“Corporate Profits Lose Steam.” That was the headline atop a recent Wall Street Journal article. For those that become indignant about highly successful and profitable corporations, this should be really great news – right?
But nobody is celebrating. In fact, the sagging profits reports of the past several weeks are thought to be such a bad thing that some believe they have brought about the downward shifts on the stock market as of late (could it be that the business uncertainty caused by our U.S. government could be the problem on Wall Street instead?).
Companies as diverse as Krispy Kreme donuts and the almighty Microsoft have seen profits decline a bit in recent months. Americans – especially the community organizers among us who become unhinged when businesses are successful – should be thrilled about this.
If profits are such a terrible thing, why aren’t we relieved by their decline?
For the record, I have no idea whether or not a recession is eminent. And to the extent that economic activity is nearly impossible to predict with precision, nobody else knows either.
But regardless of whether the economy is moving up or down, Americans need to grapple with this “love-hate” attitude towards profitable enterprise. And let’s start with a couple of philosophical questions: Are profits always a good thing for a company to produce? And is it okay for one company to be really, really, profitable, even when other companies are not?
In some spheres of life – collegiate and professional athletic competitions, for example –Americans have no problem accepting the fact that with each match-up, some will succeed while others fail. Yet when it comes to business, success in producing profits is often seen as merely a necessary evil – and only acceptable if the profits aren’t “excessive.”
Part of the dilemma may well be that far too many Americans assume economics to be, as the term goes, a ‘zero-sum game.” Just as it is the case in many sporting events that one team wins and the other loses, so also it is assumed that if one individual or group is profitable, it necessarily causes somebody else’s unprofitability.
That, of course, is false. In our competitive free market economy, success with one enterprise often creates new markets in which other companies can succeed.
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.