

Ignorance of the purpose of profit is not limited to foolish environmentalists of course: it seems to be a failing of our next Prime Minister as well. For he and his sidekick are missing the second point of profits: the hunger for being allowed to keep them. It is this, the idea that we might individually get rich by making profits which leads to the society as a whole getting richer as we struggle (and the successful succeed in) to find newer and better ways to be efficient with those scarce resources.

Profits are both a signal that we're doing something right and a temptation, an incentive, for people to do those right things: look for and find ways to be more economical with the resources available.

No surprise in an environmentalist not quite getting it but if a Tory PM in waiting can't understand it, what is the world coming to?