Profits are the Mothers Milk of USA Prosperity, Jobs
July 6, 2012, the following letter of mine appeared in the print edition of the Daily Record. I wrote it in response to a prior letter that attacked profits. So far this letter has not been placed online at www.dailyrecord.com. In fact no letter since June 29 has made it on-line since then.
Frank Vidolin, in his letter ‘Romney knows nothing about creating jobs’, is misguided in his critique of profits. Profits are created via private companies that sell products and services in great demand. Employees of the companies are the actual profit creators. Their jobs are self sustaining. How? The employee generates more in revenue that the employee’s cost. How do companies increase profits? They do so by hiring more of such employees. This scenario benefits the government by increasing tax revenues.
Does the public sector create profits? Yes – indirectly and usually over longer time periods. Two great examples are teachers and police. Teachers educate our next generation of job creators. Police maintain order to allow this to occur.
However, much public sector spending results in increasing debt. A great example is the $15 trillion spent since 1964 on our ‘War on Poverty’. Except for brief and infrequent periods our poverty rate has barely budged. Other great examples include wasteful defense spending and ‘nation building’ wars.
Let us then appreciate profits for what they are – the mother’s milk of economic prosperity and jobs.
Morris Township, NJ
Expecting some differing opinions or missing something in a short letter I have this in response should I see my letter on line some early morning:
Profits are also created when companies decrease costs while increasing the difference between revenues and costs. Often this occurs from purchase of new technologies to decrease costs with no net increase in employees, perhaps a decrease. However the new technologies are often created by start ups who hired new workers to develop the cost reducing technologies that are in demand. In a strong economy the trends overall are hiring of new employees due to address new market demands.
I look forward to your responses. However I will not be able to respond to them until late tonight.
So look for this in day or 2 at www.dailyrecord.com.