Thursday, July 19, 2012

In Some Parts of America, This Passes For Genius

Stumbled upon this quote, prominently featured on a curmudgeonly blog:
‎"Profits may be the most misconceived subject in economics...To many people, even today, high profits are often attributed to high prices charged by those motivated by 'greed.' In reality, most of the great fortunes in American history have resulted from someone's figuring out how to reduce costs, so as to be able to charge lower prices and gain a mass market for the product." - Thomas Sowell, Basic Economics
I am not an economist, and not an entrepreneur, but it takes a pretty special economist to imagine that "high profits are often attributed to high prices" that stem from greed, as if it were a commonly accepted piece of knowledge.

There are obviously different ways of making a fortune: you can mass produce and mass market a product or service so that you can extract the highest possible price (even if it's fairly low in absolute terms) that most people can afford to spend for it; or you can design, produce, and market an exclusive product, for an exclusive and small crowd of people for whom money is no object. Or perhaps you are a corporation (or a person, as Mitt Romney would say) run by the kind or people Thomas Sowell would extol for their hard work, creativity, and success, and you decide to buy yourself a government and to overcharge it for the goods and services that you produce or render (and sometimes even for things that never see the light of day).

In any case, no one would deny that good business sense and greed can coexist, as they seem to do more and more these days all over the globe, just as no one would deny that they can live on never-intersecting planes.

It should go without saying, and it shouldn't take a professor or two to figure it out, that there are various motivating factors behind the success of many rich entrepreneurs, and that not everybody who ever made anything that was popular and made them a lot of money was motivated by greed. Some people actually achieved great success while in pursuit of a higher goal, of a positive change for society. (In words that Sowell can understand, not everybody is a lying, cheating, and greedy banker or hedge fund manager.)

That's why I find Sowell's quote, and the prominence it was given on the particular blog where I found it, quite puzzling. I wonder what kind of person it takes to read such trifling thoughts and see great and profound wisdom in them. Bah.

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