John Singleton with Bob Howard, Rip Van Australia (Stanmore: Cassell Australia, 1977), pp. 204-08, under the heading “Profits”.
It is a socialist idea that making profits is a vice.
I consider the real vice is making losses.
WINSTON S. CHURCHILL
Profit is the driving force of the free market. It determines where, and in what quantities capital is invested. It determines what is produced, in what quantities, and of what quality.
Profit can be measured in many ways, but the most common is in money. It could be argued that too much emphasis has been placed on money, and as a result, the pursuit of profit has come to be regarded as a regrettable, though unfortunately necessary, evil. Another way of putting this would be to say that too much emphasis has been placed on short-term profits, and not enough consideration has been given to the requirements of long-term profits. For example, a ruthless businessman could get larger short-term profits by brutally exploiting his employees, but by so doing he would be signing his long-term death warrant. Competitors who offered better working conditions would take his employees away from him, or, if the practice was widespread, the conditions would produce a situation favourable to the growth of a strong, anti-business Union movement. Furthermore, the general attitude of people to business would be hostile, and favourable to government legislation to control business. In all these ways, there have been enough short-sighted people in business to bring all these problems (and attempted solutions) into being in Australia today.
Profit is a dirty word, and business is regarded with suspicion and even hatred. The proposed solution is to get rid of the evils of greed and its consequent rush for profit, and to put “a human face on business” by turning it over to “society as a whole”. In other words, to turn to socialism, or some variation of it.
While one can, to some extent, sympathise with people who feel this way, it is not possible to agree with them. Their proposed solution is far worse than the problem, and arises from a basic misunderstanding of both business and people. This is not to deny that there have been bad businessmen, and bad business practices. There have been, and always will be.
But what is profit? How does it arise, and what does it signify?
The first thing is to understand something fundamental about human nature: people will only act when there is some incentive to act — for example, when they can see some profit in acting. A businessman runs his business to make money. He may also love his occupation, and a get a kick out of the whole business experience — out of the challenge, the competition, the enjoyment of his skill. But he must make money to survive.
A person in a burning building will (usually) try to get out of it. His profit is staying alive. Another person might work hard for twenty years to spend two years lying on the beach. His profit is being able to escape from work. Others might work to help others, because of the sense of satisfaction and fulfilment this gives them. Whatever the situation, people act because they have some incentive to do so. In most cases, this incentive, directly or indirectly, involves getting money. Money is either an end in itself (for example for a greedy miser) or a means to other ends (allowing a life of luxurious leisure, or gaudy ostentation, or whatever).
The pursuit of this profit motive usually involves trade. This again is a commonly misunderstood process. It is often thought that in any trade, there is a winner and a loser. There isn’t, unless the trade is a forced one. In any voluntary trade, all parties must gain (or at least, at the time of the trade, believe they are going to gain — they could, of course, be mistaken) or the trade would not occur. A common example of this is the used car business. The buyer looks for a car to buy. The seller has cars he wants to exchange for money. The buyer rejects many cars because either he can’t afford them, or, in his opinion, they are not worth the money he’d have to spend to get them. In other words, he decides he’d rather have his money than that particular car. At last he makes up his mind on a car he’d like. He tries to beat the salesman down. The salesman may drop his price a little, but finally reaches a point where he will go no lower. Beyond that point, he’d rather have the car than the money.
When an exchange finally does take place, implicit in it are the facts that the buyer, at the agreed price, preferred the car to the money, and the seller preferred the money to the car. They both get what they want — they both gain.
Even if the buyer was in a position where he didn’t really want a car, but had to have one for a job he wanted, he still is making a net gain. The desire for the job outweighs the reluctance to buy the car.
In any voluntary trade, all parties believe at the time of the trade that they are going to gain from it. Therefore, one person’s profit is not another person’s loss. The price paid is a measure of the balance between the buyers demand and the available supply. You might be tempted to say that that’s all very well. A “reasonable” profit is okay, but why should an unscrupulous person be able to fleece other people and make “excessive” profits just because of, say, freak circumstances? Nobody minds “reasonable” profits, but “profiteering” should be outlawed.
Why should it? The “excess profit” situation sometimes arises during time of personal suffering, for example, Queensland’s annual floods. Motorists are sometimes stranded for days at a time with floods in front of and behind them. “Profiteering” takes the form of excessive prices for food, drink, shelter or a tow out of the water, and the public cry of disapproval goes up. The same thing happened in Darwin after the cyclone — “greedy” landlords raised the rents on the few houses left standing making huge profits out of other people’s misfortune.
In these examples we can see an extreme case of high demand versus low supply. According to our previous equation of price being a measure of supply versus demand, this situation should naturally result in high prices. Of course, what people find offensive about this situation is the apparent inhumanity of it: taking advantage of other’s misfortune. But when one considers the consequences, the results are anything but inhumane.
Take Darwin. If rents had been allowed to rise to very high levels, what would have happened? People would have paid them, because they had little choice — in fact, that’s why they would have risen in the first place. People would have bid for the houses, just as they bid in an auction. Home owners would have been confronted with a number of families wanting the house, all trying to outbid each other for it. There are two other extremely important results as well. First, families would have shared the houses to split the costs. As the prices went up, they would rent out rooms, and make do with less and less space. This would be a good thing, as the available houses would have spread much further than otherwise. Second, there would be the prospect of high profits for anyone who could supply housing or shelter of any sort at short notice. So, every builder, caravan owner, or manufacturer, prefab house builder, or even boat owner, in Australia or overseas, would have done some quick sums to see if there was anything to be gained from moving into Darwin. There would also have been a great incentive for the people of Darwin to get their homes repaired. Within a very short time, shelter would have been available again.
Admittedly, much of this early work would be temporary, and standards might not be high enough to withstand another cyclone. But the people would have had shelter, quickly, and they could have, at a later time, upgraded their buildings to whatever standard they liked, or even simply discarded their temporary shelter once they had something permanent constructed. Quickly, within six months, this new shelter would have forced the rents back down to “reasonable” levels. As far as standards are concerned, the people who live in Darwin should set their own. Having just been through the hell of that cyclone, and suffered the high costs associated with it, they wouldn’t need to be forced to ensure that their buildings were of adequate strength and safety. In this regard, the high rents would help to drive the lesson home, because if their house was strong and still standing, they reaped their own rewards. If it wasn’t they paid the price. And also if it wasn’t strong enough the chances of getting insurance would be between none and zero.
All of this could have happened and would have happened. But as we all know, it didn’t. Instead, during the Darwin disaster we saw a pure exercise in fascism, as, true to form, eager politicians practised the old trick of turning every contingency into a resource for accumulating force in the government. Glory hunters were everywhere, jostling one another to get their photos in the papers, expressing “concern”, offering “help” and (unsaid) seeking votes. All they succeeded in doing was perpetuating the disaster.
They, for example, imposed rent control, and at a stroke, killed off all chances of a natural economic recovery. They forbade people to repair their own houses, and dithered about letting contracts for the building of new houses. Result? It was over a year before a single new house was built.
People who complain about profiteering are never consistent about it. When it comes to them selling something, they charge what the market will bear. If you, for instance, had a car that you thought was worth $1000 and you wanted to sell it, would you take $2000 for it if someone offered it? Would you sell it for $800 if you thought you could get $1000 for it?
Profits serve a very important economic function. They do not, as is often thought, simply go into rich people’s pockets to be squandered on lavish parties and high living. (Usually, the people who squander money are those who have never had to earn it in the first place, for example public servants, politicians — or anyone spending someone else’s money.) However, as they squander the money it finds its way into the hands of people who do value it. It has always been the case that if a person is not big enough to live up to their money, it will destroy them.
What do those people who do have money do with it? Where do Lang Hancock’s millions go? Back into the ground to find more minerals to produce real worth, and to provide jobs for people.
It is fashionable to crucify profits, but what really happens to the money when a company does make a profit? The government cops 42.5 per cent of it for a start. Most of the rest pays dividends to shareholders, and the remainder is invested (often the dividends are simply re-invested anyway). The invested money is used to build new factories, start new industries, expand operations, install newer and better equipment, research and develop new processes, machinery, production methods, and in all these ways provide new jobs. Furthermore, by developing and installing new plant and equipment, thereby raising the productivity of employees, the company ensures its future competitiveness which enables it to pay higher wages.
The higher the profits, the more a company is able to do in all these areas. That some of the consequences don’t always follow is often attributable to restrictive legislation, which prevents competition or experimentation, or which has allowed Unions to control wage movements. Companies that don’t make profits are either bankrupted, or are propped up by the taxpayer. Either way, they help no one.
On a real free market, profits would flow to those who best satisfied consumer needs. Competition would ensure that only by cutting costs, increasing efficiency and building “better mousetraps” would people be able to achieve greater and greater profits. Market situations would develop that allowed entrepreneurs to reap very high profits, but the very fact that they did so would being into being the competition that would quickly reduce the level of profits to an equilibrium point. Money would always tend to flow into the most profitable areas in the economy, thus providing the lifeblood of healthy competition with its resultant maximisation of quality and supply and minimisation of price. In a rigged economy, such as we have now, this doesn’t happen. Inefficient industries are propped up, or protected. Industries that we should not have, because of the possibilities of cheaper imports, are maintained by tariffs. Monopolies are institutionalised so that open competition is not allowed, and the consumer is constantly exploited. Free enterprise and the profit motive cop the blame. But they don’t deserve it.
- Governments Consume Wealth — They Don't Create It
- Singo and Howard Propose Privatising Bondi Beach
- Singo and Howard Speak Out Against the Crackpot Realism of the CIS and IPA
- Singo and Howard on Compromise
- Singo and Howard on Monopolies
- Singo and Howard Support Sydney Harbour Bridge Restructure
- Singo and Howard on Striking at the Root, and the Failure of Howard, the CIS and the IPA
- Singo and Howard Explain Why Australia is Not a Capitalist Country
- Singo and Howard Call Democracy Tyrannical
- Singo and Howard on Drugs!
- Simpleton sells his poll philosophy
- Singo and Howard Decry Australia Day
- Singo and Howard Endorse the Workers Party
- Singo and Howard Oppose the Liberal Party
- Singo and Howard Admit that Liberals Advocate and Commit Crime
- Up the Workers! Bob Howard's 1979 Workers Party Reflection in Playboy
- John Whiting's Inaugural Workers Party Presidential Address
- John Singleton and Bob Howard 1975 Monday Conference TV Interview on the Workers Party
- Singo and Howard on Aborigines
- Singo and Howard on Conservatism
- Singo and Howard on the Labor Party
- Singo, Howard and Hancock Want to Secede
- John Singleton changes his name
- Lang Hancock's Foreword to Rip Van Australia
- New party will not tolerate bludgers: Radical party against welfare state
- Singo and Howard introduce Rip Van Australia
- Singo and Howard on Knee-Jerks
- Singo and Howard on Tax Hunts (Lobbying)
- Singo and Howard on Rights
- Singo and Howard on Crime
- Singo and Howard on Justice
- Singo and Howard on Unemployment
- John Singleton on 1972 cigarette legislation
- Singo and Howard: Gambling Should Neither Be Illegal Nor Taxed
- Holed up, hold-up and holdout
- The libertarian alternative vs the socialist status quo
- Workers Party Platform
- Singo and Howard Join Forces to Dismantle Welfare State
- Singo and Howard on Business
- Singo and Howard on Discrimination
- Singo and Howard on the Greens
- Singo and Howard on Xenophobia
- Singo and Howard on Murdoch, Packer and Monopolistic Media
- Singo and Howard Explain that Pure Capitalism Solves Pollution
- Singo and Howard Defend Miners Against Government
- Singo and Howard on Bureaucracy
- Singo and Howard on Corporate Capitalism
- The last words of Charles Russell
- Ted Noffs' Preface to Rip Van Australia
- Right-wing anarchists revamping libertarian ideology
- Giving a chukka to the Workers Party
- Govt "villain" in eyes of new party
- "A beautiful time to be starting a new party": Rand fans believe in every man for himself
- Introducing the new Workers' Party
- Paul Rackemann 1980 Progress Party Election Speech
- Lang Hancock 1978 George Negus Interview
- Voices of frustration
- Policies of Workers Party
- Party Promises to Abolish Tax
- AAA Tow Truck Co.
- Singo and Howard on Context
- Singo and Howard Blame Roosevelt for Pearl Harbour
- Singo and Howard on Apathy
- Workers Party is "not just a funny flash in the pan"
- Singo and Howard on Decency
- John Singleton in 1971 on the 2010 Federal Election
- Matthew, Mark, Luke & John Pty. Ltd. Advertising Agents
- Viv Forbes Wins 1986 Adam Smith Award
- The writing of the Workers Party platform and the differences between the 1975 Australian and American libertarian movements
- Who's Who in the Workers Party
- Bob Howard interviewed by Merilyn Giesekam on the Workers Party
- A Farewell to Armchair Critics
- Sukrit Sabhlok interviews Mark Tier
- David Russell Leads 1975 Workers Party Queensland Senate Team
- David Russell Workers Party Policy Speech on Brisbane TV
- Bludgers need not apply
- New party formed "to slash controls"
- The Workers Party
- Malcolm Turnbull says "the Workers party is a force to be reckoned with"
- The great consumer protection trick
- The "Workers" speak out
- How the whores pretend to be nuns
- The Workers Party is a Political Party
- Shit State Subsidised Socialist Schooling Should Cease Says Singo
- My Journey to Anarchy:
From political and economic agnostic to anarchocapitalist
- Workers Party Reunion Intro
- Singo and Howard on Freedom from Government and Other Criminals
- Singo and Howard on Young People
- Singo and Howard Expose how Government Healthcare Controls Legislate Doctors into Slavery
- Singo and Howard Engage with Homosexuality
- Singo and Howard Demand Repeal of Libel and Slander Laws
- Singo and Howard on Consumer Protection
- Singo and Howard on Consistency
- Workers Party is born as foe of government
- Political branch formed
- Government seen by new party as evil
- Singo and Howard on Non-Interference
- Singo and Howard on Women's Lib
- Singo and Howard on Licences
- Singo and Howard on Gun Control
- Singo and Howard on Human Nature
- Singo and Howard on Voting
- Singo and Howard on
- Singo and Howard on Education
- Singo and Howard on Qualifications
- Ron Manners on the Workers Party
- Singo and Howard Hate Politicians
- Undeserved handouts make Australia the lucky country
- A happy story about Aborigines
- John Singleton on Political Advertising
- Richard Hall, Mike Stanton and Judith James on the Workers Party
- Singo Incites Civil Disobedience
- How John Singleton Would Make Tony Abbott Prime Minister
- The Discipline of Necessity
- John Singleton on the first election the Workers Party contested
- Libertarians: Radicals on the right
- The Bulletin on Maxwell Newton as Workers Party national spokesman on economics and politics
- Singo and Howard: Australia Should Pull Out of the Olympics
- Singo and Howard Like Foreign Investment
- Mark Tier corrects Nation Review on the Workers Party
- The impossible dream
- Why can't I get away with it?
- The bold and boring Lib/Lab shuffle
- Time for progress
- The loonie right implodes
- Max Newton: Maverick in Exile
- John Singleton on refusing to do business with criminals and economic illiterates
- Censorship should be banned
- "Listen, mate, a socialist is a bum"
- John Singleton on Advertising
- John Singleton on why he did the Hawke re-election campaign
- Sinclair Hill calls for dropping a neutron bomb on Canberra
- Bob Howard in Reason 1974-77
- John Singleton defends ockerism
- Singo and Howard talk Civil Disobedience
- The Census Con
- Singo and Howard Oppose Australian Participation in the Vietnam War
- Did John Singleton oppose the mining industry and privatising healthcare in 1990?
- Bob Carr in 1981 on John Singleton's political bent
- John Singleton-Ita Buttrose interview (1977)
- John Singleton on elections: "a Massive One-Day Sale!"
- John Hyde's Progress Party praise
- King Leonard of Hutt River Declares Defensive Just War Against Australia the Aggressor
- Singo says Lang Hancock violated Australia's 11th commandment: Thou Shalt Not Succeed
- Singleton: the White Knight of Ockerdom
- John Singleton bites into Sinclair Hill's beef
- Save Parramatta Road
- 1979 news item on new TV show John Singleton With a Lot of Help From His Friends
- Smoking, Health and Freedom
- Singo and Howard on Unions
- Singo and Howard Smash the State
- Singo and Howard on the big issue of Daylight Saving
- Come back Bob - It was all in fun!
- A few "chukkas" in the Senate for polo ace?
- Country Rejuvenation - Towards a Better Future
- Singo and Howard on Profits, Super Profits and Natural Disasters
- John Singleton's 1977 pitch that he be on a committee of one to run the Sydney 1988 Olympics for profit
- Thoughts on Land Ownership
- 1975 Max Newton-Ash Long interview on the Workers Party
- The Electoral Act should allow voters to choose "none of the above"
- The great Labor Party platform: first or last, everybody wins a prize
- The politics of marketing - laugh now, pay later
- Singo and Howard call Australia fascist and worse
- The mouse will roar
- Viv Forbes and Jim Fryar vs Malcolm Fraser in 1979
- Quip, Quote, Rant and Rave: four of Viv Forbes' letters to the editor in The Australian in 1979
- Australia's First Official Political Party Poet Laureate: The Progress Party's Ken Hood in 1979
- Hancock's playing very hard to get
- Harry M. Miller and The Australian disgrace themselves
- Ocker ad genius takes punt on art
- John Singleton 1976 ocker Monday Conference Max Harris debate
- John Singleton mocks university students on civil liberties and freedom of choice in 1971
- Murray Rothbard championed on Australian television in 1974 (pre-Workers Party!) by Maureen Nathan
- John Singleton profile in 1977 Australian MEN Vogue
- I think that I shall never see a telegraph pole as lovely as a tree
- Ralph Nader vs John Singleton on Consumer Protection
- John Singleton's first two "Think" columns in Newspaper News, 1969
- Singo and Howard on Ballet
- Product innovation comes first
- Protect who from a 'mindless' wife?
- A party is born
- Tiny Workers' Party gives us a hint
- John Singleton on the ad industry, consumerism and innovation
- Workers Party Economic Policy Statement, December 1975
- Lang Hancock on the Workers Party, secession and States Rights
- John Singleton and Howard on Government Largesse
- Counterculture must exclude government handouts
- John Singleton's 1974 Federal Liberal Election Campaign Ads
- John Singleton believes in the Workers Party
- Write-up of John Singleton's 1978 speech to the Australian Liberal Students Association
- Singo in 1987: "Joh doesn't go far enough ... I want absolute deregulation of the economy"
- Maxwell Newton chapter of Clyde Packer's No Return Ticket (1984)
- Singo and Howard on Totalitarian Socialism and Voluntary Socialism
- Rip Van Australia on Ripoff Vandals Taxing Australia
- Singo and Howard beg for tolerance
- John Singleton's 1985 advertising comeback
- Singo and Howard Demand End to Public Transport
- John Singleton and Howard on Fred Nile, Festival of Light, FamilyVoice Australia and the Christian Lobby
- Capitalism: Survival of the Fittest
- Return Australia Post to Sender
- Singo and Howard on Public Utilities
- John Singleton and Howard say monarchy should be funded by monarchists alone
- John Singleton on cigarette advertising
- Singo in 1972 on newspapers' demise
- John Singleton farewells Bryce Courtenay
- John Singleton on Australian political advertising in 1972
- Gortlam rides again
- Announcement that Lang Hancock will be guest of honour at the Workers Party launch
- John Singleton on trading stamps, idiot housewives and government
- 1975 John Singleton-Sir Robert Askin Quadrant Interview
- Singo asks two prickly questions
- VIOLENCE, TV BAN, DRINK - SINGO SPEAKS HIS MIND
- Why John Singleton can't keep a straight face
- Why John Singleton Defends Smokers Rights
- Tony Dear on Paul Krutulis, the Workers Party and murder
- An Ode to Busybodies
- Progress Party and Workers Party lead The Australian
- How many tits in a tangle?
- Viv Forbes in 1978 on loss-making government, the Berlin Wall and misdirected blasts of hot-air
- John Singleton wants the Post Office sold and anti-discrimination legislation scrapped
- A speech from the Titanic
- A crime must have a victim
- John Singleton vs Australia Post
- Minimum wages the killer
- Has Fraser got his priorities all wrong?
- John Singleton says "the royal family should be flogged off to the U.S."
- John Singleton vs Don Chipp and the Australian Democrats
- John Singleton vs Don Lane
- John Singleton. Horseracing. Why?
- John Singleton's 1986 reflection on the Workers Party
- Bob Howard in 1978 on libertarianism in Australia
- John Singleton on the stupidity of anti-discrimination laws
- Thou shalt know the facts ... before thou shoot off thou mouth
- Charity: An Aesop Fable
- Bob Howard announces the Workers Party in freeEnterprise
- New improved moon
- Announcing people ... YES, people!
- Creativity in advertising must be pointed dead on target
- John Singleton on barriers to, and opportunities for, effective communication
- Wayne Garland on John Singleton on Advertising
- John Singleton schools ad course
- John Singleton: advertising awards
- Mr Singleton Goes to Canberra for Australian Playboy
- John Singleton on his TV career for Australian Playboy
- John Singleton sacked for telling the truth about Medicare