Vitaliy wrote:

> Ling, it may help to define "no profit" -- how do you understand it? If
> I'm investing all the profit my company makes into new equipment,
> advertising, etc -- would that mean I'm not making any profit? When do
> you count profit (instantaneously, weekly, quarterly, annually, once
> every decade)? 
> 
> Maybe more importantly, HOW do you count profit? Do you include the
> employee's salaries in the cost of the product, or do you count it as
> profit? What if the employee is a CEO who makes 10M a year? Should any
> portion of the raw materials or unsold inventory be counted as profit?

Just to clarify how I understand it (this may help understanding my posts):
I consider "profit" in this discussion all the money that real people take
out of the business: workers' salaries, investors' dividends, and, yes, CEO
salaries :)  This includes also growth of the company's assets. In a way,
taxes paid and money given to charity are also part of the generated
profit, in that this is money that benefits (in theory, at least) the
community. 

There's still the period question. But then, the original question was
about intent, and there the period is the one used by the intent.


> This conversation got started when I innocently (or so I thought)
> suggested that from a business point of view, it is better to sell more
> units at a lower price, and make more money, rather than to sell fewer
> units at a higher price, if the _total_ profit for the former is higher.

One problem with profit maximization is that there are many things that
have value but don't appear in the balance sheet. A healthy (physically and
emotionally) work and living environment, for example. Some of it may be
profit-relevant in longer terms, but much of it isn't, or only in so long
terms (centuries, for example) that nobody uses it in profit calculations. 


> By definition, lower prices benefit the consumer. 

Yes, but not always when you start taking side-effects into account. There
are many cases where cost minimization and profit maximization benefited
some consumer (money-wise), but severely penalized (health-wise) other
people (like workers, or people who live around the plant). Most of our
current environmental and work environment regulations only came after some
disaster (caused by profit maximization, usually) already had happened.

This is an ongoing process. Which says that if you give profit maximization
the highest priority, you are bound to sooner or later cause some
irreparable harm to someone -- or to many, if you're really into big-time
maximization :)

Gerhard

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