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Profit is not some arbitrary amount chosen by the owner to fund whatever lifestyle he prefers. It is constrained by competition with other businesses. I don't k

by mhb 7mo ago

Profit is not some arbitrary amount chosen by the owner to fund whatever lifestyle he prefers. It is constrained by competition with other businesses. I don't know why you keep suggesting that the amount of profit can be increased or decreased independently of any other factors. If the profit in this business becomes less appealing relative to other businesses, the owner will change businesses, there will be less competition in this business and the prices will go up. Increasing potential profit. This is basic stuff. Despite your aversion to business owners making a profit and wishing employees were paid more, introducing non-linearities, loss leaders, price inelasticities or any other complication does nothing to change the fundamental point.

mmooss 7mo ago
Most of that I didn't say, but it's certainly true that wage increases are commonly absorbed by reducing profits (or investment) rather than closing the business (!) or increasing prices. Closing a business because wages or any cost go up a bit would be absurd. That is way overstated. Of course there is some undefined point where costs are too high to sustain, but closing and opening businesses is not trading stocks on Robinhood. There are large transactional costs, including to your reputation - investors, creditors, co-workers, business partners, employees, who have invested their precious time, money, and careers and reputations with you, would be very angry (probably they would replace you as CEO and keep going). And how will you pay your mortgage next month? > the amount of profit can be increased or decreased independently of any other factors It indeed can be decreased that way, except that the money has to go somewhere - retained earnings (savings), new gardens in the courtyard, even wage increases.
- mhb 7mo ago
  > Closing a business because wages or any cost go up a bit would be absurd. It is not absurd at all. This is economics thinking. There are always businesses on the margin of staying in business or going out of business. You don't base an argument on the extremes. You look at the marginal cases. It's only absurd in the scenario you're imagining in which every business is somehow able to make so much profit that it's still worthwhile for them to reduce profits and increase wages. But there are other businesses who are willing to decrease profits to compete with that business. This is the precise mechanism of how profit is constrained and how consumers benefit from competition.
  - mmooss 7mo ago
    I can't tell you more than I have. Good luck my friend!

by mhb 7mo ago

mmooss 7mo ago

Most of that I didn't say, but it's certainly true that wage increases are commonly absorbed by reducing profits (or investment) rather than closing the business (!) or increasing prices. Closing a business because wages or any cost go up a bit would be absurd. That is way overstated. Of course there is some undefined point where costs are too high to sustain, but closing and opening businesses is not trading stocks on Robinhood. There are large transactional costs, including to your reputation - investors, creditors, co-workers, business partners, employees, who have invested their precious time, money, and careers and reputations with you, would be very angry (probably they would replace you as CEO and keep going). And how will you pay your mortgage next month? > the amount of profit can be increased or decreased independently of any other factors It indeed can be decreased that way, except that the money has to go somewhere - retained earnings (savings), new gardens in the courtyard, even wage increases.

mhb 7mo ago
> Closing a business because wages or any cost go up a bit would be absurd. It is not absurd at all. This is economics thinking. There are always businesses on the margin of staying in business or going out of business. You don't base an argument on the extremes. You look at the marginal cases. It's only absurd in the scenario you're imagining in which every business is somehow able to make so much profit that it's still worthwhile for them to reduce profits and increase wages. But there are other businesses who are willing to decrease profits to compete with that business. This is the precise mechanism of how profit is constrained and how consumers benefit from competition.
- mmooss 7mo ago
  I can't tell you more than I have. Good luck my friend!