American Elephants


The Business of Businesses is to Create Value by The Elephant's Child

Back in 2011, a Rasmussen survey taken on August 20 and 21st found that 64 percent of Americans actually believe that the most basic goal of businesses is “to create jobs for the overall economy.”  Only 25 percent of respondents understood that “the primary objective of a business is to create value for the shareholders.” In other words, to make a profit. The socialists among us have so demonized the word “profit” without any understanding, that people get confused.

We have a lot of people in this country currently unable to find a job, and a lot who are working at jobs for which they are overqualified. So jobs are a big concern. Jobs, however, are not created out of thin air, or wishful thinking, and businesses are not charities.

Business begins with an idea. Someone thinks he can make money with his idea. Unless he is independently wealthy, he must raise money to start. He has to sell his idea to people who will believe that his idea will create value. Those people will become shareholders, giving our idea man enough money to get a start, and he in turn, gives them shares or rights to future value.

With that financial backing he can hire people to do the jobs necessary to create the value promised to shareholders and continue to create value so they will continue to support him.  Investors will stick around only so long buoyed by hope for future profits. They expect to get their money back, with some more value thrown in to reward them for risking their money.

“Profit” is not a dirty word.  People have long been confused by the political left— academics and media people who simply do not understand the profit motive. A successful idea, well-implemented, can create many jobs, not only in their own offices, but in all the companies that supply a business: raw materials, shipping containers, computers, equipment, janitorial services, transportation, and so on; and the same increase happens in each of the suppliers’ businesses.  Free enterprise at work.

But a free market economy is always changing, growing, and there is ‘creative destruction’ too. Here are a couple of examples that will clarify it all. Though each short video could prompt another few essays.

The MSRP for a Tesla Model S — $106,200. Tax and license extra. But the EPA: 101 city/102 hwy (MPGe)


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Reblogged this on Utopia – you are standing in it!.

Comment by Jim Rose




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