THE PROFIT PROBLEM

AN ESSAY

Newspapers often publish stories about corruption and greed. People have an appetite for hearing about well-placed individuals who get caught gorging themselves just a little too much at the profit pot. They relish all the seedy details: The lies, the doublecrosses, the secret cash payments and admonishments to keep quiet. In the end, the public loves these stories because it gives people an opportunity to vent their collective outrage against a villain who “broke the rules” and enriched himself “too much.” After all, only a few manage real success in America; and when they do, they inspire as much envy as respect. When “successful people” stumble into scandal, the public gloats. Finally they get a chance to express their envy. “He profited too much,” they cry. “Now we want his blood.”

Profit always lurks behind corruption stories. “The dream of profit” always provides the initial impulse to scheme, double-deal, deceive, swindle and conspire. Profit sets nefarious gears in motion. But who said that profit is wrong? In fact, private profit motivates virtually all economic activity in a free market system, whether beneficial or not. Without hope of profit, no entrepreneur would take chances introducing a new product. Without hope of profit, banks would not lend money to promising new enterprises. And without hope of profit, inventors would be afraid to invest their toil and sweat creating useful new technologies for everyone else. In short, commercial life springs from our society’s universal quest for private profit. If a person works, he wants a profit. Even the lowliest checkout clerk needs a profit to pay the bills and stave off eviction. In word; profit underscores all economic activity. When commercial actors lose their focus on profit, their balance sheets fail and they go out of business. Even employees must think about profit. If an employee’s compensated labor does not generate profits for his employer, he loses his job. In this sense, profit motivates all economic activity in this country, even if the economic actor at issue does not reap the profit he helps to create.

Why then do we condemn profit in corruption/greed scandals? If we all seek profit in our economic lives, why do we castigate those who win fabulous profits? In my view, we do this because most people have a schizophrenic, love-hate relationship with profit. On the one hand, everyone wants to profit; people live their whole lives seeking profit. But on the other hand—and despite all encouraging rhetoric to the contrary—very few people ever find true success in our economic system. This breeds resentment, bitterness, envy and animosity in all those who work hard for a profit, but never win it. This reflects basic inequalities in commercial life: A few succeed wildly; most do not. While this makes sense from a free market perspective—i.e., success would mean nothing if everyone had an equal right to it—it nonetheless propagates negative human emotions. When a child sees another child with toys, he thinks: “No fair. I should have those, too. How come he gets them all and I don’t.” This is precisely how “average people” react when they hear about a person who makes “too much profit.” Profits are adults’ toys. Everybody wants them; only a few get them.

This may oversimplify the profit problem. But on closer reflection, it largely resolves it. After all, human beings are selfish creatures who tend toward avarice and envy. They want to ensure their own pleasure and success, even if it means denying success and pleasure to others. In a competitive economic system with limited resources, this can lead to genuine social trouble. Competition ensures that “only the best” people make the “big profits” and control the resources. Everyone else struggles for handouts (wages), or perhaps a piddling profit, all the while enriching some economic superior. And because human beings are selfish, they feel resentment when one person appears to enjoy all the advantages, leaving them to struggle for almost nothing. In the United States, dominant social classes maintain the status quo by hypnotizing the population with rhetoric about “equal opportunity,” “class mobility” and “universal success.” These myths convince most people that if they “just work hard enough,” they, too, can win the “big profits.” Even if they barely stand a chance to fend off bankruptcy in our economic system, they still grope blindly after the elusive “success mirage.” The mirage keeps them from completely giving up on the insultingly vain pursuit. More usefully, the mirage keeps them from rebelling against the economic order by fooling them into thinking “they have a chance.” Whether duped or not, most people still feel resentment toward those who make more profits than they do. They simply stay their hands, believing that one day they, too, may finally “make it.” But it is all an illusion.

Corruption and greed scandals bring latent public resentments about profit into the daylight. When some unfortunate politician fails to cover his financial tracks and public realizes just how much money he made in a crooked deal, they unbottle their resentments. The politician may not have even violated any law to make his profit; the mere fact that he benefits suffices to unleash pent-up popular resentments about profit. I find this particularly interesting because it appears that public outrage about “excessive profit-seeking” stems not from profit in the abstract, but rather from the fact that enough people discovered it. In other words, profit-seeking is “OK” as long as you are discreet about it. Scandals break when large numbers of people find out about someone’s “questionable behavior.” If no one discovers certain behavior, it will not result in scandal, even if the behavior is undeniably “questionable” or even criminal. Corruption and greed scandals all involve profit. The public condemns the perpetrators for “shameless profiteering.” But they would not condemn it if they never discovered it. In this sense, the perpetrator’s real error is not profit-seeking; it is indiscreet profit-seeking. No one complains about secret, private, discreet profit-seeking. After all, everyone does that; it sustains our economic system. Yet if a person brazenly makes profits for all to see, he can expect social reproach. The sin, then, is not profit-seeking; the sin is indiscretion about profit-seeking.

As a society, we have a bizarre relationship to profit. I analogize it to sex. Everyone seeks and enjoys sex, just the way everyone seeks and enjoys profit. In some way, we “hunger” for both, even we have moral qualms about our quest for them. Moreover, both sex and profit are “touchy subjects” that demand discretion; we can only whisper about them. We expose neither sex nor profit to candid, open dialogue. No one likes to tell others how big a profit he won in a deal; he worries that he will inspire resentment in those who have been less than successful in business. In the same way, no one likes to brag about sexual exploits in mixed company; he worries that he will inspire resentment in those whose amorous pursuits have been less than satisfactory. Yet everyone seeks both sex and profit. And the problems only develop when there is indiscretion about the subject. This is because human beings naturally feel resentment toward those who achieve success in an area in which everyone seeks success. Still, human beings envy only what they see. To avoid difficulties involving either profit or sex, a person must merely cover his tracks and remain discreet about it.

In my view, this whole discretion complex misses the conceptual point because it mistakes peripheral questions for substantial ones. Why is indiscretion about something worse than the thing itself? Here, we must leave the sex/profit analogy and examine profit alone in the abstract. Objectively speaking, profit-seeking is a much more pernicious vice than sex, if sex can even be deemed a vice. Lust for profit in our economic system leads to far worse social problems than the mere biological impulse to sex. Profit-seeking spawns inequality, unfair competition, disparities in wealth, class discord and pervasive suspicious throughout society. Perhaps worst of all, it disparages human dignity by relegating individual human beings into instrumental “roles” intended to placate a “master’s” greed for personal profit. Given these abstract problems with profit-seeking, we should condemn it more strongly than mere indiscretion about profit-seeking. But that would contravene our entire raison d’etre in a free market system.

Our society, then, maintains its bizarre relationship with profit. After all, if our society candidly condemned profit, it would nullify itself completely. For better or worse in America, everyone lives for profit. We envy those who succeed, but we do not express our resentment until successful people drag their shameless profiteering into the daylight. If they had been discreet about their profiteering, they would have faced no trouble. They would merely have been “good at business.”

What is the lesson, then? The lesson is that everyone wants to make a profit, but no one wants others to know about it. Because when one person gets all the toys, everyone else starts whining. When it comes to profit in our society, it is best to just quietly deposit our checks and shut the hell up. And try not to leave a paper trail on your way to the bank.