terça-feira, abril 02, 2013

The Role of Profits

The Role of Profits por Robert A. Sirico:
Profits are central to capitalism, and I am often asked whether profit making is evidence of greed. Not in itself. The fact that a business is profitable tells us little that is morally relevant. Profit, after all, is simply the name that accounting attaches to the condition of income outpacing costs. In other words, a company that earns a profit brings in more money than it expends for all of its costs, including materials, real estate, labor, and taxes. The opposite of profits is financial loss. A firm that is losing rather than making money cannot long survive. So, under ordinary circumstances, profits are a necessary condition for the success and continuation of a business.
Profitable companies are the ones that find a way to create and deliver products and services at prices high enough to cover their costs, but low enough that customers find them attractive. The profitable company, in other words, is one that flourishes by creating and delivering value.
.. zero-sum mentality is particularly prevalent among clergy, who often view profits with disdain. In conversations .. I often ask, if profits are morally dubious, are losses more ethical? .. Profits indicate that resources are being used wisely by a business; losses suggest that they are not. Although profits and losses are not the be-all and end-all of a company, they are crucial first-level indicators of how effectively they are serving the wants or needs of customers.

Because human wants always outpace scarce resources, every society must have some guide for allocating those resources. Something or someone must decide whether water will be used for drinking, bathing, or irrigation, and whether iron ore will be used for making cars or manufacturing tractors. The same is true for all social resources. Even the resource of time, which is also scarce, requires some tool for sensible allocation.

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