Now, I think my view of private equity is that it is set up to maximize profit. And that’s a healthy part of the free market. That’s part of the role of a lot of business people... ...But understand that their priority is to maximize profits. And that’s not always going to be good for communities or businesses or workers."I've owned several small business in my lifetime. I chuckle when I hear people like Obama say "profit" as if it is a dirty word. What Obama doesn't understand, and what all successful business owners know for certain, is that "profit" is not "part of the role" of a business; profit is the lifeblood not only of a business but also of our economic system. Without profit a business dies. This is a hard concept for politicians to understand because most of them have never owned a business, and all of them do not have to make a profit or close up shop.
property and a free market, as well as capitalism which combines property and a free market into a functioning economic system. These posts can be summed up in a single phrase: In a voluntary trade, both parties to the trade always win. This phrase may strike you as ephemeral or theoretical, as cute but having no concrete relation to reality. Yet, it describes to a "T" how business owners earn their living (and their profits) in our capitalist system.
Properly understood, a private business is nothing more than a prospective trading partner, a vendor offering goods and services for purchase by other businesses and individuals. There is no force or coercion involved. Like eBay, all transactions are free and voluntary. What makes the system work is profit.
When an individual "A" purchases a guitar, for example, from another individual "B" for $100 on eBay, it is obvious that "A" would rather own the guitar than $100 and that "B" would rather own $100 than the guitar. "A" and "B" value the guitar subjectively and differently. "A" thinks the guitar is worth more than $100 to him, and "B" thinks the guitar is worth less than $100 to him. Each trader is satisfied with the deal; each has made a profit, which is the difference between the value each places on the guitar and $100 in cash. If this were not so, "A" and "B" would not go through the trouble of making the trade.
Another way to put this is that profit equals the satisfaction each individual takes away from the deal. Human beings act with purpose, i.e., they act if and only if they believe their state of affairs will be more satisfactory after the action than before. If "A" and "B" were both indifferent about the trade, i.e., if neither "A" nor "B" expected to profit (to be more satisfied) as a result of the trade, they would not trade.
Many progressives make just this assumption. They argue that since human beings are slaves to their emotions and animal instincts, they are incapable of acting with a purpose contrary to these emotions and instincts. As a consequence, they believe human beings must be forced and coerced to act in their own best interests, which are often contrary to their emotional and instinctual impulses. They believe there must be an authority in society which forces and coerces individual human beings not only to live together amicably and peaceably, but also to trade fairly and equitably. Left to their own animal devices, human beings would prey on each other and, as in the realm of nature, the strongest would survive at the expense of the weakest.
No other conclusion is logically possible.