More Profit Is the Enemy: the New Capitalism

July 25, 2017 - 4 minutes read

I have run my own business for more than fifty years. One of my primary goals has been to earn a profit. The idea behind this is simple:  No profit, no business.  To stay in business you have to meet a payroll on time as well as pay your rent, electricity, and telephone bills.

When asked what I want from my business, or from my life, I have often answered with a single word:  More.

If you were to ask the owners, or top managers, of any “for profit” business in the United States how much profit they would like their business to earn next year they would almost certainly confirm my former answer:  More.  After all, if “some” is good, isn’t “more” better?  And aren’t managers rewarded with financial bonuses and promotions when profit increases?

Perhaps.  But I would argue that in the United States today the unceasing quest for more profit is the enemy.

Trained as a CPA, I know how to analyze and evaluate expenses on an Income Statement.  But as a business owner and investor I have also learned that the pursuit of profit incurs many severe costs that will never appear on a financial report.  For example:

  1. At the moment I’m a passenger on a flight from Los Angeles to Hawaii on “We Get You There So Shut Up and Suffer” Airline. The plane is old, not well maintained, and the legroom in Economy is deplorable.  For my next trip I’ll try “Anyone Else” Airline, even if it costs me more.  “Shut Up and Suffer” may earn a greater profit this year, but not next year.
  2. I often offer an incentive out of my own pocket when I’m selling something. My friend Ed, a university professor, spends up to ten percent of his salary to help his students.  We are not focusing on profit, but on value.
  3. At seventy-seven years old I sometimes wonder if I have “sold” more of my life to work than I should have. On the teeter-totter of life when financial gain goes up, must happiness go down?  Often yes.  In my case I’m comfortable with my decision, but I decided when I started out not to reach too high for profit.
  4. I find that many businesses, both large and small, fight for every penny. Up to a certain point a struggle may be needed to survive, or maybe it’s just for sport.  But after a point there is a cost, mental and physical, which I call the friction of conflict.  You will never find “Cost of Conflict” on the financial statement of Exon, Apple, or my company.  But the Cost of Conflict is always paid for in sick tummies, throbbing headaches, or failing relationships.
  5. The goal of more is often unreachable. Failure to Exceed last year’s profit becomes a failure.  But if your salary goes down instead of up might you enjoy yourself more?  There is always a price, often heavy, to be paid for the unrelenting pursuit of More.

Capitalism may be forever, but your lifetime is finite.

I also believe that you can earn and keep more money when you invite more fun into your life, when you let your mind wander in the shower, and when you come into work with a fresh outlook.

I’m on vacation today, and writing this blog is fun even though it doesn’t earn a dime.

Of course, tomorrow I have a ticket back to Los Angeles on good old, and I do mean old, “Shut Up and Suffer” Airline.

Alan

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