August 30, 2019

Profit is the life Blood of Business

Maurice Marwood

Maurice Marwood
Director and CEO/ReStimCo Limited

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I am continually surprised and disappointed by the number of letters to the Editor that are critical of business. Why is it so difficult for people to understand that profit is the life-blood of any business? A normal healthy business only gets to keep about 4 cents of every sales dollar after expenses. No business will succeed by subsidizing a losing operation in order to demonstrate benevolence towards its workers, including H. J. Heinz or Caterpillar or International Harvester, or Ford, or any other business that has departed this region because of its anti-business environment. These 4 cents of profitability are critically important for success, and it’s becoming harder to achieve every time energy costs increase or another frivolous environmental regulation is passed.

For example, Walmart, as one of the most successful businesses, is able to generate an exceptionally good operating profit of about 6 cents on each dollar of sales, and from that they pay dividends back to the shareholders and invest in new capital resources in order to stay healthy and grow. The media would lead us to believe that we all hate Walmart, but the company does not force anyone to work for them or to shop at their stores. And they provide productive employment for over 2.2 million people worldwide.

Business people demonstrate a rare talent—the talent to create wealth on an enormous scale through their ingenuity, hard work and productivity. Carnegie, Rockefeller, Gates, Jobs, Morgan, Buffet, Walmart and others created wealth that did not exist before by building railroads, discovering and producing oil, manufacturing steel and developing time-saving computer hardware and software. And they all reinvest this wealth into other businesses that create more jobs, etc.

These giants solved problems of efficient production that challenged mankind throughout history, and still plagues many developing nations of the world. Their work was life-giving activity. The billions of dollars of wealth created by these giants made people that much better off than they would have been without their efforts. Think of the amazing efficiencies possible today with a computer that would not have been possible without the work of Bill Gates and others like him. The “innovation revolution” spawned by them advanced our standard of living significantly.

Today, there is much discussion about the redistribution of wealth. Many take the creation of wealth for granted, conveniently overlooking the fact that it must be created before it can be redistributed. They imply that earned wealth belongs to everyone and that we have a moral obligation to give it away—i.e. Marxism. Unfortunately, the redistribution of wealth either voluntarily or forcibly by government is routinely commended, whereas the creation of the wealth is looked upon with indifference, or worse, condemnation and punishment.

To forcibly redistribute wealth requires a thief with a gun or a legislator armed with a Bill that authorizes him to take your wealth, the same as a thief. If it’s immoral to steal from your neighbour, then it’s equally immoral to appoint a government bureaucrat to do it on your behalf.

Millions of profitable business leaders provide their employees with the opportunity to do productive work. That is the greatest humanitarian gesture one can make, an act of greater virtue than a handout given by government or the most benevolent “public servant.” Business people do that every day and should be admired for it, not criticized.

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