Is profit bad?

A mood is emerging that for-profit enterprises are at the core of problems facing the world today.

Greed in general, outrageous chief executive officer salaries in particular, and bonuses for financial sector employees who harvested bail-out money are indicators cited as proof that business is out of control. But care should be taken not to lump all business in the same category.

Perhaps the greatest womb of free enterprise on earth is the United States of America and this past week bore witness to the changing mood about profit. The race for the Republican nomination turned nuclear, as candidates lambasted front-runner Mitt Romney for his role as former CEO of Bain Capital, stating that he harmed American workers through firings, layoffs and plant closures executed by that company. Such talk can be written off as cheap politics by opponents running far behind, and certainly within a party regarded as business friendly. But where there is smoke there is fire. Those are flames that do not need to be fanned.

There is a sense in Canada, too, that profit is automatically somehow bad. To hear some tell the story, profit almost always comes exclusively at the expense of someone else.

Efforts to privatize government activities such as garbage collection almost always result in accusations of profiteering at the expense of workers. If a service of equal value can be delivered at a cheaper overall price, is that bad? If that same company can turn a profit, should that matter?

Proponents of a competitive bidding process will be content with a free market looking after itself – may the best price win. Opponents of that system will suggest in order to profit the company must be shirking its responsibilities with safety, fair pay, benefits, equipment and so on. Rarely will anyone suggest that introducing a profit model into the mix actually results in innovation and more efficient approaches to service delivery.

Profit is a great incentive for cost control, but it must be tempered with competition to ensure fair pricing. We acknowledge the potential for greed is omnipresent – but it becomes a real problem only when left unchallenged.

It is easy to fall into the trap of labelling business all the same way. The greed and excesses of large multi-nationals chronicled in Newspapers and on television are not necessarily reality when it comes to the small and medium sized businesses that dominate communities in this county. It’s not that simple, nor is it that easy.

Truth be told, every resident in every town should pray every night for local businesses to be profitable. Local profit typically means local investment. When a business is profitable, the store and property shows it.

A business turning a profit can afford to employ people – maybe your neighbours or your kids. If business is good, there is a higher chance that fundraising drives will benefit. Certainly, service clubs and Sports teams usually get a “yes” when business is good.

Growing businesses need more people with a differing range of skill-sets. Factoring in commuter time, many residents might like a chance to work closer to home at a growing firm.

Profitable companies pay corporate taxes – on top of meeting obligations for HST, payroll tax, health care taxes, worker’s compensation fees and sizeable property taxes.

Successful businesses replace vehicles regularly and get them serviced routinely.

Stagnant wages have a better chance of climbing when profits are made. Most employees know if their employer is making some headway they will be brought along with that success.

Local companies that make money each year are less likely to hit the panic button and expel staff when tough times arrive, preferring to embrace a we’re-in-this-fight-together attitude as opposed to everyone being left to their own devices.

Perhaps the most important aspect of the profitable company is its ability to pay bills on time. Timely payment is critical for the success of our local economy.

We see profit as something to admire; not the bugbear it’s been labelled as of late.