Condemning the Profit Motive: Part 3

While most people accept that business are in the business of pursuing profits, this pursuit nevertheless prompts many complaints, In two previous posts, I outlined ten objections to the profit motive, and I tried to counter each in turn. In this post, I offer ten more complaints that allegedly result from the pursuit of profits.

See what you think of this next set, and let me know your thoughts in the comments!

 

21- Manipulation of financial markets

Entrepreneurs have manipulated financial markets in the past and are likely to do so in the future. One of the more notorious examples was the Hunt brothers’ attempt to corner the silver market back in 1980. They lost over $4 billion in the attempt.

On the other hand, the Federal Reserve Bank manipulates financial markets as part of its charter. Its easy money policies contributed to the inflation of the 1970s, the Dot Com bubble, the Housing Bubble, and the current wave of bank runs.

While financial manipulation by an individual or a firm may cause serious problems, the impact of government manipulation is usually far more widespread and devastating.

 

22- Expansion of insider trading

Making insider trading both legal and public would be a service to investors. Company officials buying or selling large amounts of their own stock would be a useful indicator of the company’s health. While insider trading is not inherently immoral, government officials trading stocks based on their knowledge of pending votes is immoral and all too frequent.

 

23- Controlling government policies

Firms can’t control government policies without government acquiescence. That said, industry influence is unavoidable given government intervention in the marketplace. When an agency is created to regulate an industry, where can it go for industry expertise other than the industry itself? Who has more incentive to lobby the agency than industry leaders? When bureaucrats retire from the agency, where can they go for second careers other than the industry about which they’ve spent their professional lives learning?

 

24- Disregard of human rights

Companies have been accused of human rights violations by building “sweatshop” factories in developing countries. In cases in which activists have succeeded in shutting down those factories, however, the laid-off workers have often had to resort to prostitution and drug trafficking to stay alive. Working conditions that Americans find unacceptable are often the best options that people in impoverished nations have. Taking away those options doesn’t make their lives better however good it makes activists feel.

 

25- Ignoring consumer needs

Companies that ignore consumer needs don’t stay in business long. By contrast, governments routinely ignore consumer needs. Unlike private firms, they don’t have to cater to consumers to stay in business.

 

26- Incompetent distribution of funds

Companies that incompetently distribute their funds don’t stay in business long. By contrast, governments are routinely profligate with taxpayer dollars.

 

27- Corrupt leadership

As opposed to Obama, Trump, and Biden who routinely ignored their oaths to abide by the Constitution?

The ESG (environmental, social, governance) movement’s whole aim is to corrupt corporate leadership, redirecting their efforts away from their fiduciary and contractual responsibilities and toward “social justice” issues that are not only ill-defined but beyond both their control and competence.

 

28- Lack of consumer choice

What happened to Bernie Sanders’ complaint that consumers “don’t need 23 choices of deodorant”? Which is it, too much choice or too little?

 

29- Ignoring consumer safety

Companies whose products hurt people are subject to fines, lawsuits, and bankruptcy. By contrast, government agencies that cause harm face no such penalties. For example, what recourse does a patient have when the FDA is slow to approve a life-saving drug that has been on the market in Europe for years?

Perfection is not an option. People can be hurt by nearly any human activity. Ideally, the injured should be able to obtain restitution from those responsible. While our tort system does enable people to obtain compensation from private individuals and companies, the government often refuses to pay compensation for the damages that its actions cause.

 

30- Tampering with medical research results

The Food and Drug Administration (FDA) requires drug companies to conduct clinical trials to show the effectiveness and safety of their own drugs. Yes, the FDA establishes strict guidelines for drug trials, reviews the reports, analyzes trial data, and can require additional studies. However, its requirement that companies test their own drugs creates an inherent conflict of interest. Moreover, if a drug does cause harm, the fact that it has been approved by the FDA can reduce the manufacturer’s liability. The problem is less with the profit motive than with the perverse incentives that FDA regulations have created.

 

 

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Richard Fulmer worked as a mechanical engineer and a systems analyst in industry. He is now retired and does free-lance writing. He has published some fifty articles and book reviews in free market magazines and blogs. With Robert L. Bradley Jr., Richard wrote the book, Energy: The Master Resource.

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