For Profit

Column 2019-5 (2/4/19)

For many the term “for profit” is an obscenity. I doubt that most people who hate profits understand the object of the hatred. Perhaps they have been conditioned by others to hate profits.

So, what are profits? A business sets out to produce and sell something. It secures resources and makes its product. If the product sells for more than the resources cost, the gain in value is profit. The business earned its profit by pleasing its customers.

Profits can be measured only in free market transactions. If the business is subsidized by government or the customers are coerced to buy, we can’t know the real cost of the product or what customers free to choose would have paid for it. There is no way to measure the earned real profits. At least part of the business's gain was forcibly taken.

Measuring profits and losses is a way to calculate whether the business created or destroyed wealth. If a business creates substantial wealth, others will try to duplicate the success. Increased competition will pull down profits. In free markets profits are self limiting.

A legislator has submitted a resolution to amend the Michigan Constitution. The amendment would make it unconstitutional to hire a for profit business to manage a charter school. The Mackinac Center for Public Policy has analyzed the ratings for Michigan schools. It found that some of the best schools are charter schools managed by for profit businesses. Should the successes be wiped out by a constitutional amendment?

For profit businesses provide our food, vehicles, clothing, furniture, etc. Why is it a special evil for them to provide education services? If it is evil to profit from providing education services. How dare we pay school teachers and administrators? “Wages” is just a different name for profits earned by an employee.

This does not mean all wages are earned. Some employees are paid more than the value they produce. For profit businesses try to identify and eliminate such wasteful jobs. Government doesn’t have to worry about keeping employees who cost more than they produce. At least it doesn’t have to worry until it reaches the limits of taxation and borrowing.

Government “sells” to taxpayers who don’t have the choice of saying “no.” Thus, we will never be able determine the value, if any, of what government produces.

I don’t doubt that those who want to eliminate “for profit” from charter schools despise profits. I strongly suspect that they hate charter schools even more than they hate profits.

The hatred of charter schools is fueled by the schools’ successes rather than their failures. No one is forced to patronize charter schools. Charter schools can survive only if they convince parents and students that the charters provide better service than district schools provide.

For the most part those who attack charter schools do so to preserve district schools for the benefit of the schools’ employees and the unions. To achieve this goal they are willing sacrifice the students.

The Detroit district schools are generally recognized as the worst in the country. Anyone who is pro education should seek to aid children in escaping those schools, not force children back in to them.

Consumer choice kills businesses that fail to please customers. Government subsidizes its failed schools so they can continue torturing children. The Detroit district schools have been headline grabbing failures for decades. There is still no improvements in sight. Why should we sink the charter school life boats in which some children have escaped?

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Copyright 2019

Albert D. McCallum