CDZ If it doesnt turn a profit

[Tommy Tainant]

Is it worth doing ?
Should some things be subsidised ?
What are they and why ?

 

[TNHarley]

If you get no incentive for doing something, why do it?

 

[SassyIrishLass]

If you get no incentive for doing something, why do it?

Part of the reason Socialism sucks

 

[task0778]

Dang, what the heck was this thread about? Going by the title, somebody complained about corps and businesses moving offshore or closing up if they don't turn a profit? As opposed to what, gov't support at the taxpayer's expense? And for every enterprise or just the chosen few? Surely everyone can see what a giant folly that would be.

 

[oldsoul]

Is it worth doing ?
Should some things be subsidised ?
What are they and why ?

1) maybe, there are more reasons than profit to do a thing.
2) no, not by the government.
3) irrelevant.

 

[Tommy Tainant]

Dang, what the heck was this thread about? Going by the title, somebody complained about corps and businesses moving offshore or closing up if they don't turn a profit? As opposed to what, gov't support at the taxpayer's expense? And for every enterprise or just the chosen few? Surely everyone can see what a giant folly that would be.

Nope, I was thinking more about things like art and science,civic infrastructure and so on. A public park benefits all of us but there is no money to be made.
Same with an Opera House.
Should minority languages be supported ? Childrens play groups.?

 

[usmbguest5318]

Is it worth doing ?
Should some things be subsidised ?
What are they and why ?

If it doesn't turn a profit...Is it worth doing ?

Positive answer:

Economists use the terms "utility" to address this sort of question. Utility refers to the value given and received as construed by parties to an exchange give and receive. There are four genres of utility: form, time, place and possession.

In the business realm, that which, given the "lay of the land," does not contribute to maximizing business profit is usually not worth doing because the very point of commerce is to produce maximum economic profit. (Of course, at the time of any given action's execution, the individuals who decided to undertake them may have incorrectly thought those actions the ones that maximized profit.)

Occasionally firms willfully make short-term non-profit-maximizing decisions. When they do, it's generally because they have no alternative but to do so or because they see making such decisions as the thing(s) to do "now" to maximize long-run profits. Such choices are, however, outside the realm of economics; those are business marketing and management strategy. One might liken them to the sacrifice in chess.

Outside the business sphere, extrapolating economic principles to non-commercial events, people and organizations make all sorts of decisions in order to obtain utility of some measure. In some instances, that utility is predominantly emotional, whereas in others it can be tangible, and still not be profit. When the context is one whereof economic principles are applied to non-commercial circumstances, economic/financial profit is merely a form of utility.​

Normative answer:

Maybe. Maybe not. It depends on the actors' involved nature of and need for whatever utility s/he construes s/he will receive as a result of completing the transaction. For example:

• I sell my and my colleagues' knowledge to economic profit.
• I may sell an old car to free up the space it occupies in my garage, but insofar as I'm selling it for less than I paid for it, there's no economic profit to be had.
• I buy labor and materials to subsequently sell them at a profit.
• I buy "widgets" because having and/or using them please me.

 

[SeaGal]

Is it worth doing ?
Should some things be subsidised ?
What are they and why ?

The federal government doesn't turn a profit. The public school system doesn't turn a profit. Amtrak doesn't turn a profit. National parks don't turn a profit. National forests don't turn a profit, tho' once did. National highways don't turn a profit.

Both federal and state governments heavily subsidize poverty, medical care and the 'arts'.

If you're referring to private industry - it's worth doing if it produces something worth having. If you're referring to public money subsidizing private industry - 'green' energy comes to mind...where the only green worth having is the color of the money going into a few pockets. Not that I'm against renewable and clean. Like harvesting timber - the ultimate renewable resource.

 

[fncceo]

Is it worth doing ?
Should some things be subsidised ?
What are they and why ?

Who decides if it's 'worth doing'? Every 'worthy cause' has a negative effect on someone. There is no better method for deciding what the people think is worthy than the open market.

 

[usmbguest5318]

Is it worth doing ?
Should some things be subsidised ?
What are they and why ?

Who decides if it's 'worth doing'? Every 'worthy cause' has a negative effect on someone. There is no better method for deciding what the people think is worthy than the open market.

That's just not accurate. There are several qualities that people think are "worth it" and that free markets never provide in sufficient quantity to meet demand. Free markets, left alone, do one thing very well; they optimize, with regard to profit maximization, the allocation of resources. That is, they are excellent at providing what people want, but not necessarily good at providing what people need.

• Always-high-enough quality -- Since profit maximization is the biggest motivation for firms, they may try to reduce their costs unethically by polluting the environment or by exploiting workers.
• Merit Goods -- Goods and services that are not profitable will not be produced/run. Rural communities will suffer as a result e.g. in terms of transport and post. For example: Rural hospitals may not be profitable to run but are necessary and rural people surely think health care is "worth it."
• Justice and equity -- Large firms can still dominate certain markets, even where there is competition, and exploit suppliers (by squeezing their prices down) and consumers (by charging higher selling prices) to maximize profits. Amazon has done this in the book industry by dictating unfair terms to publishers.
• Employment -- Certain members of society will not be able to work like the elderly or the unemployed (because their skills aren’t marketable). They will be left and will fall into poverty (remember if there is no government, they cannot be helped).

Now, I have responses to those downsides of the free market, but, at least normatively speaking, most people don't much care for them. The reason most people normatively oppose my responses is because to act in accordance with those responses, they'd have to change something or the way they do one or several things.

For example, my response to the merit goods shortcoming is this: (1) move to a place where it's "worth it" for someone/an organization to profitably provide the good/service one demands, (2) stay and accept that not having that "thing" is part of what one has chosen willfully to forgo. "Move" is one of my two responses to the matter of one's skills not being demanded by employers, the other being develop skills that are in demand where one is. Why are those my responses? Because, for most individuals, nobody is forcing them to stay where they are; they're choosing to do do. Thus they must accept the "good" and the "bad" of their choice.

Economics is all about behavior in the face of scarcity. All sorts of things -- physical and conceptual --are scarce. No matter what it is that is scarce, because there is scarcity, each of us, organizations and individuals, must decide which of those scare things we most value. Those choices and one's situation may mean that one must do without one or some of those scarce things in order to have others which one values more highly. One can either change one's choice or change one's situation. People who are unwilling to change either or both of those things don't like my responses.