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// This is what we call the Myth of the Profit Motive that underpins a lot of capitalist propaganda Comrade, I am curious - what is the economic system of the

// This is what we call the Myth of the Profit Motive that underpins a lot of capitalist propaganda Comrade, I am curious - what is the economic system of the country you live in? And if it's not socialist, why have you not migrated to one of the existing socialist paradises? I ask this as someone whose family made the move in the other direction. Life in capitalism is better empirically than the alternatives, it's not propaganda for millions of us who experienced it both ways. // Our outcomes (eg life expectacy) are generally worse because we restrict access only to those with money. Is that true and is it accurate to compare say Sweden which is a small, uniform country (everyone is an in-shape middle class white guy) to the US which is vast and diverse in every way?

ryandrake 4y ago
You don't have to go to that extreme. The Myth also says that with less profit motive, less would happen. But, is that really true? If a profitable corporation has to pay a little more in taxes, and thus becomes slightly less profitable, will shareholders simply decide to "Go Galt," close the business, and stop making that delicious profit? I don't think so. If I was a business owner, and I had to go from making "great profit" to "good profit" I'm still thrilled because I'm profiting. I'm not going to take my ball and go home. Businesses close when they make no profit, or when there's not a market fit, or for many other non-tax-related reasons. I've never heard of a business failing simply because their taxes were too darn high.
- Kalium 4y ago
  To be clear, shareholders do routinely pull their money from companies they believe are underperforming. This is what's happening when a stock price drops or bond rate climbs after a company's earnings fall short of expectations. Investors are generally not equally thrilled with a mediocre profit instead of a great profit because any profit is delicious. Do they "Go Galt"? No, but their money often goes somewhere else. A different company, a hedge fund, or even a different country are all options used quite regularly. Taking their ball and going to play somewhere else with some other people is always an option. Tax policy can and does influence this.
- jandrewrogers 4y ago
  You are ignoring that the net profit has to be sufficiently high to offset risk in the financial calculation. Expected ROI calculations are always net of taxes, inflation, and risk. Many businesses that look "profitable" on paper are uninvestable due to inflation and risk, so reducing realized net profits pushes more businesses into this category. There absolutely is a level of positive profit below which it makes more financial sense for investors to sit on their money. Governments are aware of this and set their taxation policies accordingly. That is why long-term capital gains usually have a relatively low tax rates. There is a high drag on expected ROI due to inflation and risk that makes many of those investments unattractive ceteris paribus.

ryandrake 4y ago

You don't have to go to that extreme. The Myth also says that with less profit motive, less would happen. But, is that really true? If a profitable corporation has to pay a little more in taxes, and thus becomes slightly less profitable, will shareholders simply decide to "Go Galt," close the business, and stop making that delicious profit? I don't think so. If I was a business owner, and I had to go from making "great profit" to "good profit" I'm still thrilled because I'm profiting. I'm not going to take my ball and go home. Businesses close when they make no profit, or when there's not a market fit, or for many other non-tax-related reasons. I've never heard of a business failing simply because their taxes were too darn high.

Kalium 4y ago
To be clear, shareholders do routinely pull their money from companies they believe are underperforming. This is what's happening when a stock price drops or bond rate climbs after a company's earnings fall short of expectations. Investors are generally not equally thrilled with a mediocre profit instead of a great profit because any profit is delicious. Do they "Go Galt"? No, but their money often goes somewhere else. A different company, a hedge fund, or even a different country are all options used quite regularly. Taking their ball and going to play somewhere else with some other people is always an option. Tax policy can and does influence this.
jandrewrogers 4y ago
You are ignoring that the net profit has to be sufficiently high to offset risk in the financial calculation. Expected ROI calculations are always net of taxes, inflation, and risk. Many businesses that look "profitable" on paper are uninvestable due to inflation and risk, so reducing realized net profits pushes more businesses into this category. There absolutely is a level of positive profit below which it makes more financial sense for investors to sit on their money. Governments are aware of this and set their taxation policies accordingly. That is why long-term capital gains usually have a relatively low tax rates. There is a high drag on expected ROI due to inflation and risk that makes many of those investments unattractive ceteris paribus.