Profits and law professors

Posted: 1 August 2009 in Uncategorized
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Back on 22 July, I wrote that we’d probably be better off if we just got rid of all the economists. The same is true of law professors, at least those at Yale. . .

Stephen L. Carter has penned the latest paean to profits, in the context of a full-throated defense of the capitalist health-care insurance industry.

High profits are excellent news. When corporate earnings reach record levels, we should be celebrating. The only way a firm can make money is to sell people what they want at a price they are willing to pay. If a firm makes lots of money, lots of people are getting what they want.

To the country, profit is a benefit. Record profit means record taxes paid. But put that aside. When profits are high, firms are able to reinvest, expand and hire. And profits accrue to the benefit of those who own stocks: overwhelmingly, pension funds and mutual funds. In other words, high corporate profits today signal better retirements tomorrow.

What about those who are concerned about obscene profits?

Although it is easy to be dismayed by excess, trying to regulate profit makes things worse. Capital flows to places where returns are highest. The more exercised our political leaders become when profits rise, the more investment capital will remain abroad.

Here’s right about one thing: profits are what make capitalism work. What he doesn’t understand is, we don’t need capitalism to make the world work. And that’s particularly true when it comes to health care.

Health Insurance Protest

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