My college economic classes and experience have taught me this: That an entity (person, organization, company, etc) has to produce value in excess of its cost to be sustainable. This ‘value’ in excess of cost is called ‘profit’.
For example – The company you work for likely has a job description for your position. They have decided that when you fulfill the requirements set forth in the job description, they will be receiving the value of your efforts represented by your compensation package. If you decide to be lazy by not doing the job, or for whatever reason cannot meet its terms, your ‘cost’ rises. You become a liability.
When you buy a car, you expect it to perform at a level commensurate with the amount of money you pay for it. You say that you ‘got a good deal’ when you pay an amount less than it’s perceived value. If you were able to purchase a Lamborghini for $5000, the difference between what you paid and it’s market value ($500,000) would be considered profit.
Nobody expects to go to work and produce for free. Volunteer work is an exception, but in reality is a donation of ‘value’ to an organization. It’s not sustainable. At some point, through the sale of labor, you have to make money (profit) to pay your way. The trick in all of this is to pack as much value into your labor as possible, then utilize leverage to create large profits.
Profits are important because this ‘extra’ can be used in a discretionary manner. Profits can be used to invest and grow a company in the hope of realizing more profit in the future. Profits can be donated to a worthy cause to enable social improvement. Even then, donations are unlikely to be made if the value of the social improvement is less than the amount of donations.
Far too many people today see profit as evil. They see the wealthy spending profit on themselves rather than making ‘social improvements’. Indeed, many wealthy people irritate me. I find them selfish and fearful, willing to destroy others, sacrifice children and marriages in the process. The problem is that the wealthy are absolutely necessary to society as a whole. The fact that the wealthy exist means that the opportunity to be wealthy exists. Simple as that.
The truth is that many poor and middle class people irritate me too. In their pursuit of wealth they are, many times, worse than people that are already rich. Instead of creating wealth, they steal it through government programs and unearned money, but I digress…
I don’t want to be like them though. If I have to be selfish and fearful to be rich, they can have it! But my sense of it is that it doesn’t have to be that way. If my personal needs are met, I have no need of a car that costs half a million dollars that does the same job as my $30k car. I would rather see that money go where it will do the most good. I don’t begrudge anyone their money (as long as it isn’t stolen) and what they do with it so long as it’s legal. Being envious of the wealthy is selfish and fearful too. It’s two sides of the same coin. I certainly don’t envy the poor, but I will say that it is better to be poor at peace with oneself than rich and selfish.
Now if I can just find some like-minded people, I might have something here…