There are people who think of profits as a bad thing, or at least as something which is inferior to other goals to which a firm’s owners could aspire. This Thomas Sowell column rips that idea apart en passant. The vital grafs:
Back in my teaching days, many years ago, one of the things I liked to ask the class to consider was this: Imagine a government agency with only two tasks: (1) building statues of Benedict Arnold and (2) providing life-saving medications to children. If this agency’s budget were cut, what would it do?
The answer, of course, is that it would cut back on the medications for children. Why? Because that would be what was most likely to get the budget cuts restored. If they cut back on building statues of Benedict Arnold, people might ask why they were building statues of Benedict Arnold in the first place.
This, in other words, is the Washington Monument strategy, in which government agencies purposefully cut their most beneficial activities in order to ensure that funding never goes down. In the sequester hullaboo, we saw plenty of it.
Now, imagine that these decisions were made in a private marketplace without government distortions. Which of the two will likely provide a higher profit margin? Probably not the Benedict Arnold statue series; there are only so many historically-oblivious, ignorant hipsters around, and most of them spent their last $10 on that idiotic Che t-shirt. They do this not out of lovingkindness or generosity to their fellow man, but because that’s where the money is.
Sadly, the world of government is through the looking glass, where everything is backwards and distorted. In this world, cutting the wasteful, the ridiculous, the unnecessary, and the burdensome is a bad thing because it reduces your power. Government agencies have no profit motive, no driving force that tells them that what they’re doing serves to benefit other people who willingly provide money in return for goods and services. All they have is the taxing authority, in which people are forced at gunpoint* to give up their money. This provides no signal at all as to the usefulness of an agency’s various products to those paying the fees, and lets them get away with strategies like the above.
* - Mostly figuratively, but occasionally literally; there are IRS agents who carry guns