TED Conversations

Taylor Tomasini

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What if profit maximization is not only wrong, but dangerous?

Profit maximization implies hierarchy, standardization, and efficiency (how else do you maximize?) but these activities limit diversity and create bureaucracy.

Genetic diversity is what helped people survive the Bubonic plague. Terrorist organization survive because they have no leader (hierarchy). Your body creates redundancies (think two kidneys). And your psychological frame (profit maximization) can help you act in highly unethical ways.

What if profit maximization is contributing to unethical behavior, economic fragility, boom and bust cycles, and the degradation of society?

What if instead of placing profit at the center of our aims and desires we sought to maximize something else and simply made profits a constraint -- your business must be profitable in order to continue to exist?


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    Feb 1 2013: coincidentally, a lecture about the topic just came out on the mises institute youtube


    Why Capitalism Needs Losses, Too | Robert P. Murphy
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      Feb 1 2013: Awesome. I'll check it out.
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      Feb 2 2013: Robert Murphy is a great speaker, I wonder if even he can get a word past the OP's economic memes
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      Feb 6 2013: I happened to be going through old TED conversations and stumbled across a post you made. It was in response to the question: Passion versus enough money to make a living.

      "let me add that we (often) live our lives in a way that is not fault tolerant. if i look around, i see people who are indebted to a level and have a lifestyle that consumes all their income. should their income drop 5%, they are in trouble. should it drop 20% and they are screwed. they just burned the bridges behind themselves."

      Your quote is what I'm getting at in my question. What if by seeking to maximize profits companies are leveraging themselves to the point where they are screwed if their income drops? What if profit maximization is the problem?
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        Feb 6 2013: your metaphor does not work for the following reason. if a person fails, it is a problem. but if a company fails, it is not. the people making up the company simply leave, and join other companies. it does not directly affect their wellbeing.

        btw strangely, free market and actual reality has the same attitude to human beings. in a free market, if you make bad decisions, you suffer the consequences. society, in general, benefits from that, as smart individuals succeed, not smart ones fail.

        the only difference is perception. whenever a human suffers, it is a problem. we can feel pain and pity. whenever a company fails, the same instinct kicks in, but we have to override this with reason. we need to understand that companies does not suffer. if they fail, they need to reform or die. no sorrow in that. that is progress. that is the free market. we want this. companies can die. companies are ideas. ideas die. that is cool.
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          Feb 7 2013: You make a good point, but what about the financial crisis? Banks that were over-leveraged and should have failed were 'too big too fail' because we realized that their demise meant an economic free fall for the rest of the nation, which meant that our fate was tied to their failure.
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        Feb 7 2013: they were not too big to fail. they were big enough to be able to loot the central budget, and essentially steal money from the people. failing of the big banks would have been beneficial to smaller banks that followed more prudent protocols, and did not stack up worthless assets. many small firms were ready to soak up the capital and workforce of the big failing firms. they have waited for that moment for years. they suffered loss of business, and now they were ready to reap the profits of their patience and foresight. saving the big firms was a mistake, and detrimental to those many small firms.

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