To Heck with Entrepreneurship…. Profits are Bad

Okay, the my title is heavily laced with sarcasm and I certainly don’t believe this but if you watch the video enclosed below you’ll find that this sentiment is something that some people do believe. Me… well I’ve kept silent as long as I can. When I saw this video in a brief flash I got a picture of what our country might be like in another decade unless the silent majority starts stepping up to the plate and helping to lead. My next comments are neither Democratic or Republican in nature – they are squarely American… as in I believe in freedom, free markets and personal responsibility (novel idea).

Thanks to a friend, I saw this YouTube video post included below from a gentlemen that went to one of the recent national political conventions and talked up a bunch of people about an idea he had to ban or cap corporate profits. His commentary on the front-end of the video I could have done without but the overall Q&A was pretty startling. When I saw this I thought that’s crazy, who could possibly support such a crazy idea. But guess what, people agreed….

As a business owner now, and at varying times in the past, sometimes successful and sometimes not, the necessity, the imperative, one of the base-line goals was to always turn a profit. In my lexicon profit is a good thing. Profit shouldn’t be a bad word. After watching the video I feel like somewhere along the line this word has become ammunition in a nasty political fight that tries to boil down the nation into have and have-nots.

I could drone on but any half-way intelligent person is going to quickly grasp the concept that corporate profits are the life-blood of our economy. Anybody that argues otherwise doesn’t understand economics or probably needs to head back to school. Healthy businesses that are able to make profits from their efforts, risk, good management and well paid team members (i.e. employees) is what our nation not only needs but wants.

In a properly functioning corporate entity that is market incentivized to innovate and deliver great products and services, the company wants to invest, innovate, grow, and hire the best talent. When these things happen our nation benefits in a variety of ways, some of which includes:

  1. Jobs – Companies growing with profits can hire more people, duh…?
  2. Community Growth – New jobs in communities have a cascading effect and drive the local economy
  3. Investment – Companies use corporate profits to build infrastructure (materials, equipment, contractors, etc.)
  4. Dividends – Companies growing sometimes distribute earnings in the form of dividends
The idea that people could be so uneducated or so jaded to believe that corporate profits are evil shows that whatever path we are on as a nation needs to be calibrated back to reality.  I’m sure in North Korea and other places the idea of centrally planned enterprises might work just fine but not here.
I hope that each voting person in the US can put aside the partisan politics and realize that when corporations and individuals do well that’s a good thing.
Here is an example of 2 large corporations and how they spent their profits in 2011.  Imagine if the government capped their profits?  What would then happen?  Let me know your thoughts via comments.

EXXON
2011 Fiscal Profits: $40 Billion
Full Time Employees: 82,000
2011 Profits / Cash in 2012 Spent On:
*Inventory ~ ($2.2 B)
*Capital Projects ~ ($31 B)
*Dividends ~ ($9.3 B)

APPLE
2011 Fiscal Profits: $25.9 Billion
Full Time Employees: 60,400
2011 Profits / Cash in 2012 Spent On:
*Inventory ~ ($275 Million)
*Capital Projects & Investments ~ ($36.8 B)