Profit not a dirty word for businesses
By Gary Wechter
I must say I was outraged after reading Steven Mintz’ op-ed, “Minimum wage hike a moral issue,” in the April 8 issue. “Outraged” when at the end of the article I learn that Mintz is a professor in the Orfalea College of Business at Cal Poly San Luis Obispo. I asked myself, how is this possible?
The article begins by presenting some details of the new law that mandates a minimum wage of $15 per hour in California by the end of 2022 and continues by asking, “Will it raise the cost of products and services so that consumers will have to pay more for the same item?” Great question, right? But he never answers it. He just continues. “Will the products and services be any better or is this just another way of taking from the (relatively) rich and giving to the poor?” Again, he never answers his own question. And then he ends the paragraph by saying, “In all likelihood, product appeal and functionality will stay the same because businesses have never been known to act in an altruistic manner.” Are you kidding me? Did he really say that?
Here’s a thought … how about the university behaving in an altruistic manner by lowering salaries, working harder, doing more fund raising and the like to reduce tuition. That’s the altruism I’d like to see. I’d also like to see some of the professors band together and, with personal investment, start an altruistic business and see how far they go. That would be fun to watch.
But Mintz wasn’t finished. He continued with, “As I see it, the issue is one of greed and it has infected the corporate world for several years.” Again, is he kidding? Is this a satire? Is he just trying to get someone like me all bothered about his point of view? Could he really believe what he is saying? I wish I knew.
And finally, the biggest misperception of all, “Corporations have a social responsibility to advance the cause and improve the well-being of American workers…”
Now I’m not a trained economist, rather a retired businessman who has at least read Milton Friedman and Henry Hazlitt, and I know that what Mintz is saying is nonsense.
The only purpose of a business is to offer a product or service at an appealing price while generating a profit. There is no other reason for a business to exist other than that and it’s not greedy to earn a profit. A business that doesn’t earn a profit is not going to survive (unless it’s a non-profit). The marketplace gets rid of these businesses. Think Blockbuster Video or Haggen or Circuit City.
Businesses that generate a profit provide stuff we need at a price we’re willing to pay. Apple comes to mind as I type into my Mac. Smart and Final now fills the gap left behind by other failing markets and, in turn, provides quality products at a more affordable price. And let’s not forget Walmart, where the struggling among us are able to increase their purchasing power and live a better life in spite of coming from the low end of the earnings ladder. Are we really going to call these companies greedy?
American-style capitalism, with its focus on providing what customers want while at the same time earning profits, is responsible for our long life and comfortable standard of living. Yes, our rich live well. But so do our poor. And, in addition to helping ourselves, we help much of the world fight sickness, poverty and hunger.
So if there’s any name I’d call our small businesses and corporations, it would be proud. I’m proud of what they build for us, the services they provide and the benefits they share around the world.
• Gary Wechter is a retired businessman living in Arroyo Grande.