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Profits Are the Key to Economic Recovery

By: Steve Johnson

4/8/2010 - 39 Comments

In a world of upside down economic ideas, profits have become the target of ridicule – yet profits are the key to economic recovery.

The attack on capitalism waged by President Obama and Congress to demonize profitable businesses shows how little our political leaders know about the economy and how much they are willing to risk in order to further their agenda.

Profitable businesses are the key to economic recovery because they are the hope of creating new jobs, increasing demand for labor and wages, and increasing capital investments into other businesses.

Profit Driven

Profits are not evil and either is being profit minded or profit driven.  Begin profit driven means being as productive as you can to reduce costs and increase efficiency.  The results produce lower costs for consumers while using less material and energy.  Everyone benefits.

The lower prices for consumers result in a higher standard of living as the money saved by consumers can now be used to purchase other things. 

The increased productivity results in greater profits for the business.  Increasing profits coupled with free labor results in an increase in real wages – not phony wage increases from government created inflation.

Profit Minded

To get the nation out of the recession, we need national leadership that will promote and strengthen a focus on being profit minded.

The victim mindset being promoted by the Obama administration and Congress today will never result in a return to prosperity.

The economic recovery is hinged on the national rejection of the victim mindset.  The Tea Party movement is a growing group who realize that the victim mindset is a path to economic suicide.

The victim mindset is the idea that we are victims of profitable businesses (like healthcare insurance companies, oil companies, banks, etc.) and that we deserve to take their profits through as increase in regulations, taxes and government policies.

Mercantilism

The true problem is not the profits these companies seek, but the ‘mercantilism’ that they engage in to gain competitive advantages over their competitors that allows them to increase their prices –rather than begin forces to decrease their prices through the competitive process of capitalism.

Mercantilism is the process of business influence on government policy to create government enforced regulations that give them a competitive advantage, which protect them from competing businesses that would otherwise force them to lower prices and cut costs to be more productive and more efficient.

We don’t want these companies or any company or any small business to stop being profit driven. Profits are the hope of the future of our economy.  Seeking profits is not the same as being greedy, and when capitalism is operating without government intervention, greed is squeezed out of the economy.

Being greedy is holding money without allowing it to be used by others or used to take advantage of labor to pay less than they are worth.  This is not possible with free capital and free labor because businesses must pay higher wages to keep their best employees from being taken by competitors. 

The labor market is unfairly manipulated when the government expands and pays working higher wages than they are worth to private businesses.

It is only when labor or wages are controlled that greed can operate.  Therefore, these businesses can only engage in greedy activities when they are supported by government intervention. So when you see greedy activities, it is because of too much government intervention, not too little government intervention.

The Obama administration has miss labeled ‘profits’ as ‘greed’ in order to further his agenda to grow the government, which gives these businesses even more leverage to further support higher prices. This lie leads into a complete takeover of these industries by the government. 

This is what we are about to see as private healthcare insurance companies are run out of business by the government insurance.

Capitalism cannot survive a direct war from the government.  The result has already destroying many large businesses and moved the ‘labor’ from the private sector into the government (GM is 60% owned by the government).

To fix this mess, we need to get the government out of the economy and let these businesses compete with each other, which will force them to operate on profits to survive.

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