Sowell on Profits

Sowell on Profits

Part I

Thomas Sowell: Profits without honor

To the economically illiterate, if some company makes a million dollars in profit, this means that their products cost a million dollars more than they would have cost without profits. It never occurs to such people that these products might cost several million dollars more to produce than if they were produced by enterprises operating without the incentives to be efficient created by the prospect of profits.

If "obscene profits" are what cause pharmaceutical drugs to cost so much, why haven't socialist countries set up their own government-owned pharmaceutical enterprises to produce drugs more cheaply? Why don't non-profit organizations here do that?

It is because rhetoric is cheap but creating drugs is not. Recent estimates are that it costs $800 million per new drug. That is why drug prices are so high. But needless suffering and premature deaths are even higher costs.

Part II.

Thomas Sowell: Profits without honor: Part II

"Never speak to me of profit," India's legendary leader Pandit Nehru once said to that country's leading industrialist. "It's a dirty word." Policies based on that attitude cost millions of Indians a better life for decades, by stifling India's businesses.

Indian businesses flourished around the world -- except in India. Only after India's severe restrictions on business were lifted in the past dozen years has its economic growth taken off, creating rising incomes, employment and tax revenues. This poverty-stricken country could have had all those things 40 years earlier, except for a prejudice against a word. . . .

For these kinds of non-profit organizations, the sky is always falling or we are threatened with seeing the last few patches of unspoiled land paved over for shopping malls, virtually everything is "unsafe," we are running out of natural resources, and air and water are becoming dangerously polluted.

Facts do not make a dent in these claims. No matter how much data show air and water pollution to be far less than in the past, that only a small fraction of the land of this country is paved over, or that there are far more known reserves of natural resources than there were half a century ago, or that life expectancy is increasing despite innumerable "dangers" proclaimed by hysteria-mongers, the media continue to take these people seriously because non-profit is equated with unbiased.