Browning chief. [volume] (Browning, Mont.) 1941-1953, 1947-03-28
LOOKING
AAE4D
" GEORGE S. BENSON
/ Presidexf--Hdhdixg college
Searry. .Arkaxsas
Profits Fallacv

The profit incentive is widely mis-
understood and maligned. Many
folks talk about profits as though
they were injurious. These folks in
dulge in side-glances, as if profits
were vicious imposition upon the
people. Profits, to some who are
misled or misinformed, have as
sumed negative sound. The fall
lacy is that industry arrives at sell
ing prices by piling onto production
costs as much profit as the traffic will
bear. This is not the way profits are
calculated.
Sales prices on the tags are the
prime consideration. In free COM
petitive market, the price tag is not
marked according to preconceived
notions OF what the profit ought to
be. Another fallacy, that free en-
terprise makes goods for profit rath-
er than for use, comes to light here.
The consumer is king in free mar
ket: the price tag is slave to the
demands of a price-conscious buy
ing public. This is one game in
which the consumer takes the sweep
stakes.
Efficiency Is King
You and l manufacture radios. We
meet squarely in the market, where
mine is priced at $500 and yours at
S75. Ii the quality is the same, I
must either lower my selling price
to compete or give to the Gus .omer
cne-third greater value than you do.
The lower the price and the more
quality included, the better off each
of us will be-saleswise. And the
first one of us to achieve quantity
sales, or real mass production. will
be the frs one to give the customer
lower prices and better quality.
Competition thus regulates the sell
ing price regardless of my costs.
The cycle is just that simple. To
keep factories running, the goal of
cur industries is to make a better
product available to a larger num-
Der of people through mass produc-
ton and lower selling costs. After
deducting costs from the customers
price the result may or may not be
profit. When the margin is un-
comfortably close, the next logical
step will be toward more efficient
production.
Efficiency of operation means to
industry the ability to keep down
costs of making and selling a prod
uct. The object is a favorable po-
sition on the open market. This
| means that factories must be busy
constantly, taking up the unem-
ployed, supplying products at lower
costs to on ever increasing buying
public. Not only idle men, but idle
money, is called for to provide the
tools to increase output.
! The Public Profits
Winner Of this game is the buying
public. Because of the profit incen-
! tive and free competition, the public
reapS huge dividends in the form of
better merchandise at fair prices.
To the average citizen of socialistic
ard totalitarian countries, where I
have observed that these things are
never duplicated, these simple facts
| seem an unattainable dream. What
American would wish to exchange
this system for methods that have
never succeeded half so we'll?
Profit is no parasite feeding on
our economic system. Profit is the
life blood of the industrial and bust
ness enterprises responsible for the
highest level of civilization the world
has known. Freedom to compete
against skill and efficiency by using
better skill and more efficiency
means progressive civilization-not
a static economy that either withers
away or makes spoilage for the
spoilers.