Occupy Wall Street demonstrators are demanding “people before profits” — as if profit motivation were the source of mankind’s troubles — when it’s often the absence of profit motivation that’s the true villain. First, let’s get both the definition and magnitude of profits out of the way. Profits represent the residual claim earned by entrepreneurs. They’re what are left after other production costs — such as wages, rent and interest — have been paid.

Profits are the payment for risk taking, innovation and decision making. As such, they are a cost of business just as are wages, rent and interest. If those payments are not made, labor, land and capital will not offer their services.

Recommended Stories

America is holding an election. It needs a divorce

Virginia is the Left’s Trojan horse test run — and your state is next

The socialists are half-right: Ban reelection, not the Senate