Thursday, May 24, 2012

Show Up Obama's Ignorance on Profit's Role in a Free Economy

by Keith Riler

Barack Obama is out knocking Mitt Romney's "profit maximizing" experience as irrelevant to the job of President and bad for individuals and communities.

This line of thinking is sufficiently ignorant and incompetent so as to automatically disqualify Obama from the job he seeks. Profit maximizing, at the national level, is precisely what this nation now needs.

This is so basic that writing it feels silly.

Consider that gross domestic product (GDP) is the revenue line for the United States, with its most dynamic and important component being business activity in the private sector. GDP is "the output of goods and services produced by labor and property located in the United States."

Every one of us wants GDP to grow as large as possible - in Obama's words, to be "maximized," because in a growing economy, everyone is much more likely to find a better job. In a shrinking or flat economy, jobs are much harder to come by. When US residents find better jobs, their gross paycheck increases.

As we all know, the only difference between gross pay and take-home pay is taxes. With GDP maximized, gross pay is maximized. To maximize net take-home pay, taxes must be minimized.

Therefore, for the most US residents to maximize their material well being, GDP (revenue) must be maximized and taxes (expense) must be minimized. Combined, the maximization of revenue and the minimization of expense is also known as "maximizing profit."

We can only guess what Barack Obama thinks should be maximized and minimized, but he has inadvertently highlighted each voter's choice: a) vote Romney, maximize profits - maximize GDP, minimize taxes - and increase the material well-being of the most people, or b) vote Obama and get more policies that yield no return and do nothing for GDP or the material well-being of most people.

Keith Riler


Copyright - Original materials copyright (c) by the authors.

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