“Witnessing” is a much abused term, not least by the way people often go about what they call witnessing. So last night Energion owner Henry Neufeld interviewed Christian apologist Elgin Hushbeck, Jr., author of the Consider Christianity Series, starting with the simple question: When someone asks you why you’re a Christian, what do you say?
There are some very important points in this video, including these: Your answer is about your own testimony, not about your extensive (or not) theological and biblical knowledge; It’s OK to say “I don’t know” and go try to find out; You need to start in prayer and consideration of what your Christian faith means to you; An apologist doesn’t argue people into Christianity or even convert anyone, but rather removes objections; Changing people is up to the Holy Spirit and them.
Here’s the video:
I also want to call your attention to two other books we publish: Constructing Your Testimony (from the Topical Line Drives Series, and thus short!), and Testify! by Doris Horton Murdoch. These are books that might be useful if you wonder what a testimony is and how you might give it.
Tag: Elgin Hushbeck
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Tuesday Night Hangout: Elgin Hushbeck, Jr. on Witnessing
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Politics Moment: Elgin Hushbeck, Jr. on the Status of the U. S. Election
Energion owner Henry Neufeld interviewed Elgin Hushbeck, Jr. and asked him about the Clinton email scandal, the chances of the Republicans replacing Donald Trump at the last moment, and what is likely to happen next in general. Enjoy!
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Are Business Owners Naturally Greedy?
by Elgin Hushbeck, Jr.
In a recent segment on Global Christian Perspectives discussing my last blog post on the minimum wage, the claim was made about opposition to the minimum wage, “That’s greed. Everyone who has argued against a minimum wage, or even a living wage, has wanted to keep the bottom line for themselves.” (@ the 50:00 min. mark).
While an argument commonly heard from supporters of increasing the minimum wage, it is nevertheless false. There are many reasons to oppose the minimum wage. Many supporters of an increase seem to see this as simply an issue between struggling employees trying desperately to make ends meet, and greedy employers who seek to exploit their employees so as to rake in even more riches. In this view supporters put themselves in the role of riding in on a white horse to force the employer to give up a small part of their wealth and return it to those who really earned it.
While such a depiction may work for a movie, or more likely a cartoon, it hardly represents reality. Rather than a struggle between employer and employee, wages are in reality a part of a huge network of interactions. Sure, there is the employee to their employer, but the employer has similar interactions with customer and suppliers. Then there is the interactions with government which unlike the others is one sided; government demands under threat of force. [ene_ptp] To insist by fiat demand that employers pay more to workers is problematic because it artificially puts constraints on one part a system governed by free interactions. Can employers just demand that suppliers cut their costs to make up for the higher wages they must now pay their employees? Hardly, as their suppliers are under the same dictate to increase wages. Can they just raise their prices? Probably not, at least not all the way. After all, if these employers really were as greedy as they are so often portrayed then certainly they would have already done so if they could. The only other place the money can come from is the employers themselves, or from lower labor cost by cutting employees.
This is where the other part of the myth falls apart. Over half of all employees work for small businesses, and small businesses account for 65% of new jobs, yet most small businesses fail with 5 years. Owning a business is not a matter of exploiting your employees, it is hard work and very difficult to do. Many businesses are struggling, and it is not uncommon for a business owner to have to forego paying themselves, because there is not enough money left after paying their employees, and bills. This is why following the recent increases in the minimum wage in both Seattle and San Francisco, many businesses simply closed while others cut back their staff resulting in a lot of people, not getting the increase in their wage that supporters promised, but seeing their wage go to zero. So there are reasons to oppose the minimum wage beyond just greed.
“Business owner” is not just an abstract label; it represents real people, people who as a general rule work very hard and who are concerned about their employees. Yet not only is the charge that just greed is involved false, it is slanderous and thus wrong on both moral and intellectual grounds. It is wrong on intellectual grounds because instead of dealing with the evidence, it short circuits the thinking process. Those making the charge can, and often do, simply ignore any evidence present that runs counter to their beliefs as merely a ruse to mask greed. Thus such slanderous attacks become a form of self-justification, insulating the maker from any evidence that runs counter to their beliefs.
This can be seen in the fact that rarely do I see supporters actually addressing the arguments I raise concerning the damage done to those who lose their jobs, those who lose their businesses, and those who cannot get employed because they do not yet have the skills to be employed at the minimum wage level. No, it is far easier to attack mythical greedy employers rather deal with actual damage done.
In terms of moral grounds, I believe it is immoral to falsely demonize large groups of people. As I have written in the past, rather we must treat people as individuals, and I believe should assume the best until proven otherwise, and yes, I believe this even includes business owners.
Yet many of the arguments put forth to support a minimum wage hike are grounded implicitly and, at times as in the quote above, explicitly demonizing those who disagree. If we were to do this with any nationality, race, or religious group, etc., such demonization would be justly condemned. So why is demonizing business owners, or those who oppose the minimum wage because of the damage that is does any different? Is it not even possible that they are good people who just have a different point of view?
Nor is it sufficient to say something to the effect of “Well they are not all greedy,” and then go back to arguments based on the premise that opposition is still based on greed.
I believe that if one person agrees to hire another, whatever the price that is a good thing. Being employed is better than not being employed, as numerous studies on happiness and self-worth have demonstrated. I also hope that the employees will develop a track record as a good employee and this will allow them to quickly move up the wage scale. If the only job one can find is a minimum wage job, then it is much better to look to the person (do they have skills and work history to get a better paying job), or the job market (why are there not better paying jobs out there). This, I believe would be far more beneficial than making it even more difficult for employers to hire people.
For me the minimum wage is a barrier to some from earning a starting wage. We have far too many people who have never been able to enter into the job market so as to become productive members of society and who are thus are trapped in poverty and dependence. That is not an argument based on greed but on wanting the best for all people.
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Minimum Wage
by Elgin Hushbeck, Jr.
There is a growing movement on the left to increase the minimum wage, or as it been relabeled, a living or in even some cases a just wage. As the relabeling makes clear, this is often seen, not just as an economic issue, but as a moral issues in which greedy business owners are pitted against the oppressed and exploited workers (On the labels, see my previous post).
As Christians we are after all exhorted to “stop expressing love merely by our words and manner of speech; we must love also in action and in truth” (1 John 3:18 ISV). So our duty would seem clear, to take action and stand with the oppressed.
But John’s exhortation is not merely to love through our actions, but also in truth, and herein is the rub. Simply relabeling something does not change its nature. Calling something a just wage, does not make it just. The wages for any particular job are part of a complex web of economic relationships. Employers have work that needs to be done and are willing to hire employees to do that work. Employers are not completely free to set wages at whatever they want. If they pay too low, they will not find people willing to do the work, if they pay too much, workers will be easy to find, but customers are likely to find the prices charged too high. Thus like so many things in the economy, wages are a balancing act between completing forces.[ene_ptp] Often the charge is made that employers are hoarding huge piles of money while they exploit workers. This is belied by the simple fact that most business fail. It is also belied by the fact that workers must be paid first, and many a business owner has had the “privilege” of going without because after paying wages and bills, there was nothing left for them.
Thus it should not be a surprise to anyone that when cities like Seattle raised the minimum wage, many small businesses closed. When San Francisco raised its minimum wage likewise many business closed, including a historic bookstore that was beloved by the community.
Why? It is simple, government can demand that employers pay more, but aside from Obamacare, they cannot demand that customers pay increased costs. In Seattle the average restaurant spent 36% on labor, and made about 4% in profit, the difference going to food and other costs. Without a price increase or labor cuts the increase in the minimum wage would drive labor cost up to 42% – 47%.
It is just math; something has to give. Increase prices too much and customers stop coming. Let employees go and service declines and again customers stop coming. Even before the increase owning a restaurant was not an easy business to be in, so it should not be a surprise that many owners just gave up and closed.
Nor is this restricted to just restaurants. Twenty Two top Retailers have profits of $34 billion dollars, which sounds like a lot. But they also employ 5.8 million people for an average profit per employee of about $6000. Not a lot but a good return on investment that allows these companies to remain in business. Not all of these are minimum wage positions, but increasing the minimum wage tends to shift all wages up so increasing the minimum wage to just $12/hour and this changes the profit into a loss of over $1000 per employee. Increasing this to proposed $15/hour and instead of making $34 billion, these retailers would be losing $34 billion.
To stay in business, they would have to increase their prices, though given customers resistance to price increases that can be difficult. The only other option is to reduce the workforce, which raises the question, what good is a $15 minimum wage if it costs you your job?
In recent years, an additional result of increasing the minimum wage is to accelerate the push to automation. Fast food restaurants are already experimenting with automation both at the counter and back in the kitchen. The higher the minimum wage the more cost effective such automated machines will become.
Thus increasing the minimum wage will have some short term benefit for a few workers, those lucky enough to still be employed when the wage kicks in, but the benefit will be offset by some increase in prices, and this benefit will decrease over time as the economy works itself out to the new higher price level. Others will see their wage drop to $0/hour as they lose their job.
The worst off however will be those trying to enter the job market for the first time. This is the real insidious damage done by the whole concept of a “living wage.” Minimum wage jobs are not supposed to be jobs one can live on. These are entry level positions, positions many if not most people start at, only to move on to better paying positions once they develop job skills and experience. According to government figures in 2014 of the 131.5 million people in the workforce, only about 1% or 1.3 million, earned the federal minimum wage, which demonstrates that virtually all do move on, that is if they can get into the workplace to begin with.
The truly tragic part of such increases, is that it makes these entry level positions even harder to get. Without the entry level positions it can be very difficult for people to learn the job skills needed to get and hold a job. These are skill most of us take for granted, such as showing up on time, acting professional, working hard, etc., but for those who have hired first time employees, sadly for many these are skills that do need to be learned. With chronic unemployment at levels not seen since the Great Depression, now is hardly the time to be further restricting the job market making it even harder for people to get their first job and learn the skills that will allow them to succeed in life.
So while at first blush raising the minimum wage may seem like a compassionate thing to do, it is hardly loving in truth as it causes far more harm than good. Perhaps that is why the new bill passed in California only raises the minimum wage $0.50 per year until the end of Jerry Brown’s term, but $1.00 per year after that until the new minimum is reached, leaving the next Governor to deal with the consequences.
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Why Same-sex Marriage Is Not Good for America
by Elgin Hushbieck, Jr.
[ene_ptp] A supporter of same sex marriage recently asked me, “Why should I care what two people do in the privacy of their bedroom?” It is a common question and even a valid one in some contexts, but it has nothing to do with same-sex marriage, except that it encapsulates a great deal of the problems with this issue.
To see this just consider the following fact, and it is a fact: The recent Supreme Court ruling forcing states to accept same-sex marriage across the country had absolutely no effect on what people could or could not do in the privacy of their bedroom. None.
A major reason for this is that marriage is not a private matter, is it a public commitment, and a societal construct. As someone who has been concerned about what author Maggie Gallagher described as “The Abolition of Marriage” long before same-sex marriage was even on the horizon, much less a pressing issue, I approached this debate as yet another in a long line of attacks on marriage, and in many respects one of the final nails in the coffin of marriage, if not the final.
While I believe there is an important religious component to marriage, religion was not the primary factor in my views. After all, the traditional view of marriage is hardly restricted to evangelical Christians, it is about as universal as any human convention as ever been. Even in societies that had no objection to homosexuality, marriage was still between and man and a woman. The main social experiment was with polygamy, but that seems to be driven more by male desire than family values and was at least until recently seen as undesirable at best, and degrading to women. We are already seeing signs of people pressing for this and other forms of marriage. Given the so-called “legal reasoning” of the decision, I do not seen any way to prevent it, and therein lies the problem.
Something that can mean anything means nothing; that is pretty much where we are today, with the only thread remaining being a grouping of 2. But, given that historically there is more foundation for polygamy, I cannot see how that will be able to stand for long. Marriage will end up being anything and thus will be nothing. It will effectively have been abolished.
Neither do I believe this is at all accidental. Serious thinkers on the left have attacked the traditional family and called for its weakening or elimination as a barrier to the state from the beginning, though the intellectual backing for this is largely unknown by the rank and file liberals.
To them it is just about people (currently two) in love. But if this is the case, why has the traditional family been such a feature of every culture and every time period until now? The main reason has been the raising to children, who it was believed needed a good father and a good mother.
Today we are told that this is no longer true. That the only thing needed is love. While love is certainly important, this is yet another example of ideology trumping reason and the facts. Its core foundational belief, while a mantra for the left from the late 1960s–1990s, is that men and women are the same. Most people have noticed the difference between the sexes from the beginning of humanity. But that did not keep the belief they are essentially the same from becoming an important tenant that lies behind much of modern leftism. It remains a key underpinning, even today and long after science confirmed common sense by refuting this idea.
It is this false idea, that there is no difference between men and women that underpins the notion that the only thing you need is love which has governed so much of the left’s attack on traditional values. After all once you admit there is a difference, then it becomes clear that a mother and a father bring different things to the raising of children, and if you allow for this, then you have a reasonable basis for traditional marriage.
Intellectually this is a death blow to the campaign for same-sex marriage. Its imposition by the courts was grounded on the false belief that the only possible opposition could be homophobia, and this could only be true if there was no basis for traditional marriage, that there fundamentally was no difference between men and women.
The lasting effect of individual same-sex couples getting married will be nil simply because, other than qualifying for social security benefits, little has changed for them. The social effects, on the other hand, will be to both to hasten and lock in the destruction of the traditional family. The message society sends to the next generation will now be that traditional marriage, rather than being the preferred option, will be just one of many social groupings one can engage in. Again, this was already going on long before same-sex marriage became an issue, and the deleterious effects will only be hastened and magnified, though probably still ignored, as they consistently have been.
In addition, there will be the further segmenting of society. Those who do not wish to jump on the bandwagon of the left, those who believe that men and women are different, and that marriage is between a man and a woman, will find it increasingly difficult to live in society. There will be a growing list of professions where those with traditional beliefs will be banned. We are already seeing it deepen the divide in churches and even splitting some churches. And undoubtedly this will hasten the exodus from public schools further segmenting society. In short, this will not unify the country, this will further split and alienate a very large and significant part of the population.
When the court attempted to settle the abortion issue in 1973, they instead created a political cancer that has infected much of politics since that time. I fear that they have done the same thing here, but time will tell.
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Is Something Wrong with Social Justice
We recently released a new book in the Topical Line Drives series, What is Wrong with Social Justice?. In it Elgin Hushbeck, Jr. presents his case that “social justice” is not actual justice. In fact, he claims, it is inimical to true justice.
Energion author Bob LaRochelle has a somewhat different view. While he appreciates the tone and quality of Elgin’s argument, he continues to disagree with the main point.
Join the discussion on Bob’s blog or here.
Also: Watch here for information on a Google Hangout on Air that will feature Elgin and Bob discussing their differences on this issue. The hangout will be on October 28 at 7 pm central time. -
Joel Watts – Question 6 – Answer 1 (Profit)
Links:Question 6
Elgin’s Answer
Joel’s Answer
Elgin Hushbeck – Question 6 – Reply 1 (Profit)Content:
(Note: Content corrected an updated 7/30/13, because the editor posted the wrong content.)
1) You say profits must be kept low. But terms like “low” and “high” are relative terms, and frankly very subjective. What is low or high is very likely to vary widely from person to person, and particularly between buyer and seller. What will be the basis for such determinations?
I think high profit would be something along the lines of what the former Exxon executive received as a retirement package. I must turn again to Aquinas. Money is consumable, unlike land and other means of production. To have more money than is consumable by the individual is against natural law (as Aquinas would state). To have consumable money making money consumable money, neither of which will ever be consumed, this is against natural law. If profit is consumed to provide for the poorest, it is a virtue. If profit is wasted (as in left only to consume itself), then it is sinful.
2) You say “But, to keep them low, one must employ external forces, such as government regulations.” How is government going to perform this role, and what gives you any confidence that they have the ability to fulfill this role?
“They” is not a term I thought we would rightfully use in a Republic. I would prefer the term “we.” The anti-trust/monopoly acts worked well until they were balkanized to the point of non-existence. Further, taxes based on high profit (profit unconsumed either in the means of production or in the means of comfort, but profit consumed only in the production of more profit) would likely yield a comfortable natural force, as was evident before the concept of low taxes means a better economy was the trend in the 1960’s.
3) You say you have different expectations for the profit and non-profit. What are these expectations, particularly when it comes to for profit and government?
I thought we were talking about profit and non-profit, not profit and government. I fully expect a profit organization to seek to make profit for the betterment of its members. A non-profit should seek to raise money for the betterment of others.
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Elgin Hushbeck – Question 6 – Reply 1 (Profit)
Links:Question 6
Elgin’s Answer
Joel’s Answer
Joel Watts – Question 6 – Reply 1 (Profit)Content:
1.) You quote Scripture regarding pay. Are profit and the pay the same thing?
Well, there are clearly some differences; otherwise we would not have separate words. But at their core they are basically the same in that they are the compensation for services rendered.
Where they differ is in how they are paid. Wages are paid for a particular unit of time. But, if we look at a store owner selling a can of soup, it would be very difficult to if not impossible to determine the hours worked to get a can of soup on the self so it could be purchased. As such the store owner is paid for his or her work by the difference between the cost of the can of soup and the amount paid for the can of soup.
This difference also results in another key difference that is often overlooked. Most people see profit only in terms of gain. But there is no guarantee that anyone will purchase the can of soup. If someone works for a wage, they are virtually guaranteed to receive payment for services rendered; as such there is little, if any, risk. With profit, there is rarely any guaranteed and normally there is significant risk.
I have worked both ways. When I worked for a wage I have always been paid for the work I did. When I worked for profit there have been many times where I have not. If my costs ended up higher than I had expected, then my compensation was reduced. In fact, there were many times when I wrote checks for my employees’ wages, and did not have enough money to even pay all my bills, much less myself.
So at their core, they are both compensation, but they vary in how they are paid and the risk involved.
2.) Do you see only one “profit?” In other words, you speak about profit motive, yet we have seen in recent economic epochs the increasing split level of meaning applied to profit. Do you believe in different profits or is there only one profit, with just different avenues to get there?
Similar to the previous question they are all compensation, but there are two things that distinguish among the various types of profit. One is in what the compensation is in exchange for, is it in exchange for a good or a service? There is at times some confusion about this because at times the service being provided is not clear, and at times not understood by many people.
The other is in the number of people being compensated, is it the single owner of a small store, or thousands of stockholders of a corporations?
3.) You write: “You pay a store in exchange for goods and services received.” I would contest that while this is philosophically the case, this is not always true. There are profit centers in business where profit is earned at a greater rate than with other products. Your statement seems to indicate you believe in a fair exchange. Economic practices no longer pretend this is true. Would you regulate fair exchanges? What if the exchange wasn’t fair?
At a minimum I would want to add a lot of qualifiers to these statements, but I would accept the general concept of a fair exchange as a goal, the main problem being how one defines “fair.” But if we ignore that issue for now, I do think there is a need for some regulation. To me the issue is not the existence of regulation, but the purpose or goal of regulation.
Regulation that aims at encouraging choice and competition is good. Because of the nature of regulation, regulation aimed at encouraging choice and competition is limited in nature, as too much regulation creates barriers to entry that stifle competition. On the other hand, regulation that seeks to impose some concept of fairness is doomed to not only to fail, but will ultimately make things worse.
Here is a case in point. A few years back Florida was hit by a hurricane and there were charges of price gouging by gas stations. In response, the Florida Attorney general made a very public point of saying that the states anti-gouging law would be strictly enforced. As chance had it, a few weeks later, another part of Florida was hit by another hurricane. Sure enough this time there was virtually no gouging – because there was no gas.
It is easy to understand, and in fact is simply the law of supply and demand in action. When stations were “gouging” with the first hurricane they were effectively rationing it and people purchased just what they need. After the second hurricane, they simply filled up “just in case” and stations quickly ran out. In addition, with the first hurricane station owners were encouraged to take extra efforts, perhaps purchasing a generator and getting an electrician to wire it up knowing they could recoup their costs. If they did that in the second case, they could easily be charge with “gouging” and end up in court and even fined. So why take the risk?
As for what to do if the exchange is not fair, the first question is who determines what is and is not fair? For me the best solution is to ensure consumers have choice. This will encourage business owners to provide the best value to customers. Again a case in point: There is a lot of competition among restaurants, and prices vary widely. Some places charge more for a lunch than others. But who is to say that one place is unfair and the other is fair? If I have a problem with one restaurant, I can very easily go someplace else.
The bottom line is that given all the factors that are involved in a transaction, so many of which are subjective, it is simply impossible for the government to regulate this in any effective manner and history is pretty clear that the more they try, the worst they make things. Thus government should instead focus on making sure there is choice and competition for consumers and then let consumers decide for themselves which of the many suppliers provide them with the best value.
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Joel Watts – Question 6 (Profit) – Answer
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Question 6
Elgin Hushbeck – Question 6 (Profit) – Answer
For we do not aim to be rich merely for our own sakes, but for the sake of our children, our neighbors, friends and most of all, for our community. For the private fortunes of individuals are the wealth of the state. (Cicero, De Officiis)
St. Thomas Aquinas cites Augustine in saying “The businessman who is eager for profit blasphemes at his losses, and he lies and swears falsely over the price of his goods. These, however, are the vices of the businessman himself, not of business in general, which can be conducted without these vices” (Summa Theologica II-II, 77, 4)
For more of what could be considered my philosophical starting point, see here.
1.) What is the value of profit as a motive for action in the marketplace and competition as a regulating force?
The theology of the scientific theory of evolution is one benefiting us here, I believe. “Life will find a way” is a statement common in movies about dinosaurs resurrected for our benefit and the creators’ profits. But, in this Hollywood statement are tenets of great philosophical struggles. Life will find a way.
Why must life find a way? Because the forces of non-life are always present and are the primary substance of the universe. As of yet, we have found life only on one planet, in one solar system, in one small part of the growing universe. Non-life is the constant of the universe. Yet, we have life.
“Find.” Find implies motive. We must find a way because it is natural. Competition and push-back are those things that drive us in our need to find a way to survive.
The same thing occurs with profit. Without the desire to live by what we make, we do not flourish as humans, but languish as natural beasts of the field. I believe in the concept of human flourishing, that of finding out who we are meant to be. I believe humans are naturally competitors. We compete against our siblings, against our schoolmates, and against one other in the pursuit of jobs, fame, and fortune. Profit and not material gain such as land, goats, and children is the modern goal of that pursuit. To deny, then, the pursuit of profit as a human need is to suggest we have somehow “become as the angels” have thus have need of nothing, not even love. The pursuit of profit is part of human flourishing.
At small levels, competition does present a regulating force; however, when profits are too large and thus power too easily bought, competition is easily snuffed out. Even Adam Smith knew this. When profits are kept low, competition is naturally occurring because more people are able to invest in order to achieve profits. Further, when profits are kept low, this means consumers have more money to spend. But, to keep them low, one must employ external forces, such as government regulations.
2.) Do you trust profit making organizations more than non-profit? Under what circumstances?
This is a rather difficult question to ask, given the wide range of organizations under those banners. Even non-profits must make money in order to say afloat.
I would venture to guess that the reasons many non-profits form as such are the tax laws. If we were to rectify them first, we might see the end of this dubious separation.
As far as a matter of trust, I do not think I can fully apply that term to a non-human entity. Corporations are not persons, my friend. I do, however, have different expectations for the two groups. -
Elgin Hushbeck – Question 6 (Profit) – Answer
Links:
Question 6
Joel Watts – Question 6 (Profit) – Answer
What is the value of profit as a motive for action in the marketplace and competition as a regulating force? Do you trust profit making organizations more than non-profit? Under what circumstances?
While profit and the profit motive are often maligned they are the driving force in most of that we do, nor should this be seen as a problem. As 1 Timothy 5:18 says “For the Scripture says, ‘You must not muzzle an ox while it is treading out grain,’ and, ‘A worker deserves his pay.’” For some, the concept of wages and profit may seem like apples and oranges. But they are really the same thing, the compensation we get for our work.
Like many things, the profit motive can be both overdone and underdone. More importantly, it needs to operate within a system that allows it to be productively channeled, and that system is the free market system driven by choice for consumers and competition among suppliers. If businesses do not provide good value, customers can go elsewhere. Even most not-for-profit organizations must provide value in order to receive donations.
Government has no such driving force. This also explains why government is so wasteful. It has nothing to do with the people, but with the incentives, and the system in which they operate. Government has no competition, and can just demand money in the form of taxes. In fact, to be innovative and save money, for much of government is counter-productive. Administrators who do this would be “rewarded” by having their next years’ budget cut, whereas wasteful administrators are likely to have their budgets increased even more.
When it operates within a system of choice and competition, the profit motive has some very positive outcomes. The first is a desire to improve. Whether this is an individual who goes to school so as to get a higher paying job, or a business that wants to attract more customers, the profit motive drives improvement. The second is that the desire to improve, when combined with competition, pushes people to search for new and better ways to do things; in short it results in innovations.
This is something that most not for profits simply cannot do. Not-for-profits can consume and distribute wealth but they do not create it. To be sure they can adapt to innovations, though they often have trouble doing even that, but rarely do they ever drive innovation. This is particularly true for Government because rather than innovation, government regulates, which by definition hinders innovation. Regulation looks back and seeks to standardize past practices, rather than looking forward to create new ones.
The side effect of all this is a tremendous amount of good for humanity. This is seen both in the increase in the standard of living, and in the tremendous array of products and services that make our lives better, nearly all of which we have because of the profit motive.
In addition, because most resources are limited, the profit motive, when combined with choice and completion drives a more efficient use of these limited resources. The more efficient you are the lower your costs and the higher the profit. Before Rockefeller got into the oil business, most of the oil produced was simply wasted. It was wasted because no one knew what to do with it so it was just thrown away, or wasted because of leaks and losses during transportation, but it was wasted.
Rockefeller sought to improve all aspects of the process, from funding the development of some 300 new uses for the “gunk” that used to be thrown away, to better delivery systems that reduced loss. As a result the cost of the oil used at the time for light dropped from what was for most an unaffordable 58 cents per gallon to an affordable 8 cents, allowing them to have light at night. In the process he created a vast amount of wealth, a vast number of jobs and increased the standard of living for millions.
The profit motive not only benefits the society at large, it benefits the individual as well. There is, of course, the desire for self-improvement it instills, but it goes deeper. At the heart of a system governed by choice and competition is the exchange of value. The employer pays you in exchange for a certain amount of work. You pay a store in exchange for goods and services received.
While the ultimate goal of a business is to earn a profit, if a business makes profit their primary goal, they are sure to fail. This “paradox of business” is simple to understand: who wants to deal with such a business? To attract customers, a business must provide value in exchange for the money they receive. To grow a business must provide a better value than their competition.
To do this one cannot just focus on what they want, they must be concerned with the needs and wishes of others. This is why most companies provide far better customer service than government does. For profit companies are driven by the profit motive which forces them to be concerned with the wishes and desires of their customers.
This also goes a long way towards explaining why those who support free market solutions driven by the profit motive tend to give more to charity than those who support government solutions. The profit motive operating in systems governed by choice and competition reduces poverty, increases the standard of living, make society better, and makes the individual better. What’s not to like?
