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Monday, December 29, 2003
I love Thomas Sowell. He's written a 3-part series in defense of profits. He makes his points so easy to understand I wonder why it's taken me so long to get it. Maybe that just highlights my deficiencies, but I think, rather, it highlights his genius. He, among so many, is the one who makes it crystal clear.Here's the killer point from the first segment:
If profits were just extra costs arbitrarily added on to the costs of production, then non-profit institutions or whole countries that operated without profit, such as the Soviet Union, would have had lower costs. Almost invariably, however, enterprises that operate without the incentive of profit have had higher costs, not lower costs.
Economically illiterate people -- which, unfortunately includes much of the intelligentsia -- have never understood the role of profit as an incentive to keep costs down.
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