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World's richest five men double wealth since 2020
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this post was submitted on 15 Jan 2024
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Profit is theft and it always has been.
I am confused. From what you're saying, profit shouldn't exist, only business expenses.
So a Mom and Pop shop doesn't need to make any profit to pay for their living expenses (not business) and shouldn't be allowed to have money to go on trips or vacation themselves?
Employees are able to go work to make money to spend on living costs, personal things, and vacation.
I have a friend who owns a tea shop with no employees. So she isn't allowed to make a profit? Only allowed to make enough to keep the business running? Sounds like that would be miserable. Might as well close the store and be an employee of another business.
They can pay themselves a wage, which is a business expense, and then save their wages like everyone else. The only basis for profit is the exploitation of labor and unfair exchanges in the market, hence, all profit is theft.
How do you think not-for-profits and cooperatives work? They don't have profit, but no one works for free!
Your teashop friend could just as easily pay themselves to run their shop and invest whatever is left into the shop. Profit isn't necessary.
I find it confusing. How do you differentiate if that is a "wage" or "profit"? How does a person who owns a small business determine how much wage to pay themselves with? I would think most small business owners will just put enough money into the business expenses for how big they want their business to be, then take the rest for themselves.
A small business typically don't need as much money to reinvest back into the business itself unless they are looking to expand the business to something bigger. There is only so much you can spend for business expenses when you don't want to deal with expanding your business even bigger. Some people only want to own a small shop.
For example, my friend at the tea shop is happy with the size of their small shop. They already offer enough stock to locals. They don't want to expand anymore. She loves running a tea shop and talking to locals, but does not want to deal with running a big store with employees. But from what you're saying, they should keep reinvesting in the business, even though the business doesn't need more money to avoid making a profit.
I understand profit is an issue with bigger companies due to them stealing money from their employees by paying themselves much more, but I am trying to understand how profit shouldn't exist for a smaller / mom and pop / 1 person shop.
If she doesn't want to expand, she can just pay herself a higher wage for doing such a good job. Profit is superfluous for her - it's probably just a tax thing in her case, where she gets a better tax deal if she pays herself with profits instead of wages.
Her "profit" is literally just the money she isn't paying herself in wages. That's what all profit is, hence, profit is theft. The fact that she is sort of stealing from herself for tax reasons just highlights how unfair tax law is imo
I disagree, because profits can be used to upgrade equipment, reward employees, R&D, invest in expanding the business, etc.
When used properly, profits keep businesses healthy and self-supporting without relying on shareholders, the government, or bad actors to get involved.
But absurdly excess profits shouldn't exist, and absurdly excessive wealth hoarding by individuals should never be allowed to happen.
That's not what profits are.
Profits are the what is left over after upgrading equipment, paying employees, doing R&D, investing in expansion, and every other business expense. Profit is literally the money left after subtracting expenses from revenue. All profit is wealth hoarding, definitionally.
Profit is theft and it always has been.
In business, you can't predict what your expenses will be next year or in 10 years, so you need profit to act as a buffer. Some years, your revenue exceeds your expectations, and you profit that year.
This could allow you to spend more money on those legitimate business expenses next year, or bank it for years when your expenses exceed your revenue.
Even a non-profit has to have leftover to bank for the future, expand, etc.
But consistently having billions in profit tells me that there's a massive problem somewhere, and it's more than likely as a result of wage theft or gouging customers.
That's not what profit is either! Funds that are set aside for future expenses or to act as a buffer are also just business expenses.
Profit is purely the money that is left after all that shit. Profit is the money the business owner and/or shareholders take for themselves, after everything (investing, saving, wages, everything) has been subtracted. Profit is literally only the money they take for themselves.
Your impression isn't unique - most Americans don't really understand what profit is. But like I said, profit is theft and it always has been.
Yeah, I guess that's how modern corporations are using profits.
I come from a small business and charity background, so salaries/wages/employee benefits would be considered a business expense. Profits would be banked and used to cover expenses in the future.
It's different on a small scale because the line between "business expenses" and "personal expenses" can sometimes get blurred. Though technically, if the money is earmarked for future use then it is definitely not profit. That's a business expense.
Profits can become expenses when it is spent, for sure.
Actually he's correct as to the dictionary definition of profit. What you are describing are called dividends in business parlance.
The dictionary defines profit as "income in excess of costs" i.e. subtract all expenditures from revenue, that's profit. It gets more complicated, there's gross profit vs net profit, but money that is specifically set aside by the business for the future is an operating cost.
Dividends are just a way for profits to be distributed to shareholders.
That's my point.
You said
But the money they take for themselves are called dividends, and is a subset of profit. Profit can stay in the business too.
Well, no, dividends are specifically how the profit is divided up among shareholders.
When the money stays in the business it stays in as "retained earnings" and they become an asset of the company i.e. the money they take for themselves. I'll admit the language is actually less clear here than I thought, because retained earnings are also sometimes referred to as "undistributed profits" and I'm not actually sure if that's an accurate way to refer to them or if it's just a jurisdictional tax thing. And also because those undistributed profits can then still be reinvested they don't technically count as a business expense because those retained earnings were from a previous fiscal cycle and- it's all a mess lol
I think we have to consider that from the perspective of many shareholders, receiving dividends vs increased share price is basically the same thing. I know all my accounts are set to reinvest dividends, for example.
So if a company reinvests all its income and grows like crazy, the shareholders will profit from that growth even if you might say “profit” wasn’t distributed.
Or if the company does a share buyback, or gives out huge bonuses, or buys an "office" in a tropical location that's actually just a vacation spot that they can use for a tax shelter, etc.
Basically, I overstated my case before. There's lots of ways to use business expenses to distribute profits without actual reporting profits.
So in conclusion, death to capitalism 👍
I don't see how you can consider leaving it in the company being "taking it for themselves". You can't do anything with that money other than pay for business investment or expenses. At least until it's turned into dividends.
I reject the idea that the company is some legal person separate from the people that run it. They are the company, they can choose to use that money however they want. If they want to pay out huge bonuses from the profits, they can. It's their choice.
Just because they might choose to use that money to fuel growth or buy back stock or something doesn't mean it isn't theirs.