Intent vs. Results

When discussing any topic, whether it be public policy or sports or whatever, one must remember to separate intent from results.  An action could be conducted with good intent but have bad results (thus the phrase “the road to Hell is paved with good intentions”).

This is important to remember when discussing markets’ morality.  One of the arguments some make against markets is that they are driven by profit.  This is true; firms and individuals are profit-seekers and profit is necessary to remain in a market (after all, as we discussed before, in order to receive in a market, one must have something to give).  But does the fact that markets are not formed solely on altruism make them immoral?  Of course not: markets are a force for good because their results, on the net, are good.

Let me demonstrate my point with a question for you to consider: who is more moral (who does more good): the store owner who keeps his prices so low he breaks even, but his store is always sold out of goods, or the owner who makes a profit but his store is always stocked?  If you needed goods, which would you go to?

7 thoughts on “Intent vs. Results

  1. Having been a “store” owner for most of my working life. I had a saying that “there is nothing more frustrating than competing with someone that doesn’t want (know how) to make money.” Yes they say they have the lowest price, most deals, the right stuff; but time and again customers would return disappointed at the lack of knowledge and inventory.

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  2. Good reasoning Jon; but, the morality of profit is not in question to any one who thinks it through and discovers the true place in the rise in mankind to dominance on the planet. And not just dominance; but, all of the material, spiritual, physical, and intellectual progress as well can be laid to what profit has delivered to mankind.

    In a recent conversant with our friend Dick Gillette, I finally articulated an important point, that I propose is a truth. That truth is profit is progress. I repeat, Profit is Progress.

    Without profit there is no progress, no growth. Without profit mankind would still be competing with the other primates for food and territory, even factoring in that man had created flint tools. Other primates, other animals use tools, but they never learned to take profit, store and accumulate profit.

    Profit is progress, and it is the root of trade, the root of capitalism.

    As you pointed out, a business has to make a profit. Even non-profits have to make a profit or they would soon be out of operation – and it must be a profit beyond immediate costs. A non-profit has to make more than immediate because no one can predict tomorrow, and if there is no cushion built up, there are a multitude of things that could unexpectedly raise costs for the non-profit and cause it to close.

    Those who curse profit are truly the ignorant of the land.

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  3. One need only watch any of the many videos of desperate Venezuelan shoppers scrambling for scarce goods in government shops with mostly empty shelves to confirm what you write here. But will progressives ever acknowledge this? Very few and far between, if any, would be my guess.

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  4. I’ll point out the example of higher education and government funding. The intent from government was to make a college education more affordable by handing out grants. The result:
    “Lesley Turner, a PhD candidate at Columbia University, looked at data on aid from 1996 to 2008 and calculated that, on average, schools increased Pell Grant recipients’ prices by $17 in response to every $100 of Pell Grant aid. More selective nonprofit schools’ response was largest and these schools raised prices by $66 for every $100 of Pell Grant aid.”
    and
    “After adjusting for differences among schools, the authors find that Title IV-eligible schools charge tuition that is 75% higher than the others. That’s roughly equal to the amount of the aid received by students at these schools.”
    Higher education got more expensive. From a supply and demand perspective, this makes sense. The grants increased the demand for higher education while the suppliers, if they didn’t increase the supply, could raise prices. They did. And why not? They could make more money by keeping the supply static. Who would turn down the offer to make more money doing the exact same thing you are doing now?

    Source for both the quotes: http://www.marketwatch.com/story/why-college-aid-makes-college-more-expensive-1330033152060

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  5. Good point Jon. Intent vs. Result.

    I would add that when looking at governemnt policies it is important to not get fooled by the policy name as well as by the stated intent of said policy. Minimum Wage sounds like a good policy. but uf it was called Minimum Unemployment then it looks less attractive.

    Many times the policy name describes the intent, not the result of the policy.

    I look forward to your blog Jon as I have always enjoyed your posts on other economic blogs.

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