What motivates business… Greed?

As a small business owner, I get quite upset when a politician or news commentator excoriates businesses for their “profit motive” and “greed”.  While I understand that some business executives have abused their positions for personal gain, the reality is that a business only succeeds if it satisfies its customers better than the competition.

When the consequences of failure rest on the owners of the company, there is a proper balance of the risk of success and failure.  The owner will typically make rational decisions regarding what risks to take to make the company successful, knowing that the owner will also have to bear the results of failure.  The reward of success is profit (financial or of another type).

What person or entity does not do something for personal benefit?  Does the politician volunteer for free, or does he profit from income and power granted to his position?  Does the newscaster as to be paid for hosting the news program, and does he not also benefit from his potential influence?

If you are transacting business with someone who clearly states he is in the transaction to benefit himself, and you can choose whether or not to do business with him, you can at least be confident you know his motives.

On the contrary, if someone is telling you they are going to help you for no benefit to them, you should be very concerned as that person’s motives are at best naive and at worst sinister.

This article by Walter Williams (IBD Editorials) is a further clarification of this concept.

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