Suppose you run a business of your own. Maybe you make beautiful Adirondack Guide Boats.
Now these boats are gorgeous and extremely well crafted. A simple model will run you about $5,000. You can get them rigged up with a mast and sail and some other goodies and probably have it run up to about $10,000. At the end of a particularly successful year it is revealed that you made $2 million in profits. Doesn’t this mean that if you decided instead to organize your business as a non-profit, or if the authorities did away with the disgusting idea of profits, that these dandy boats would cost consumers $2 million less?
Such is the thinking of many an economic laymen. Look around you at the store. Watch the envy of your neighbors when they discuss the success of certain local businesses. Watch the contempt that profits are discussed by the political class and in the media. And then ask the following question, “how many millions more would these gorgeous boats cost without the prospect of our craftsmen earning profits in the first place?” Would we even have such beautiful boats?
For an insight into the answer, check this out.