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CHRIS KATTERJOHN Commentary: Why 'profit' is a sturdy word

April 16, 2007

Sometimes we need to be reminded of the simplest, most basic things. Like the value of profit in a capitalist society.

In a week where I was hard pressed to find the time to write a column, my friend Roland Dorson submitted an unsolicited piece for our consideration.

I've known the president of the Indianapolis Chamber of Commerce to be a witty man with a clever way with words. Here, he deftly summarizes a notion to which I and IBJ Media definitely adhere.

With only minor editing and a wink of an eye over the use of a word like "kith," I happily cede my space to Roland for your edification.

While the topic of the piece might seem like we are preaching to the choir, the melody to this song is sometimes too easily forgotten.

And by the way, in case you didn't know, "kith" is a synonym for "kin." Heeeeeeeeeere's Roland.

"Profit" can be used to describe a benefit derived from experience as in, "The team profited from wearing the right cleats for a heavy rain."

Or, profit can be about inventory valuation, capital consumption adjustments and the rate of increase in net worth. Profits can also be about a mortician, a mechanic or Microsoft, or about hiring another person, making a mortgage payment on a house, or paying dividends that might be used to send someone to college or buy a car.

Frankly, profit is a sturdy word, and we ought to make note of that.

Profit does not have to do with esteemed figures, religious or otherwise, who see into the future. That would be prophet. There has been much gnashing of teeth and rending of garments over privatization and over profit and its kith, whether it applies to Wal-Mart, oil companies or the lottery. How did we get so turned around on whether profit lives in a bad neighborhood?

The opposite of profit is loss, as in "loss of income, lost my job, lost our way, lost track ... ." Profit is good; loss is bad. This is Economics at its simplest.

Profit is what allows Ron Brumbarger, after 16 years of running BitWise Solutions Inc., his Web development firm in Carmel, to hire his newest worker, one of 22 he employs.

Mission Coffee and Tea here in Indianapolis, run by Janet Harris, donates a percentage of clients' sales to the charity of the client's choice. Without profit, Mission Coffee and Tea cannot do anything for anyone.

When Eli Lilly and Co. is profitable, Lilly Endowment Inc. benefits from the rise in the company's stock price or any increase in dividends. And because of that, the endowment can continue to give away hundreds of millions of dollars a year in charitable contributions. Does anyone, anywhere, have a quarrel with that?

The Christian Science Monitor reports that the Guthrie Theater in Minneapolis, a venerable regional theater (where my mom acted once), has found a way to pay for its costumes. It runs a for-profit costume rental company that subsidizes the company's professional ... and expensive ... costuming needs.

As James Pethokoukis writes in Capital Commerce, "Today's earnings are tomorrow's investments." John Lechleiter, president of Lilly, will tell you it takes 10 years and $1.2 billion in research to get a drug from the laboratory to the medicine cabinet. No profit, no pills, and with more and more of us approaching late-middle age, that has deep meaning.

Why shouldn't the state consider leasing out its assets or letting private enterprise take a crack at doing some things where the state has not demonstrated proficiency?

Turning a profit is a desired state, even for the state, and one that benefits all of us. Free enterprise, profitability, the marketplace-these are all field-tested concepts that have worked. On the other hand, Karl Marx, who took a dim view of profit, lives only in textbooks.



Katterjohn is publisher of Indianapolis Business Journal. To comment on this column, send an e-mail to ckatterjohn@ibj.comor go to IBJ Forum at www.ibj.com.
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