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"Profit" seems to cause problems. We have the concepts of making too much profit and no profit and just enough profit. When is it too much profit? is it too much when you hold a monopoly and charge people half a pay check for a service? Are vehicle sales a form of overprofiting? Is a 2% mark-up enough profit? is 10% too much? Should we ever make a profit or should we just remain even?

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To specifically answer your questions, "too much profit" certainly applies in your first case, when a monopoly is shaking down the traffic for what they will bear.

Vehicle sales could be a form of overprofiting if you consider that convincing people they really need a new car every 5 years means people lease more often than they buy, which means that a person effectively rents a vehicle for three or five years, chooses not to buy out the lease, and has in effect spent a lot of money for no tangible asset. So the dealership makes a nice mint, and so does the finance company, since interest is levied on lease payments.

Or a person chooses to buy a car, and decides to sell it before the car is even beginning to decline. That, too, could be overprofiting.

But those are just specifics. I turn now to generalities.

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Is making a profit right or wrong? When, in a genreal sense is it obscene? Should there be a rule or a case-by-case basis for profiteering? Should it be under the perview of the state or of market/social forces?

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A profit, by itself, is value-neutral, since it's the difference between your costs and your revenues.

But it can be fairly said that people usually know excess profits when they see them, and banks are a great example of this. The CCPA Monitor had an article talking about how the Canadian banks collectively cleared almost $10 billion this year or last year.

Since they raked in $5 billion in 1995, and it's 2002, they are definitely raking in money faster than the inflation rate, since that has only totalled about 8 percentage points in seven years.

So a "fair" profit is one that allows a business to keep operating, to invest, to expand production where necessary, but an "unfair" profit is one that is gained by gouging the customer or depriving the worker.

Obviously, I feel it should come under the purview of the state and one step in the process would be to eliminate most of the allowable deductions for corporations and limit them to GAAP rules only. The other would be to end the differential treatment of capital gains, forcing corporations to retain their earnings and use them for investment rather than paying off the paras- uh, stockholders.

I should note that the market has a role to play.

But deregulation is not the same thing at all as increasing competition.

Deregulation is allowing competition with no rules at all.

Increasing competition means bringing in more players but keeping the rules and the referee.

The hybrid capitalism we still somewhat have today may be thought of as a fair, refereed boxing match, where the participants can fight according to the rules. No foul blows, et cetera.

But deregulation is like taking away the referee, so that the two fighters start battling with more ferocity and less regard for individual safety. The fight ultimately ends with a loser and a winner, but the winner may have taken such body blows in the process that he must be hospitalized or he will die.

Communism, just to round out the story, is like having two fighters punching a punching bag. The referee is then in the position of, well, not doing much. There is equality, but since there is no competition, nobody can excel.

To bring us back to deregulation vs. increased competition, the market factors I advocate are a strong re-regulation of business, coupled with some serious enforcement of anti-combines laws. Bust up the banks! Bust up the big department stores!

As I see it the government of Canada would be doing us a huge favor if they expropriated all the banks, busted them all up, and then set them up as about 10 or 15 Crown corporations, all mandated to compete with each other on interest rates, hours of opening, whatever the edge that one has over the other.

I betcha dollars to donuts that you'd see friendlier loan officers, better teller service, less fee gouging, longer opening hours, and overall better banking quality.

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The hybrid capitalism we still somewhat have today may be thought of as a fair, refereed boxing match, where the participants can fight according to the rules. No foul blows, et cetera.

But deregulation is like taking away the referee, so that the two fighters start battling with more ferocity and less regard for individual safety. The fight ultimately ends with a loser and a winner, but the winner may have taken such body blows in the process that he must be hospitalized or he will die.

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That's scenario #1. In scenario #2, the two fighters start hanging out together during breaks, and then one of them says to the other, "Hey, all this fighting is wearing me out. Let's beat up the referee instead!"

So they beat up the referee. Then they beat up the guy filming the match because they don't want to be seen beating up the referee. Then they beat up a few more people - the guy who brings them water and towels, the announcer, whatever - just for the hell of it. Then, realising that they are stronger together than apart, they give each other big hugs, promise their eternal devotion, climb out of the ring, and start beating up the audience.

[ November 30, 2002: Message edited by: Smith ]

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What we call the market is really a democratic process involving millions, and in some markets billions, of people making personal decisions that express their preferences. When you hear someone say that he doesn't trust the market, and wants to replace it with government edicts, he's really calling for a switch from a democratic process to a totalitarian one.

An excellent example is when people demand that government confiscate the earnings of wealthier Americans to give to poorer Americans. Michael Jordan is much wealthier than I, but whose doing is that? It's decisions made by millions upon millions of people who prefer to fork over their money to watch him play basketball. I'd be just as rich if they were willing to do the same to watch me play. When someone condemns Jordan's earnings, they are really condemning the voluntary decisions made by millions of people.

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I think this guy is an optimist extraordinaire.

"Democratic process"? Okay...but in what other democratic process can I buy a million votes when my neighbour only gets one, or none?

And he doesn't take inheritances into account.

I don't oppose the "democratic process." However, I don't like the subordination of governments that are set up to be accountable to ALL citizens (at least in theory) to governments that are not (i.e. corporations). If you have a few billion dollars in this "democracy," you can silence those who don't. And if you have no money, you can just roll over and die for all the "market" cares.

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Tyrants always condemn and seek to replace the market process with government coercion because tyrants do not trust that people behaving voluntarily will do what the tyrants think they should do.

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No, because people will act in their own monetary self-interest, and that is a very narrow way of looking at things.

If you could buy shares in a child prostitution ring, would you?

What if you didn't know? What if the owners of the ring lied to you?

"The market will provide" only works if the market is truly free (i.e. everyone has access to the whole truth about every company they invest in) and everyone has a chance to participate in it. Otherwise, it's a "democracy" in which poor people don't get to vote and rich people can vote as many times as they like - in other words, a plutocracy.

This is why regulations are important.

How about this? What do you say to this?

[ December 01, 2002: Message edited by: Smith ]

But what is beneficial to a corporation isn't at all necessarily beneficial to the workforce. And that's a real problem.

We need to stop treating corporations like people. They are not people.

As for "morality," it amazes me how little many people consider the influence of economics on things they find upsetting. Divorce goes lockstep with unemployment; most kids don't have a stay-at-home parent because most families can't afford it; people naturally feel more entitled to do things like parenthood individually in a society where they are encouraged to own everything individually - get everyone in your family his/her own TV, etc. - and when Kenneth Lay can pull $230 million for himself out of the wreckage of Enron, and other CEOs are paid like rock stars even as their companies lay off people left and right, why should any of us believe in honesty and hard work?

But no, no, it's not about that. Easier to blame the feminists and the gays.

[ December 01, 2002: Message edited by: Smith ]

Edit: for getting names wrong.

[ December 02, 2002: Message edited by: Dr. Mr. Ben ]

Actually a reference in another thread to a particular site has been troubling me a bit, and maybe it deserves its own thread, maybe not; all input appreciated

This guy suggests that the US is maintaining and increasing a technological lead over Europe, and that this is because Europe needs to develop a "work ethic". Personally, I don't keep up with the business end of technology, because I prefer keeping my blood pressure below anyeurism level. It seems likely to me that what we're seeing here is mostly more US assumptive arrogance. However, I can't be sure that this is the case, and some of the points he makes actually correspond to facts that I am aware of.

My concern is: what if he is right, at least within his premise? If america, with our "work ethic", are out-advancing countries which don't demand 40+ hour weeks, ever-increasing workloads, intolerance for "excessive" illness, compromise of family interaction time, strictly limited holiday time, etc.?

Personally, I don't see this as progress, really. I see it as inimical to healthy human existence. And I'm apparently very much in the minority there. Which means that if all of this is true, how horrible if the idea spreads, and we all end up competing to see whose workforce can be the most "productive", and whose society can be more "consumer-oriented".

Unfortunately, I don't think this "work ethic" is really universal here; I think it peters out as you approach the upper echelons. Which means of course that what we have here isn't a more productive society but a more predatory society, particularly considering the degree to which we employ extra-national labor at dirt-cheap wages.

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The per-capita GDP of the US is 60% higher than in even the most prosperous European nations, and the trend is for that to grow in the future.

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Again with the per-capita GDP. How many times do we have to roast that chestnut? How difficult is it to understand that in a country where 1% of the people control 40% of the wealth, and .1% of the people control 18% of the wealth, per-capita GDP, as a measure of living standards, is meaningless?

[ December 02, 2002: Message edited by: Smith ]

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Actually, it might be more accurate to say that where economics or business is concerned, economics is morality.

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Personally, I don't see this as progress, really. I see it as inimical to healthy human existence. And I'm apparently very much in the minority there. Which means that if all of this is true, how horrible if the idea spreads, and we all end up competing to see whose workforce can be the most "productive", and whose society can be more "consumer-oriented".

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The question is, what is this all for? Is it profit for profit's sake? What kind of goal is that? Are people happier, healthier, more enlightened this way? Are our communities safer or better?

Obviously, productivity is better than nonproductivity - we can see this. And progress, technological progress, is usually a good thing. But we have to balance that, somehow, with other good things.

Yes, I do think that profit for profit's sake is what it's for. Money is power, etc. One of the essays from the Baffler's compilation, "The Commodification of Dissent" states it very well, although I can only really remember that it was well phrased, not being detail-oriented. The gist is apparently that we'll reach some ideal state in which profits rise indefinitely, competition is king, the winners always win, the losers always lose, and the rich keep getting richer... It really sounds like we're headed towards Well's Morlock-driven dystopia, except that the Morlocks are the ones who'll be getting eaten.