David M. Brown's Blog

June 10, 2012

Making money requires what’s required to make money

Filed under: Economics — davidmbrowndotcom @ 11:37 am

A NYT commenter states, with the bald contempt for elemental economic facts that is so typical of commenters at the New York Times site: “Software should reflect people’s actual needs, not corporate strategies and profit margins.”

Why wouldn’t an effective business strategy for pursuing profit have something to do with providing something that customers are willing to pay for, i.e., a product or service that serves a need or want? Equally nonsensical would be the following statement: “Grocery stores should reflect people’s actual needs, not corporate strategies and profit margins.”

Let’s take several milliseconds to work through this. What happens to businesses that fail to satisfy the needs of customers? They lose customers. What happens to businesses that lose too many costumers to competitors that are better able to satisfy customers? Those customer-losing businesses also lose profits. What happens to businesses that can’t earn enough profit to stay in business? They go out of business.

The commenter’s unreflective (or anti-reflective) anti-capitalistic statement adds up to the following assertion: “Companies should pursue corporate strategies and profit margins by satisfying their customers’ actual needs; they should not pursue corporate strategies and profit margins by satisfying their customers’ actual needs.” In a market unhampered by government intervention, there is no way to stay in business over the long haul except by satisfying “actual needs”; a strategy for successfully pursuing profit would obviously reflect this fact.

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