Saturday, May 05, 2007

Profit is (not necessarily) Theft

Meredith has drawn my attention to an interesting discussion on frugality, and Mama Squirrel did me the favor of posting on the personal side of it. Which leaves me more opportunity to lecture on the appalling lack of economic understanding shown by a frightening number of commenters.

Wealth, contrary to the apparent assumptions of many, is not some magical thing that comes down from the sky. Profit is not simply the result of taking things away from other people.

Profit is the wages of a varying combination of labor, insight, hassle, and risk. To take the subject at hand, let us suppose Frugal Shopper goes out and amid the piles of tacky Christmas decorations and battered candle holders at a yard sale finds a Treasure. FS, who pays attention to these things (and that, friends, is work) knows that many people want Treasure and are willing to pay, say $25 for it when it is marked for $5 here at the yard sale. Gasp! A 400% profit! Even an oil company exec might envy that!

Anyway, most of those people who want Treasure do not want to hunt all the yard sales in Ohio for Treasure. That is also work, and it is work most people are unwilling to do. So FS pays $5 for it, takes it home, and posts it on EBay, where people who want Treasure can just type in "Treasure" and see FS's listing. FS, however, is not home free. There are fees and such to be paid. Treasure must be kept around the house until it sells, and then she must bother with going to the post office and shipping it.

And there's always a chance that everybody has all the Treasures they want and the going rate for a Treasure is no longer $25, but $4. In which case FS would be stuck. Also, we have not seen (but FS's sore feet have) all the yard sales she went to at which she found nothing. It may be that FS has made almost nothing, considering all the time and trouble she puts into it, but we'll assume FS is not an idiot and would either stop working if that was the case or enjoys it so much she doesn't care.

In any case, this ghastly 400% profit turns out likely to be a small hourly wage. Middlemen have been beat up on from time immemorial, but they provide a very important service, or they wouldn't exist. They take stuff from the people who have it to the people who want it, when those people don't want to hassle with hunting up the people who have it for themselves.

I, personally, hope I never ever ever have to try to make money from such activity, because I have no talent or interest in it. I have no qualms about paying those who do. They are providing me with something useful.

And they are not taking something away from Poor Person who might have been able to buy Treasure for $5 had they not taken it. That is part of the risks of life. Things are not distributed evenly and they never can be. Nobody is stopping Poor Person from getting up an hour earlier. (And given the glut of material goods our society has, which for some reason the same people who bash profit want to bash, I doubt that Poor Person is without an opportunity to find many other Treasures if she wants to go look from them.)

Now profit can of course be theft, just like wages could be. If you don't do your job, taking your paycheck is theft. And if you lie or cheat or steal to make a profit, your profit is theft. But (given how other people feel about being cheated) profits are much more likely to be an expression of how valuable the activity you do is to other people. And what's wrong with that?


Devona said...

Enjoyable ramble.

It's hard to remember that it's not a crime to be paid for work you do. Especially when you get to set the price you are paid. Most people I know who make things (or find things) and sell them for profit seriously underpay themselves. I am guilty of it. I just can't help feeling bad charging someone more than $35 dollars for something that I made when I know that lots of other people make the same thing and charge twice as much.

Why is it do you think that I have this guilt that I am thieving from my customers when in fact they are willingly paying my price?

Queen of Carrots said...

I have the same problem. (I never even felt entirely comfortable taking a salary, and certainly would never have dreamed of asking for more.)

One possibility may be that it's hard to see the value of our own time. It's not something tangible. So when you look at something tangible you made, you see the raw materials (and you know how much they cost) and not the hours you put into turning it into something useful to someone else. It helps to look very closely at how much time you really spend on it and calculate your hourly wage once you deduct all your expenses. You'll probably find it's not an extravagant one. And remember that people are paying for your skills as well, which took time and effort to acquire.

Rose said...

Ha! I spotted this article a few days ago and have been working on a post ever since, but you beat me to the punch. I'll still post it, though, as you have a different angle on it. Very insightful, and of course right on target.

Beth said...

My thoughts exactly. I wondered if some of those people who feel profit = theft understand that Ebay profit has helped keep some mother's (who felt the need to do so) be home with their children rather then needing (not wanting) to take a full time job.

Meredith said...

I was hoping you might share your thoughts. There were so many ways to eat that elephant; I could only take so many bites.

Marie said...

Yay, solid economic thoughts! I despair of all the communistic ideas (profit is bad, poverty is holy. . .) floating around in our Christian circles these days!

Indie said...

While I think that we should be careful that we are not taking advantage of anyone, it doesn't make sense to say that making a prophet automatically equals theft from the poor. I can't help but wondering if there is some level of sexism here and a devaluation of what has traditionally been women's work. You rarely see men in the work force being told that they are stealing from the poor even when their actions do cross the line into hurting the poor, but when a mom makes a little bit of money selling an abundant resource, she is "stealing from the poor".

Lindsey @ Enjoythejourney said...

A Christian make a profit? tsk, tsk, tsk! :)

Thank you for this take. I've been following the whole Challies article fallout with interest.

What baffles me is that it is perfectly okay for a Christian man to say, own his own plumbing business and charge $80 an hour for labor and that is fine. That is "making a living" and "providing for ones family."

But it isn't okay for a frugal shopper SAHM wife to make a few bucks on ebay off someone else's laziness for "treasure" as you so called it!

I frequently sell things on ebay, yes, I'll admit it. My children wear gymboree dress shoes that I buy at a yard sale for $1.00 or less. They wear them all season long, but because I' wise and thrifty, I keep them polished and in good shape. The next season, I sell them on ebay for as much as $15!

It is all about what you value most: money, time, resources, etc. I choose to be frugal with my money because I feel it is a wise investment of my time and resources! I don't care if you're a millionaire or not, you can and should be good stewards with your money. Even if you can AFFORD brand new $30 shoes, should you always buy them, when with a tad bit of effort, you too can have them for $1.00??

Sadly, for most people, they just feel like they're "above" it and they use stupid arguments against frugality to offset the guilt they feel for being "above" thriftiness.

Headmistress, zookeeper said...

Yay for you and some common sense and sound thinking!

Marie, I really enjoyed your comments there and here as well. Lindsay, good point about the plumbing.

Here's something that interests me- Jesus tells the parable of the treasure found in a field, and the man who knows it is there sells everything and buys the field to obtain the treasure. Today, we would say that man buying the field is a wicked, greedy, selfish man taking advantage of the previous owner. But Jesus used him as an example of a wise man doing the prudent thing.

I do this, too. There are times I have picked up something at a yard sale that I know is worth a lot more than they are asking and I have felt so guilty I have told the sellers- I have never yet had a seller say, "Oh, well, then I'll ebay it myself." In every case they have said something about how they can't be bothered with eBay or other reselling options and I can do what I want with it. This has happened so regularly that I quite feeling bad about it.

Headmistress, zookeeper said...

quit, I quit feeling bad about it. Blush.