Wednesday, November 04, 2009

P-Mac's Short Course on Profit

P-Mac has a great essay here.


The error is in thinking profit is some kind of overhead, best squeezed out. It is not. As my economics professor way long ago, Don Salyards, taught me, profit is the payment to one of the four factors of production. Land is paid by rent, labor is paid by wages, capital is paid by interest or investment returns, and entrepreneurial effort is repaid by profit. Profit is the reward for recognizing that if you do things this way rather than that, you just might be able to produce something for less than you can sell it for

While discussing "obscene profits," Patrick forgot to mention Habushhabushhabushhabush's Miller Park profits, by the way.

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