Corporate Profits - Are profits good or bad?

"These greedy corporations are destroying us!" Have you heard this lately? In this political season, there is a lot of talk and rhetoric surrounding corporate profits and their effect on you, your money, and your future. As a friendly reminder, the news is designed to provoke a reaction, not educate. It's important to contextualize the information presented in the news without being easily provoked.

Prepare to have your views challenged as we dissect the contentious issue of corporate profits and their true role in our financial lives. This episode isn't about assigning blame; it's an invitation to understand the economy's cogs and how they benefit us all, from our personal investments to the cities and towns we live in.

This conversation explores the concept of profit and its significance in entrepreneurship and business. We discuss the success rate of starting a business and the risks involved. The role of ideas in entrepreneurship and the importance of profit as a reward for taking risks are also examined. We also delve into the uses of profit, both personally and for businesses, and we highlight the necessity of profit for growth and stability. 

We take the time to address whether profits are good or bad and explore the contradictions and misconceptions surrounding the topic. Finally, we emphasize the importance of profit for you personally in regard to your retirement and investments.

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Transcript

Speaker 1: 0:08

Welcome to ditch the suits podcast, where we share insights nobody in the financial services industry wants you to know about. We're here to help you get the most from your money in life, so buckle up and welcome to ditch the suits. Welcome back to ditch the suits podcast, steve Campbell, here with Travis Moss. If you are brand new to ditch the suits, hope it's not your last stop. But for those that have been with us on this journey, you know that Travis and I like to bring to you high level financial concepts but break them down into series and episodes. So we usually take anywhere from three to four different episodes, pile them together so that we can raise a question or thought and then, in each episode, build the foundation, help add context to it and really culminate with what should you do with this information? And we always try to mix up the different topics. So we'll talk about financial planning. Sometimes we'll talk about investments in the series we just finished up on bonds.

Speaker 1: 0:56

Well, we always like to bring back around full circle this idea around current events and what's happening in the world. And how do you apply what you're hearing on the news when you go home at night and what's real to you in your life. One of the big ones right now, especially being in a political season, is around this idea of corporate profits and, you know, kind of demonizing these companies that are out there, but, like, how do you make sense of that? And so, travis, I want to open it up. This is going to be an entire series talking around profits, corporate profits, like how can you make sense of this? So let's open it right up For those that are getting caught up. What is the dialogue kind of currently going around right now when it comes to corporate profits?

Speaker 2: 1:31

That's pretty negative because you have this concern about record profits and you hear this, you see this in the news all the time about record corporate profits. And then of course you get inflation news that comes out and says inflation is higher than expected and there's more personal debt than expected out there. They're not going to maybe drop interest rates. Of course people are waiting to buy houses or waiting for interest rates to come down to the Kyrgyz and Fort houses and stuff like that. So there's kind of a domino of bad information out there, or not bad information, negative information about what's actually going on. And then that turns into a political football and we're in an election year and of course that triggers a lot of the hot button issues of basically how people are doing right, because the idea of more inflation means your money's not going as far as it used to and so it's start. You can't have as much as maybe you want to have in those types of things. And I keep hearing through I think Biden did a speech on it and I've heard through different news channels and things this kind of assault incorporations and they say that the reason why we have inflation right now is primarily driven by record corporate profits. And so they're saying, when you go to the grocery store and actually this is almost verbatim but when you go to the grocery store and your groceries are more expensive, it's because of those greedy corporations gouging you. Basically, that's the overall message that we're getting about what's going on in the economy right now, and I think that that's got a lot of issues, part of it being we focus on investments, we look to focus on financial health and profits are part of a business, and we look at statistics, we look at numbers all the time, and statistics and numbers can essentially be misapplied or used in a way to paint pictures that necessarily aren't always true. And when you start to throw around some of these concepts and you misapply them, I think you can break confidence. I think people can get the wrong ideas about things and then, really, when trust breaks down or when people aren't confident about things, then we start to make decisions that aren't very good decisions. For instance, we could say, well, the economy is not really good because the corporations are pre-scadging people and therefore there's going to be a breaking point where people actually there's a collapse and you hear that there's record levels of consumer debt out there. Well, consumer debt actually did reach a record level, but there's 2 million more households included in there and the average amount of consumer debt per household went up like $500 and went from $5,500 to $6,000. And people also are making, on average, like 7% more than they were making.

Speaker 2: 4:30

So what do people do, steve, when they have more money? They tend to they go okay, I got a raise, now I can afford the hot tub that I wanted or the jet skis that I wanted, or I can afford to go out to dinner a little bit more often, or I'm more comfortable with a $6,000 balance on my credit card rather than $5,500. And the problem when we look at some of these issues is that we tend to think in an idealistic world like, okay, there's people out there and they have credit card debt and it's horrible to have credit card debts, they must be suffering or struggling. I know lots of people who aren't suffering, aren't struggling at all to have credit card debt and it going up by $500 isn't extenuating the circumstances at all for them. And it's going up because they have more means, they're more comfortable with paying for it, because they're making more money than they've ever made in their life, type of thing.

Speaker 2: 5:21

So what I wanted to do with this particular series is to take the concept of profit all by itself as an economic term and relate it to people that we work with. Like, what does profit do for you financially? So you as an investor or you as somebody with a pension? What does profit actually mean to you? And I want to help put it in perspective. And so there's terminology, that there's a thing that's actually more important to profit, and we're going to talk about that in our next episode. But I really want to get behind some of the numbers. So when we think about inflation and we think about the relationship of profit in the equation of inflation, what else is actually in there? So we can see if inflation is actually well, if profit in inflation, so if the part of inflation that is due to profit, if profit is playing an outsized role in hurting people financially, or is it maybe contributing in a certain way in a positive way? And I think that that's just.

Speaker 2: 6:35

I want to broaden the discussion from a good guy and a bad guy and I want to talk more in terms of the place of profit and the statistics behind everything that's going on, so that if we have a better understanding of this stuff. It's not going to bother us nearly as much. Right, we can put in a perspective. We know how to react to it. We know how to kind of handle our business when people say these things. And I think we're gonna go through there's. There's a lot of technical stuff we're gonna go through, but some fun kind of a day allergies and stuff. I think that we're going to get into Some really good brain food. I think this is a particularly interesting series for us and we did a lot of research to put it together and we're gonna finish with a discussion about corporate greed. So that will be. This will actually be a four Part series for us and I think this is a fun one, folks.

Speaker 1: 7:32

I get the pleasure of working next to Travis every day in an office and so when he's putting together show notes and concepts, I can tell when he gets excited about a certain concept, and when he started to raise this one to me, I said look, I'm gonna trust you, and if you turn on your nightly news, it's getting to the point that it's gonna start become sickening in a political season. So much slander there's so much bashing, it's really trying to put blame on somebody, and so I think what's exciting about this From leading up to this conversation, is it's not pointing out one side of an aisle versus another In having slander go on, as much as trying to educate you, for when you hear certain things on the news to have enough information to say, hey, that that's true. What they just said Because you can find a whole lot of people shaking their fist at the nightly news, not really understanding what's being said With the news we've talked about this in several series before is so sensational, package so well that it creates an emotion out of you. So if somebody every night is on the news saying that corporate profits, corporate greed are destroying your life, your family, like, how do you make sense of that? How do you step back? And so we have to come into current events to talk about your money in life, because you have to understand Things like profits, how they work. So when you're choosing investments, like, how do you make sense of profits and how the effect bottom line of a company? And so maybe that's a great place to start.

Speaker 1: 8:46

We're really big on financial literacy. We're not just gonna jump into the last part of this series Trying to convince you of something that you don't have enough information on. A great place to start is just kind of this idea around really what are profits? You know, for people that have never owned a business or don't really understand it's kind of one of those words you hear. So, travis, like if we just threw that question out to you what are profits? What's the easiest way to explain it?

Speaker 2: 9:09

Well, first, really quick, just a very quick point. News does not educate, news provokes. Right, the idea of news is to provoke a reaction. That's that's modern news. Maybe it's not the historical context of it, but the modern News is designed to provoke a reaction because that's how it's monetized. So it's not to educate. What we want to do is educate. So when you watch the news, you can take the information that's within the news and contextualize. You could. You could put it in the right context yeah so you can.

Speaker 2: 9:40

You can get away from the provocative. How do you say that you can get away from being provoked?

Speaker 1: 9:47

provocative. We're just gonna say thanks in advance for education.

Speaker 2: 9:49

Yeah alright, so anyway. So so profits, profits, what they really are, there they are the return on risk and ideas. So what I mean by that? Somebody friends money to start a business. Businesses don't just like, appear at a thin air, so somebody has to actually start it. And when you drive down the street and your way to work, all the little businesses, somebody put some money up for those. All the big businesses originally started as one of those little businesses. So somebody Took some money and said I'm gonna start business.

Speaker 2: 10:27

Now, a lot of times that money is borrowed and when the business fails and lots and lots and lots of businesses fails that money is then lost. So if you borrowed money and put it into a business and the business fails, you still normally have to pay back the loan. Yes, bankruptcy can help, but a lot of small businesses actually, when you start a business, have to have personal guarantees. You know so, a lot of times somebody's house pledged against the loan or something like that. But there's always a potential that the business is going to fail and there's a cost to using money too.

Speaker 2: 11:09

So let's say that the business doesn't fail, but it takes a long time to get it going, because most businesses take a long time to actually get to the point where they're profitable. Well, if I took $100,000 out of the bank and put it in a business and the business isn't profitable for five years, how much interest would I have made on that money over the five years if I had left it in the bank? Or if I had left it in my mutual funds or whatever investing program you've got going on right, so you're losing on the opportunity to make money. And then, even worse than that, if you had to borrow, not only are you not making money on it, but now you're paying interest on the money that you're using to start the business. So the business isn't just costing the money that you took out of savings or the money from the loan, but it's costing the interest on it too. So somebody is actually foregoing financial stability essentially to start a business.

Speaker 1: 12:02

Let's take a quick break to hear a word from your sponsor. This episode is brought to you by SEED Planning Group. If you're looking for a life-giving experience working with a financial planner, then SEED is here for you. Seed is a fee-only financial planning firm with a fiduciary obligation to put your best interest first. If your goal is financial freedom and independence, without sales products or really glorified salespeople, then check out SEED Planning Group. Today you can visit wwwseedpgcom that's wwwseedpgcom In the best part. You can schedule a free consultation to find out if their fee-only planners and their process are right for you. Well, travis, I think that's a super helpful explanation of just kind of companies, and I guess it poses the question what is the success rate for somebody who's starting a business today?

Speaker 2: 12:51

Yeah, depending on what study you read and I've read I've seen lots of different numbers, but somewhere between 80 and 90% of all business startups fail within their first five years.

Speaker 1: 13:01

That's a lot of risk, Like what goes into all of that.

Speaker 2: 13:05

Well, somebody comes up with an idea. They quit their job, they use either their own savings or they pledge their personal property to get a loan, or maybe they do a combination of both. They start a business, they hire people. They have to pay the people, regardless of whether or not the business makes any money, regardless of whether or not the owner gets any income. And even if a business is profitable let's pretend the business is profitable in the first year profitable doesn't mean lucrative. So the business could have a $20,000 profit because it doesn't pay the business owner. And potentially and in a lot of situations, the business owner is actually operating within the business. So they not only are fronting the capital, but they a lot of times are going without an income for a while as they're starting or building this business. So 80, 90% of the time the person took the risk, they're failing and they're losing a lot.

Speaker 1: 14:07

Yeah, that entrepreneurial journey is fascinating. So you're talking about return on risk getting started. Many times you're having to wear multiple hats because you also can't go out and afford to hire people. So what are the other areas that profit can make a difference or kind of lead into this?

Speaker 2: 14:24

Well, profit is the first and foremost. It's a return on risk. So this is where the term entrepreneur comes in, because entrepreneurship is really about taking risk, taking a disproportionate amount of risk to other people, and I know that we're going to bridge into corporate. When you think corporate, you think Amazon and Apple and Kroger and the Wegmans and the big stores, publix right, you're thinking that in this context. But let's talk about where it starts, because somebody before those stores became big enough so that you knew about them.

Speaker 2: 14:59

Somebody took this risk, and if that person, who's an entrepreneur, doesn't take the risk, there are no jobs to be complaining about, there are no nice buildings in your town, there are no taxes to collect. So this person who takes the risk, who risked their own financial stability and, a lot of times, their own personal health because of the stress, their family relationships, those types of things they are also the catalyst for your community. Think about, when you think about wherever you live, what are the prettiest buildings? What makes it exciting? Who funds the parks, right? Who's sponsoring the corporate events? Who's names on the football field to make sure that the football team is in your town?

Speaker 1: 15:46

Yeah, well, and you're talking about too, with profit. I would imagine that most people start a small business or a company because they have an idea or they have something that they think can be different. How does that work into this whole idea between entrepreneurship?

Speaker 2: 16:05

Well, profits also. You get it for taking risk. But you're also getting rewarded for your idea. And not all ideas pan out right, because you can have a great idea but it doesn't make a difference to anybody, nobody cares, you don't make any money on it. So it is quite random actually. Which ideas take off Well? I think a lot of it's happenstance. You're the right person with the right idea in the right place at the right time. It can be extremely random, because you can have great ideas and history is full of great ideas Because they say we're going to change the world and then a year later they're obsolete.

Speaker 2: 16:45

But every idea that an entrepreneur has, they take the risk, they borrow the money, they use their own money, they start a company to go out of paycheck. So they have the risk component. But they also have the fact that they were the ones. If that idea comes through. They are the ones who had the idea, they are the ones who actually made something happen.

Speaker 2: 17:07

It's normally something new or disrupting the status quo.

Speaker 2: 17:11

The product might not always be new, but maybe the way of building the product or delivering the product is new or something like that.

Speaker 2: 17:16

So they're actually, if you think about it advancing society or advancing our experience in the world, and it can be on the other side of the coin too, though. So somebody can create, and therefore they get profit because they create it. Well, people also make profit by protecting, and I'm not just saying that there's a right side or a wrong side to this, because it's easy to say that a corporation that goes to war with another corporation or corporation that goes to DC and lobbies to protect their business is bad, but what is that business actually doing? It's protecting their way of doing things. It's protecting their business. It's protecting their profits. So, corporations, it's like there's two sides of a coin. One is I create something new and I'm making money, and the other one is is that idea that was new is not so new anymore, and I'm trying to get to make as much money as I can before it becomes obsolete? So it's the conundrum between being new and kind of holding on as long as you can.

Speaker 1: 18:23

Well, so you just talked about a little while ago that 80, 90% of most business startups fail within the first five years. There's a ton of risk involved, so it almost sounds like then profits are the reward for being able to hang in there and stick it out and actually make a difference. So if profits are the reward, then I guess the question would be used as so what are the uses then of profit? You've done what you're supposed to do. You're making a difference Like what are the uses of profit then? Hey guys, steve Campbell with Ditch the Suits Want to take one quick moment to make a big ask. If you haven't already, travis and I would love for you to subscribe to this podcast, and if you haven't, also we would love for you to leave a five star rating and review. Your rating and review will let other podcasters know that the show is worth their time. So let's get right back to the episode, and thanks for listening to Ditch the Suits podcast.

Speaker 2: 19:10

Well, let's make profit a little bit easier for the typical person to understand, because I think that we think you know when you go and you buy a product from somebody or you're at service from somebody let's say you go and you pay them $600 or something that $600 doesn't profit, right? So a portion of the $600 is profit. And people get this wrong all the time. Well, you know why does it? You know cost this for that? Well, because there's costs beyond just what you see that have to come out of that, right, and so profit is the portion of the price that doesn't have to go that isn't already claimed before the service is already delivered to the products already sold.

Speaker 2: 19:50

So an easy way to think about this is think about you personally in your household, your personal money, business. Every two weeks you get a paycheck, or whenever you get your paycheck, and let's say, each month, after you get your paychecks and pay all your bills, you have between $500 and $1,000 extra left over. So you take your $500, $1,000, $502,000 and you put it in your savings account and you do that every month for the course of a year. At the end of the year it's averaged out, you got $9,000 more than when you started. That $9,000 is your profit.

Speaker 2: 20:31

You might have made a hundred grand, but all that hundred grand, where did it go? You had to pay income taxes on it, right? You had to pay your union dues, if you're in a union. You had to pay for your benefits. You had to pay for your mortgage, your car payment, your utilities, your kids' expenses, all that kind of stuff, and you ended up with $9,000 left over to run your life. It cost you $91,000. You made a hundred, so you have a $9,000 profit at the end of the year. That's your money. Business profit for the year.

Speaker 1: 21:05

Well, that even just what you said. Again, we all have different backgrounds of financial literacy, whether it's talking with clients or even newer staff, just people in general and culture. They think sometimes that their annual income is almost like take home right. So that can cause a lot of marital strife because it's like, hey, I thought we were making good money, how come we can't pay our bills? And it's like, well, you are paying your bills along the way through benefits and what you talked about, but what you're netting out at the end. I think that's where a lot of people get lost. So, okay, even let's simplify talking about profits, you have this extra $9,000. Then what typically do people do with those kind of profits?

Speaker 2: 21:45

Well, think about what you would do. You might work on your house, right? Maybe there's a kitchen counters that you want, or new kitchen cabinets or something like that. Or maybe you want new appliances you want to get a new refrigerator, new washer and dryer. So you go on, you buy new appliances. Or you take the family on a nice vacation I got $9,000. We can finally go on that vacation to the beach. Or maybe you hire somebody to mow your lawn.

Speaker 2: 22:11

Maybe, now that you have this extra money, you feel a little bit better, spending a little bit of it, having somebody come in and making your life easier, and that lets you maybe get to do other things that you want to do. Or maybe you can work more, or something like that, if somebody comes in and helps you. Or maybe you put the money in the bank for rainy day, in case you have an emergency, which you might say that, look, I need to have some emergency funds here. I don't have enough, so I'm going to put that $9,000 profit. I'm not going to spend that, I'm going to put it in the bank. Or maybe you have a debt or two, right? Maybe you got that credit card debt, that $6,000 credit card debt and you go. Okay, I got $9,000 leftover at the end of the year after I made all my payments and everything. Let's put an extra. Let's pay that off or pay it down. At least let's put a bunch on there. Or maybe you're saving to buy a house, like a vacation house someday I want to get a house on the beach and that part of that $9,000 you're going to score all the way.

Speaker 2: 23:07

Now, if you were to break down your money like that, you probably wouldn't say you know what, travis, I got too much profit this year. There's almost never enough things. You know. You can almost never stretch the money far enough, right? There's always things that you'd like to do or want to do or could do or dreaming of doing. You very rarely go I got too much profit. You know. Sometimes people do, and then they might say, okay, I have too much profit, I'm going to donate some of that to charity, right? Or cause that I believe in. Or maybe I'm going to, you know, give some bonuses to the kids, but very rarely are you actually looking at it going got too much profit. This is a problem.

Speaker 1: 23:47

Well, because you're talking about the difference, too, between guilt-free money and something you actually worked hard for. When you're in a grind season of life and you need a break, right, you can take a vacation, but you put it on a credit card so you're able to get away time-wise, but there's still guilt in the back of your head that you really don't have the money to pay for this. When you have a $9,000 profit, as we're calling it, it's guilt-free, you've earned it. It has a different feeling connected to it because you've worked hard for that year to save money. So then, if we've talked about that profits are really the reward for somebody starting a business as an entrepreneur, it's their guilt-free money. If that's what we would do as individuals with profit, then what do businesses do when they have profit?

Speaker 2: 24:27

But you said it perfect. You said money that you worked hard for. So when we look at the money that we're getting paid, we don't say you know what I'm getting paid too much. You know, employer, I think you should pay me less. In fact, no, we walk in and we say we're worth more, you need to pay us more. Right, what I do is more valuable than what you're paying me. You need to pay me more and we advocate for more. And then we get more. We get more money. So we're essentially more profitable for ourselves, but we believe that we're working hard for it. We're earning it.

Speaker 2: 24:56

There's not a business out there that doesn't work hard for its money. So the business is working for their money. And just think about what you you were just thinking what would you do if you had extra money? This is what a business does with profits. They repair their buildings, like you, making home renovations. They buy equipment, like you buying new appliances. They attract and retain employees through benefits programs, like you taking the kids on vacation. They hire people to help be more productive, like you hiring somebody to mow lawn.

Speaker 2: 25:32

They build reserve funds for emergencies, because not every year is profitable. Not every year is a great year. Some years something breaks right. Some years there's a bad economy or something. They put some money away. I could make a billion dollars today. Well, if it cost me $10 billion to run my business, that's only a 10th. That's not going to get me very long if I have a really bad year. Sounds like a lot to you, but in the grand scheme of things, it's not that much. Municipalities have this problem all the time, right, municipalities who accumulate extra money. The local taxpayers get really mad and they're like you need to lower the taxes if you're accumulating money and then an emergency hits and they're like why don't we have any money? Where's all the money? It's bad management. It's like because you never allowed a slush fund to be built up. But you would do that for yourself. You would build your personal savings.

Speaker 2: 26:21

Businesses pay off debts. When you look at debt payments, that comes out after-profit. When you're talking about profit, you're talking about money that you made and the interest payments maybe will come out of that, sometimes depending on how the accounting is, but the principal payback of that debt that's coming out of the profits. So if I had a really bad year or if I started a business and I have debt from when I started the business or I went out and bought another business or something like that or expanded my business and I pay off debts that's going to come out of future profits, so I can have lots of profits that are actually earmarked for things Like. I can also put it towards future acquisitions and expansions, the same way that you would put it towards that lake house that you want when you retire. A business could say you know what Like.

Speaker 2: 27:12

Take FedEx, for example. Fedex has an aging fleet. Their trucks and airplanes are getting old. They're going to need new ones. You better believe they got to be saving their money ahead of time so that, as those vehicles need to be replaced, they have the money to replace those vehicles. They're saving it for a future expense that they're probably going to have in the future and I you know whether or not they're doing that. That's just an example. But you know businesses are operating the same way that you would run your household when we're talking about profit, versus you having extra money left over from your paycheck.

Speaker 1: 27:49

Yeah, because I think maybe we sometimes misdiagnose or misthink that when we hear profit in a company, it's that they're all lining their pockets with what they've made, right. But what you're talking about is just because they may have made a profit doesn't mean that they necessarily took that home, but they reinvested it in their people and technology. So, yeah, they might have had a booming year where they made all this money, but maybe they paid off debt. So it's not that they're just, you know, writing a big check to themselves, walking out the front door and making it. And I guess that's maybe where it starts to frame like how we can begin to think profits are bad, because someone told us there's greedy people out there. So I guess it kind of begs the question are profits good or bad then? Right, because it's kind of sounding like profits could be a good thing with context Profits are not.

Speaker 2: 28:33

I don't think not. They're neither good or bad. Profits are necessary. If you do not have the potential for profits, people are not going to take risk. They're and they're not going to try to fight to preserve things. So if you can't get a return that is better than your nine to five job, why would you risk what you have? You wouldn't. So without profits companies they can't pay people more, they can't expand, they can't make new products, they can't innovate, they can't get through turbulent financial times.

Speaker 2: 29:16

Think about your situation. What if your paycheck got cut in half and you don't have any extra money? You can't go on vacation, you can't buy new appliances Right. You can't put your kids through the best schools. There's all these things that you can't do, but for some reason, because it's somebody else's profit, it's not our profit, it's somebody else's profit. Some other corporation is making this money, not our family.

Speaker 2: 29:40

It's bad, and the argument is and the big argument is, which we're going to really get into is Travis. It's not that profits are bad, it's that company. There's companies out there that are really gouging the profits. They're making far more profits than they need to to be able to do all these things that you're talking about and that's we're going to dig into that pretty deep. But if you own an investment, the entire value of the investment is based on profit. The price is based on a knee-jerk reaction, right, that's what you see in the stock market. But how that price, the elasticity of that price, how it bounces back, you know how high up it can go and how far down it'll go before it snaps into the other direction. That's based on the underlying value and that is all based on current profit and expectations of future profit.

Speaker 1: 30:41

And I think you have a pretty interesting kind of word association here. That might be a good ending to this first episode for how we kind of look at profit right. So we've been leading up to this dialogue around the idea of profit. Is it good, is it bad? It's neither. It's necessary. Why don't you kind of walk us through, then, some of these statements to kind of reveal the mixed teeter-totter emotions that we can sometimes be battling?

Speaker 2: 31:07

Yeah, and this is, I think, where some of the politics and stuff comes in and the current event component of this, because I think that it's really easy to want to be an activist and help people. It's really easy to say, yes, those bad corporations, those are hurting mom and pop, right, those are hurting grandma and grandpa, those are hurting people with lesser incomes Like, we need to do something about this. We need these corporations to get under control. We're going to talk about how there's a lot of misleading angst built into that. We're going to actually get into the statistics and the numbers a little bit. But here's the oxymoron component of this. This is a walking contradiction People who are concerned about the fact that profits are too high, but also want people to get higher wages and better benefits.

Speaker 2: 32:08

That's an oxymoron Because in order for the company, profits are met. When you see what the company profited, you see what they did last year. That's not what they're doing next year. So if you want to raise next year, the company has to have been profitable last year and people want raises every year. Last eye check. People want more benefits. I want more retirement, I want better health care. I want more vacation time right, I want less hours. I want all this stuff. If you're going to have more this year, the profit has to have been there last year, because somehow they got to pay for it. They got to have a pile of money to pay for it. So if they don't have the pile of money to pay for it, you don't get it. We have people who you know. I want job stability. I want really good jobs. I don't want to have to come into work and worry about layoffs. Do you better worry about profits? You better worry about the money that the people who risked their own personal money to have this company, to create the job that you have, who could be making other money with their money right, Because if they left it in the bank, left it in their other investments, if they put it in a CD or whatever, they'd be able to make X amount of money. Instead, they took that money and they started your company or they invested in your company and they want to make sure that they get return on that risk and they're saying, hey, I got to get X amount of money for the return on that risk that created your job. If you want to keep your job, you got to make sure I get taken care of. Also, I'll take care of you, you take care of me.

Speaker 2: 33:55

One of the arguments that you hear is I want my investment accounts to go up. I guess this is the opposite. If you're against corporate profit, you're saying I think corporate profits need to come down and in the same breath you say I'd like my investments to go up. That's a contradiction. Your investments cannot go up in value if profits do not go up Period. It cannot happen because the reason why people buy an investment is because they can make more money than they're investing. That is, from profits and the growth of profits. If the profits aren't there and if there's no growth to the profits, or if the profits are threatened because the company is running itself like a municipal government basically, where it's got no reserves. What you got there, You've got a bad investment. Nobody wants to buy that investment. So if you want to make money in your investments, you have to be pro corporate profit. Now again, we can talk about corruption corporate corruption, political corruption, personal, ethical issues, that type of thing but on its own phase, we cannot be anti-profit and still say, hey, I want my investments to go up. And the reason why would you want your investments to go up?

Speaker 2: 35:18

If you have a pension or a 401K and you want to retire someday, you better hope that corporations are profitable, because that's what funds those things. You think it's a mutual fund. The mutual fund owns companies. You think it's a pension and the government maybe you work for the state and they back the pension or the federal government. They back the pension. Inside that pension they are buying stocks and they are hoping to. You know they are praying as much as they can possibly pray the people who are managing those portfolios that those companies are as profitable as they possibly can be, because that means they don't have to put extra money in that pension fund through raising taxes or anything to make sure that you get your pension. So if you want to be able to retire one day and be comfortable in retirement and not have to work till you're 80, you have to be pro-profit.

Speaker 1: 36:09

Well, I think you just did a really nice job at the end of its semantics but really separating kind of what we're talking about. Profits in general are not bad, they're necessary. But if you want to talk about corruption and political corrupt, those are two very different things. But if you are just working all day at whatever you do for a job, you come home, you turn on the nightly news and you have somebody screaming at you corporate greed, corporate profits are derailing your future. So vote this way or feel this way. If you don't have any context for what's being talked about, you could again just be mad. But you're not really sure what you're mad at. So I think for a good first episode, we'll pause here for today, laying the groundwork. But I think it's going to be exciting, because what if we told you that there's actually something that's more valuable or matters more than profit? So stay around for episode number two of this series as we talk through corporate profits.