22
Dec
11

Profits, not people

Factored out to find its least common denominator, the #Occupy movement boils down to the slogan “People not profits”.  This slogan tells us that grasping avaricious corporations focus too monomaniacally upon their bottom lines, and in so doing cause terrible harm.  What’s needed, it continues, is a focus on people — individual, quirky, imperfect, sometimes needy, sometimes secure: the building blocks of society, too complex to be reduced to an aggregated figure in a sales spreadsheet.  A compassionate, humane focus on these people and their needs and wants is the right way forward, not a fetishistically numerological obsession with bank balances and market tickers.

I think it’s a horrible idea.  Lemme ‘splain.

The main problem is that focusing on people doesn’t always — or even often — mean acting benevolently towards them.  Humans are full of nasty misanthropic tendencies ranging from intergroup bias to collective narcissism to simple sadism.  There’s every reason to believe that, if we focus on people, we will do terrible things to them.  (The historic record is particularly convincing in this regard.)

Even without resorting to sadism, people-focus can end up hurting more than it helps.  If I’m a baker at the end of a long day, I might reasonably decide to spend the rest of the evening with my family — people I care strongly about and who care strongly about me.  If this means that I don’t bake a loaf of bread for you, and you go hungry… well, that sucks for you.

Now say it with me, kids:

It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Focus on profit, and all of a sudden it makes a bit more sense to bake that last batch of loaves; to stock enough bread that no paying customer need be turned away.  Furthermore, focus on profit, and you add incentives for people to be — not necessarily friendly, but at least accommodating — towards those they’d otherwise dislike.  As Eric Crampton and David Henderson point out, racism is often too expensive to be pervasively practiced by private concerns: widespread discriminatory regimes from Jim Crow laws to apartheid were mandated by the state… an institution which could put people before profits.

By contrast, here’s Voltaire:

Go into the London Stock Exchange—a more respectable place than many a court—and you will see representatives from all nations gathered together for the utility of men. Here Jew, Mohammedan and Christian deal with each other as though they were all of the same faith, and only apply the word infidel to people who go bankrupt. Here the Presbyterian trusts the Anabaptist and the Anglican accepts a promise from the Quaker.

The incentive to make a profit convinces otherwise-antagonistic people to deal with — and, given the right institutional infrastructure, actually to trust — each other.  That’s powerful stuff.

But suppose we were able to perfect human nature to the degree required by statism and come up with a sufficiently benevolent population to make “people not profits” turn out better than, say, North Korea.  Even then, “profit” would still outperform “people” as a guiding motivation.

Here’s the next problem: We people don’t actually know what other people want.  (We have a hard enough time figuring out what we want.)  If I’m a baker, I’m unlikely to know ahead of time how much you want a loaf of bread compared to a bag of croissants or a box of donuts.  It’s unlikely that I’ll have the time or the resources to bake all of them for you, and for everyone else who steps into my shop.  Maybe I’m really concerned about other people’s health, and I stop baking donuts and other fattening confections; conversely, maybe I get great satisfaction out of the joyful smiles of people who bite into my delicious donuts, and I stop baking whole-wheat bread.

But if I want to make as much profit as I can, I need to be very concerned with the prices I charge.  These prices will inform the inputs I buy and the products I sell, and will tell me what my customers want and how much they want it.  My suppliers can tell me how hard it is to produce flour, or mixers, or butter, simply by varying their prices, and I can do the same to so inform my customers.  Note that simply having a price system isn’t enough: people have to care about profits in order to make full use of the information those prices carry.  Care enough, even, to put those profits ahead of other people who aren’t willing to pay for a product but want it anyway.

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8 Responses to “Profits, not people”


  1. December 23, 2011 at 01:52

    Well said sir. People care about people, corporations care about money. This is as it should be. That being said, corporations are not people and should not have the same rights and privileges as one.

    • December 23, 2011 at 12:19

      People care about people, corporations care about money.

      Corporations are just groups of people working together… not because they care about each other as people (although there’s nothing stopping them), but because they want to make money by selling their labour. There’s nothing wrong with people caring about money.

      That being said, corporations are not people and should not have the same rights and privileges as one.

      Agreed. Corporations as legal entities are mostly there for risk avoidance; this might not be the optimal arrangement but something like it is probably necessary. Most legal rights corporations might have should instead devolve from the fact that they’re collections of people (who, being people, have rights that they don’t leave behind when they go to work).

      • December 23, 2011 at 14:02

        Don’t get me wrong, it’s fine for people to care about money. I’m fairly fond of it myself. But a CEO (if he’s doing his job right) will do whatever it takes (within the ethical framework of the regulatory system) to maximize profits, whether he finds the actions of his company morally repugnant or not. If I help a stranger in financial trouble I do it because I want to, not because I feel a moral obligation to, or because of self interest (other than perhaps the self-interest of avoiding guilt over not having helped).

        And while yes, corporations are just people associating together for profit, the legal entity of a corporation is afforded legal rights (in practice, if not in fact) as if it were a person, separate of the personal rights of the members and employees of the corporation itself. Agreed, the employees do not surrender their rights while at work. And bollocks to risk avoidance, there’s a reason the EPA is practically worthless. If I were to dump toxic waste into protected wetlands, I’d go to prison. A corporation, OTOH merely suffers a fine, one that is passed on to the consumer. Bugger that. Let the people that make those decisions to violate the law not be shielded by the aegis of the corporation as a legal entity.

        • December 23, 2011 at 14:22

          But a CEO (if he’s doing his job right) will do whatever it takes (within the ethical framework of the regulatory system) to maximize profits, whether he finds the actions of his company morally repugnant or not. If I help a stranger in financial trouble I do it because I want to, not because I feel a moral obligation to, or because of self interest (other than perhaps the self-interest of avoiding guilt over not having helped).

          My original point is that “maximize profits”, as an incentive, generally leads to better ethical outcomes than simply relating-as-a-person. If I’m a CEO, I probably associate mostly with other executive business types (my in-group/tribe) and find, say, #OWS protesters personally repugnant. But if I’m doing my job right, I’m not going to stop trading with them, because that would amount to throwing away money.

          On the other hand, as an individual (outside of business), I’m far more likely to ignore strangers in financial trouble — or, if they post their photos on the “I am the 99%” tumblr, to ridicule them on my blog — than I am to help them. Change the setting slightly, and make me a personal finance consultant who gets a small condition every time I help someone in financial trouble get an emergency loan, and I’ll help all kinds of strangers.

          Profit-seeking gives me more reasons to be nice to people. Working as a freelance programmer has brought this home in ways I never saw coming.

          And while yes, corporations are just people associating together for profit, the legal entity of a corporation is afforded legal rights (in practice, if not in fact) as if it were a person, separate of the personal rights of the members and employees of the corporation itself.

          We agree on this point, and we agree that it’s bad.

          And bollocks to risk avoidance, there’s a reason the EPA is practically worthless.

          Not the kind of risk avoidance I was talking about (I should have been more specific). I’m thinking more about bankruptcy protection for a corporation’s owners, so that if (for example) a publicly traded company I own stock in goes belly-up, its creditors can’t seize my personal assets. Note that this doesn’t necessarily require that the company have the same rights as a person.

  2. July 24, 2013 at 11:57

    Hi mates, its fantastic paragraph on the topic of educationand fully explained, keep it up all the
    time.


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