What is Profit
Is Profit a Dirty Word?
By Daniel Muniz
 

prof•it Pronunciation: 'prä-f&t Function: noun Usage: often attributive Etymology: Middle English, from Middle French, from Latin profectus advance, profit, from proficere 1: a valuable return: GAIN 2: the excess of returns over expenditure in a transaction or series of transactions; especially: the excess of the selling price of goods over their cost 3: net income usually for a given period of time 4: the ratio of profit for a given year to the amount of capital invested or to the value of sales 5: the compensation accruing to entrepreneurs for the assumption of risk in business enterprise as distinguished from wages or rent Source: Merriam-Webster Online Dictionary

In a previous job, my employer gave us a presentation about the company mission and explained many of the corporate objectives. Part of the presentation was about employee behavior and the impact it could potentially have for the entire company, especially in a litigious environment. In explaining why our corporate headquarters wanted every employee to behave in a professional and appropriate demeanor, the presenter then asked us why we are in business.

There were a number of blank stares in the conference room but no one answered.

And the marked silence wasn’t because nobody knew the answer.

I have a degree in Accounting but I didn’t want to blurt out that the reason the company exists is to make money. It somehow seemed a bit awkward to say that and I realized that most of my co-workers, including someone from upper management, felt the same way.
 

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The presenter rephrased the question again by asking us what the company wanted at the end of the fiscal year.

Still, no one responded.

And I could see that even some of the seasoned and experienced managers who have worked all over the world for many different corporations now fidgeted and looked very uncomfortable. At this point, I realized that nobody was going to say anything regardless of the prodding.

Exasperated, the presenter finally blurted out, “profit is not a dirty word.”

She then explained why we as a company needed “profit” and why it was important, such as funding our salaries and raises, financing new equipment, etc. And all the reasons were good common sense points of why we were in business and why our conduct had to be as professional and as ethical as possible on the employee level in particular as well as on the corporate level in general.

I quietly giggled to myself while a number of us almost breathed a collective sigh of relief.

The word “profit” may not be a dirty word but it definitely is a politically incorrect word. And I could vividly see that in a room full of people who openly embraced the free market system that no one wanted to engage in political correctness at the workplace.

But why are so many people scandalized when a corporation or a person makes a profit?

First, there is a segment of the population who feels that profit smacks of vulgarity. In fact, there are a number of people who do not even mind if a governmental entity is inefficient and wasteful in performing a task as long as there isn’t some corporation making money. And it is irrelevant if a private company is vastly more better organized and innovative in doing the same service for less money.

Overall, a group of people has succeeded in painting corporations as corrupt and greedy, hence the political incorrectness of profit. In fact, the left wing has mastered the art in depicting anyone who has consistently made profits as selfish and exploitative. And oftentimes, this caricature is taken further to depict someone as ruthless and uncompassionate especially when decisions are made for economic reasons.

And you see it everywhere.

Government and environmentalists have greatly restricted the oil industry, thus supply and refining capacity have very tight tolerances. The moment that the delicate paradigm is broken, fuel prices go through the roof. But when tight supplies and insatiable demand creates additional profits, oil executives end up sitting on congressional committees explaining basic economics to our elected officials.

And the same has happened to plenty of other industries. Make a profit and government and activist organizations get mad.

But what is the government going to do? Nationalize certain industries or regulate them further and then drive prices even higher?

In addition, the media has a taste for scandal. Certain executives have mismanaged corporate money that caused bankruptcies. Such behavior is wrong and illegal but the press loves extremes and it enjoys sensationalizing these stories without ever bothering to give all the facts about our free market system.

Yes, corrupt people do make a profit but so do so many other ethical and honest people but the media hardly ever shows it that way. This type of sloppy journalism is what has given so much ammunition to the people who hate free enterprise.

But most importantly, who creates prosperity?

Is it the government that creates prosperity or is it free enterprise?

That is a question in which a lot of people have to give quite a bit of thought to because they really don’t know. Unfortunately, there is a lot of ignorance of basic economics and the media helps perpetuate that.

In all truthfulness, the government does not create a booming economy although that has never stopped politicians from claiming credit for it. Prosperity comes from the hard work of corporations and small businesses who have built an awesome economical infrastructure that is the envy of the world. And it was built out of profit.

But what is the purpose of profit? Below is perhaps one of the best explanations that I have read:
 

Profiting is like breathing. As humans, we must breathe to live, but we do not live to breathe. As a company, Big Idea must profit to exist, but we will not exist merely to profit. Source: Big Idea - Mission Statement

Big Idea is the corporation that created the immensely successful children’s animated Veggie Tales series. And this explanation illuminates the reason why profits are necessary and why corporations need them.

Investors must get a reasonable return on their investments so that they can continue to invest in their organization. Profits also help finance expansion and economic growth for the country. Profit allows people to keep their jobs and it helps improve their job situation with raises and other benefits. And profit also allows responsible corporate citizens to donate to local charities and become a viable part of a community. And profit can be taxed which is about the only thing that the left wing tolerates about it.

Yes, there are people who only live for profit. And they are absolutely free to do so as long as they don’t break the law.

However, everybody else is able to do quite a bit of good with their share of profit and salaries. Some are able to do so directly and most do so indirectly. Overall, our salaries are a vital part of this economy and our taxes help forge a civilization here and abroad.

And by the way, contrary to popular belief, the richest people in this country are also the nation's biggest philanthropists.

Looking back, I was uncomfortable with the political correctness of “profit” but I am definitely not ashamed of making money. I suppose that the political correctness of it in today’s social environment is unfortunate.

But profit isn’t a dirty word and in the future I won’t treat it as such.

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