Profit isn’t a dirty word
If I hear one more person say “but we don’t make anything anymore” as an answer to our current economic troubles, I swear I will become violent!
Let’s be clear. We do make things. According to the IHS Global Insight (a US economic consultancy) we are seventh in the world league of manufacturing value added output. However what we make is eclectic and high end. We also make ideas and concepts. We make tax and legal structures and deal in intellectual property. We make campaigns and marketing tools. We make entertainment formats and deal in rights. We trade in money and financial products and make investments.
I could go on.
Yet there is a myopic view. A view that before Thatcher we were this great nation that made such a lot of things. And if only we could make things again all our problems would be solved.
Hang on a minute. How many of those people who worked in factories got wealthy as a result of doing so? Did those shipbuilders really have a jet-set lifestyle? How about the coalminers? A nice steady job that paid ever so well affording those who partook a wonderful standard of living? And the steelworkers, second home in the Cotswolds for you sir? Indeed what about the stuff we made. Are we less of a nation because the Morris Marina is no more? Or that Terylene is more likely to be spun and woven in China than it is in Britain? Just a few examples where reality is forgotten and some golden era is spun by those seeking social engineering as their political and economic goal. We made a lot of stuff that can be made elsewhere. For less. And of a higher quality. The money is no longer in making things. It’s in inventing things. Trading, financing, concepts, ideas and intellectual property. Value added products that are sophisticated in design or concept. The sooner we grasp this the more likely we are to find economic direction.
If we are to get our economy back on track we had better stop something else too. The politics of envy. The politics that allows profit to be considered a dirty word. If we had been focussing on profit rather than profligacy perhaps our government’s finances wouldn’t be in such a perilous state. If we had focussed on making money, investing and working hard whilst providing incentives for those who do rather than lining the pockets of those who don’t, again we would be in a better place.
That’s not to say that not-for-profit jobs, or the public sector aren’t important. They are. In a balanced economy the services we, as a society, wish to have need to exist. They need to be paid for and they need to be run efficiently. Providing what we need rather than what some want. Yet we cannot have these as a right unless we can afford to pay for them. And you don’t afford them by simply looking at profits with envy and taking an ever-larger chunk. You do so by increasing the overall profit by expanding the economy.
Looking at the business failures of recent years you might be forgiven for thinking that our heritage is being lost. Woolworth’s closing down is often cited. Hang on though. All that store was good at was stacking random selections of toot in a haphazard manner and teaching our younger generation how to nick stuff. Habitat lost its way because they forgot that they were there to serve their customers with new products, in a stylish way with innovation. Zavvi failed to realise that we didn’t want to buy CD’s anymore and so the list of failures continues. There will be more because along with our lack of vision over what business we should be doing; we have become complacent about those we have.
Profit. The difference between the purchase price and the costs of bringing to market. A simple concept.
Yet one we need to re-learn. It’s time to encourage success, inspire entrepreneurs, applaud profit and invest in our future. Our future as a clever and smart nation. Not a nation that’s the world’s sweatshop.