Random thoughts – forgive me if my logic/reasoning is flawed. Just going to put this out there to the 3 people who read my blog! (Thanks, Steve, Mom, Karla).
So I have a company that provides a particular software, that does certain things other software doesn’t. We tell people about it, we show it to them, we find out what their problems are and talk about how our software might help. We let them USE it. We tell them how much we will sell it for. If they want it, then we discuss a bit more, sign a contract. We send them the software to use. They send us some money.
We are a “for profit” company, meaning that we sell the software for more than it costs us to produce/market, etc. the software. Are we evil? Are we less noble than government or non-profits?
Who are we exploiting?
Employees? I cannot coerce someone to work for me. They can give notice at any time. They voluntarily contract with us to be an employee and do certain work, in exchange for certain benefits/payments/value.
Customers? We tell them what we’ll sell it for, and they choose to buy or not. We have a contractual agreement on what we provide, what each party’s responsibilities are. I don’t see any exploitation there.
I can tell can tell you that I’m VERY keen to make a profit. Making a profit means: we may be able to buy a house in Santa Barbara some day, we may be able to finance our kids’ university education, and we may be able to pay for my husband’s heart valve replacement surgery in 8-9 years (yes, we have insurance, but I’m expecting by then the deductible would still bankrupt us:). From our share in the business.
What if the business is a roaring success, and my net worth ends up in the millions? Is this evil? Unethical? Would I somehow be destroying the community/the world? Exploiting someone? Is there a line somewhere to what’s an OK amount of profit and what’s too much? If you knew that the company was going to give 10% of all profits to the Salvation Army, would that make it all better? If you were a shareholder, would you be angry that the company was giving away profits to a charity rather than to you? Maybe you hated the Salvation Army and loved the ALS Association?
Are we less noble than a Non-Profit or Government entity?
We provide a software that helps large organizations communicate better than they could before. Our software helps call center reps get last minute info about power lines being down faster than before, which improves how knowledgeable they are during their service calls. Our software has helped reps on the road find out about price drops before they go into call on customers. Our software has helped executive teams find out how well employees are taking the restructure, or if they really understand the new processes. This is good stuff, and I’m proud to work for a technology company that provide tools that enable these kinds of things. Profits reward the people who started the company, dumped in a pile of money to see if anyone else out there thought the software was as good and as useful as they did. These are the people who also risk LOSING the pile of money they gave to the company in exchange for shares/part ownership. This is innovation. This is what creates economic growth – people figuring out how to do things BETTER, FASTER, for less money/time than they used to do it. This is how we ‘grow the pie’.
Their survival depends on whether they get enough donors to support their cause/project/goal. They are part of the private sector as much as for-profits. I love them! They are valuable and necessary to our community, to positive change in society, to humanity. Do they grow the pie? I think YES – they provide products and services voluntarily that people and entities want. If people/entities decide they don’t want them, they can stop donating. People who take the risk in setting up a non profit, dumping in a pile of money do not expect to get it back. They transfer it to the non-profit essentially – non-profits cannot be owned like for-profits and thus can’t be ‘sold’ or exchanged, right? The reward and benefits from creating a non-profit are somewhat non-tangible. What do you think – frankly I’ve never ran a non-profit or researched the sector. Of course, non-profits that survive on government grants are sort of in the next category, my least favorite.
Did you ever say- “hey, I’m not happy with the state of our schools, and I know that $XXX of my tax dollars is given to schools. I’m going to switch carriers – cancel my service with the local School District and send it instead to the Montessori.”
NOPE, you can’t opt out or go to the competition when it comes to government. If politicians vote to take more from you in tax to pay for a skateboard park behind your home and the public agrees – you HAVE to pay or you’ll be fined/jailed/wages garnished. There is no voluntary contract here.
I’m not a fan of government taking over non-profit functions or for-profit functions, in case you couldn’t tell. Government exists to provide rules, guidelines, consequences so that everyone plays the game fairly. Government is there to stop bad guys who steal, kill, harm, lie, cheat, right? I don’t think gov’t’s job is to pick winners or losers or stack the deck for certain groups and ignore others. Right now, government acts for whomever lobbies the loudest, right? It’s all about special interest groups competing for dollars/rewards taken from someone else and given to them.
Last thought for the day. I’m not a fan of large corporates who provide a service or product not on its own merits in a fair trade and open market but instead get in bed with government to
- pass favorable rules to keep out other companies
- receive subsidies, propping up products and services that DON’T actually provide enough value to stand on their own,
- get special tax breaks for their company or their region or their industry (that others do not get)
- buy off politicians with special pricing, perks, charity donations, community project
This is corporatism, where the elites in gov’t and the elites in private organizations stack the deck. Worst sort of game.
I’m on the tip of an iceberg here, clearly. This keeps getting longer and longer. Next time I’ll get into the value of government – some of the great things it provides.