When it comes to the healthcare industry, the banking industry, the insurance industry, the oil industry and other sectors of the economy, President Obama and his Ivy League cohorts seem to have declared war on profits and the profit motive. According to President Obama, profits are evil. Profits don’t create jobs or grow the economy; they only serve to enrich the wealthy investor class. Only government can grow the economy. As a self educated neo-economist, let me correct this misconception.
The profit motive is an economic force that generates profits for an individual or company that has invested in a business enterprise. The profits generated by the profit motive are used to grow the business enterprise by expanding its customer base, hiring new employees, and investing in new business ventures. Businesses also use the profit motive to cut costs and improve profit margins, thereby generating more profits. All of this activity spurs economic growth, creates jobs, and raises the standard of living for all those who participate. Only anti-capitalists would consider profits evil.
President Obama said it best at a town hall meeting in August when he inadvertently said, “…UPS and FedEx are doing just fine….it’s the post office that’s always had the problems.” He could also have said Ford is doing just fine and will soon start to generate profits again. It’s GM and Chrysler that will need more taxpayer bailouts—for generations to come.