People Over Profits?

After Mitt Romney’s speech tonight at the Republican National Convention, some of the commentators mentioned that a couple of people started protesting during the speech and were carrying signs that said “People Over Profits.” The question I ask is, “What people? Whose profits?” My guess is that the “people” they were talking about included themselves, and the “profits” they were talking about were those of others. But just what is the thinking behind such a statement?

Many years ago when I was in college, I had a professor who asked the class what the purpose of a business was. Answers such as, “make a product,” “create jobs,” and so on were called out. The professor finally stopped us and said we were all wrong. He then informed us that the purpose of a business was to make money. In other words, earn a profit.

Is this wrong? Is this immoral? Well, of course not. Who in his right mind would put either his own money or money he has borrowed at risk with no plan to make it all back plus more? He might as well just hang onto the money he has and play it safe. But the lure of making a profit so as to better one’s life and those of his family is difficult to resist. In the end, this is not putting profit over people. It’s a person placing such an importance on himself and his family (in other words, people), he is willing to take a risk.

If the business starts out very small, it may be run totally by the owner. If not, then people will have to be hired just to get the business started. In either case, if the business is successful, it is unlikely that it can expand without hiring more people. If it continues to be successful, it will be even more profitable. So, where does all this revenue go? Well, for sure it doesn’t all go into the pockets of the owner. He’s not going to be able to obtain raw materials, labor, utilities, and so on without paying for them. But for every purchase he makes and every person he hires, he is in essence helping to enhance the lives of other people.

Well, maybe the owner loves profit so much that he will only pay a pittance for supplies and labor. Well, not if his competitors have anything to say about it. If other businesses are willing to pay more for their supplies and labor, then the owner will soon find that he can no longer obtain goods and services or labor because they will all go to the higher paying competitors. In other words, it is difficult for a business owner to rip off other people as long as we live in a free competitive environment. However, it can happen in a society where the government so limits the choices of people they find themselves stuck in an unpleasant position with nowhere to turn.

So, the only thing I can conclude is that perhaps the phrase “People Over Profits” is referring to a business owner who, when times are bad and profits are down, is willing to lay off people to keep his profits up. But think about it. If you had money at risk and were working hard to make and keep a business successful, isn’t there some level of profit that you would deem a minimum? If a business owner can make more money working for someone else where he can work less hours and have no money at risk, he has a choice to make. Lower the cost of operating his business, which may entail laying some people off, or shut down the business altogether, thus laying off everyone. I sometimes get the impression that some people view businesses as having a magical well from which money can be drawn in times of crisis. Well, it just isn’t so. Running a business is tough. That’s why I decided earlier on that I just wanted to work for someone else so I could earn a steady income without having to invest any of my or others' money. I have never been much of a risk taker.

Speaking of working for a salary, what’s another word for salary? PROFIT. When I work for a business that I have not invested in personally, then all of the money I earn is profit. The business owner has to take all the money she takes in and then pay for such things as rent, utilities, raw materials, taxes, business licenses, advertising, shipping, and the salaries of individuals like me that are risk averse and work for others. After all those expenses, they hope to have enough left over for themselves to make all their efforts worthwhile. So, if a very important employee leaves a company to work for another one offering a higher salary, is he putting profits above people? It may seem that way to the company that he left. But not so for the company he moved to.

When someone complains about people putting profit over people, they are usually talking about others. I once heard of a person who complained about a guy who quickly went to a hurricane stricken area to sell water at a premium price since this was price gouging. Yet, just a few minutes later he was talking about possibly taking his chainsaw down to the stricken area to cut up residents' fallen trees because he was sure he could make a large amount of money doing so. Can you spell double standard? Personally, the thing I found irritating about people castigating the water selling man is that, had the man just stayed at home and never took any water to the devastated area, no one would have said a negative word about him. If you were in the aftermath of a severe storm and you could choose between having water quickly at a premium price or having to wait a few days for the charitable groups to get water to you, which would you choose? After all, you wouldn’t have to buy the water. You could just wait like you would have had the “price gouger” never showed up.

So, given the opportunity to increase one’s profits, whether through getting a higher paying job or creating and expanding a business, most people will do so unless there are some downsides that are too unpleasant. That’s our human nature. We want to take care of ourselves and our families and improve our lot in life when the opportunity arises. Each person has to decide for herself what she is willing to risk or give up in order to do this. No person or government needs to be making that decision for us.