Another REASON Bill Maher Is An Idiot, Profits

Posted by Jason | Posted in Economics | Posted on 13-10-2010

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Always wanting to hear the viewpoints of those who disagree with me, I always watch Bill Maher’s show when I get a chance. Typically, I end up asking myself the same question every time, “Why the hell am I even watching this?”  The reason I get so frustrated is Bill Maher states his opinions as if they have only reasoning behind them. You know, Bill Maher, the guy who says people that believe in God are idiots and don’t believe in reason. As most free market advocates would point out, Bill Maher too has a religion. That religion is statism, and it is based on faith, not reason.

Here is an example from this weeks round table discussion, which had a NY Times columnist, Andrew Ross Sorkin, conservative, S.E. Cup, and libertarian, P.J. O’Rourke (Am I using too many commas?) when discussing the Tennessee firemen standing watching a guy’s house burn down.

It’s crazy that we have for-profit healthcare. As crazy as it would be if we had for-profit fire departments or for-profit police departments. I didn’t expect people to take that and go the other way and make the fire departments for-profit. I’m saying none of them should be for-profit. – Bill Maher

I thought this was a t-ball for O’Rourke. Surely an intellectual libertarian like O’Rourke would hit this one out of the park. He’d explain how profits benefit society, they aren’t a bad word, and every government service should work “for-profit”. Not even close. O’Rourke seemed more like he had tourettes, shouting out stupid statements in an attempt to be funny. Unfortunately for him and his fellow libertarians, he wasn’t even funny, as the weird looks by the other panelists pointed out.

So what is it that Bill Maher doesn’t seem to get about profits? I mean, he’s obviously such a logical guy since he’s an atheist. He just goes where logic, proof and reasoning take him. Well, let’s lay out the proof and reasoning. Obviously, Bill Maher won’t be reading my little ole’ blog, so we’ll just do it for grins and giggles.

As I’ve stated in a previous post, the Tennessee fiasco had nothing to do with the free market. It was still government run, and the government could care less about profits. They don’t need no stinkin profits. They got the guns.

Next let’s analyze the common criticism of all lefties, profits. Aaaahhhh, profits! What is it about profits that are so evil, and why do liberals not get that profits are what drive our civilization forward?

Profits are nothing more than what results from trading one item for another freely, where both parties agree that the item they are getting is more profitable to them. For example, if I produce a bag full of apples in my back yard, but I can only eat a quarter of the bag, it would be profitable for me to trade them. Another person may have made flour, but can only eat so much bread. They would find it profitable to trade some flour for my apples. We both then can make apple pies. It was profitable to both of us.

As every economics book will tell you, this is how trade begins, but it gets very difficult to trade when you have to track down people all the time that want apples or flour. Instead, you trade them for money. Money is no different than the other commodity in the previous example, except it is accepted by everyone.  The reason I traded some apples for the flour is I more highly valued the flour than I did the apples. The other side valued the items the opposite way. This does not change when money is introduced. Say I sell my apples for a dollar each. I obviously value that dollar more than my apples. The person buying the apples values the apple more than his dollar. We both profited.

Now that we’ve laid out what profits are, what role do they play in an economy? Profits are what tell entrepreneurs what society wants and needs. They basically tell entrepreneurs, “Hey, we need more resources on this demand, and we are willing to reward you for it.” Let’s say I’m producing my apples and I decide to trade them. It cost’s me 25 cents to produce each apple. When I take it to the market, I find the going price is $1.  Obviously, that is a pretty good margin. Society is telling me that they demand more apples, and they are willing to reward me quite handsomely for it. Now, because I have unlimited wants, what am I going to do with a return like that? I am going to direct my resources at producing more apples. Other competitors will see those profits and start making apples in order to get in on the action. After all, society obviously wants more apples.

What happens next? Eventually more supply is brought on the market, which decreases what society is willing to pay for the apples. Unless something increases demand at the same rate as supply, prices will drop. If the cost to produce the apple remains the same, then the profits will decline as well. What is this decrease in profits telling the producers? It’s telling them that they are approaching the point where they are making enough of what society is demanding in regards to apples at the given price. Eventually, if they don’t change something and prices continue to fall, profits will work their way to zero and then turn into losses. What is the loss telling the producers? It’s telling the producers that the given product is being produced too much at the given price. Society would rather he direct his resources elsewhere to provide them with what they value more than apples.

The entrepreneur then does one of two things. They will either try to lower their costs, which will increase their profits and give them more market share, or they will move into another product or service, where the profits are larger, which tells them people want resources directed there.

If they find a way to lower their costs, say by inventing a machine or improving their production techniques, they will lower the cost of production. This will drive out competitors who aren’t as productive, because they won’t be able to lower prices as low as our innovative entrepreneur without taking losses. They will then leave and go into a more profitable business given their resources. The profits or the lack their of, told this business that society doesn’t want what it’s offering at this price and instead would prefer them to use their resources where they can be more efficient than they were at producing apples. Society is basically saying, “Look if you want us to reward you, you have to produce something else.” Now think about this, and you’ll see how this creates prosperity. One entrepreneur innovates, which allows him to lower price and maintain profits. The other cannot, so slowly the innovators takes more market share. Society still gets the apples they want at the given price, but as the less efficient apple producer moves into producing something else, they are now getting apples plus the new product or service. If price was driven down to 25 cents, which forces one producer to lower production cost and another out of the production of apples, society now is then getting one apple plus 75 cents of another product for the same dollar they originally spent on apples.

Now, if they can’t lower cost, they will not be able to continue producing the same level of apples. This is a good thing. Society is telling them, “We don’t need more apples given the cost to produce them.”  They will instead direct resources to where society wants as our less competitive producer above had to do. They may continue to produce apples but only to the point of it being profitable. Their excess resources will be diverted to a more profitable venture. Society is telling this entrepreneur, “Look, we want apples, but we don’t want all these apples given the cost. Please give us other products.”

I’m getting a little long here, and hopefully not being too confusing, but now ask yourself how does this take place without profits, which means the government takes it over.  The government has no competition to drive down price or encourage innovation. It has nothing to tell it that it is using it’s resources efficiently, or to tell it what society really wants at a given price. This is what leads to the proverbial $600 toilet seat and Big Dig boondoggles.

Now, as one pro-government advocate told me, resources are never really wasted. Really? What does this $600 toilet seat really mean? Remember our example of apples and flour. $600 would constitute $600 worth of production, in our example apples. That $600 of production, what many people are given for their entire week of production (their paycheck), is exchanged for a toilet seat instead of being exchange for $10 worth of production, which is more along the lines of what it should cost. Is this wasteful? Of course. It would be like me trading 600 apples (if apples are $1/each) for a toilet seat that should only cost 10 apples. Instead of being able to buy other products totaling $590 in production, meaning another $590 in production took place, I only got $10 in production.  Does this sound like resources are being put to their best use to increase the amount of production in an economy? It is production that makes prosperity, and it is PROFITS that direct producers to produce what society wants, what society deems best for society, not our corrupt overlords.

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Another REASON Bill Maher Is An Idiot, Profits, 9.1 out of 10 based on 21 ratings

Comments (18)

Well said, Jason. We all need a refresher in macro-econ. What is sad is that Bill Maher, and people like him, get a huge amount of press and also take advantage of the popular vote who think he is ‘cool’…so untrue! He is anti-capitalism, an atheist, and is so far out of line from our founding fathers that it is a crime.

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[...] when ran by the government, which has no competition. As I’ve pointed out in my blog about profits, profit is what directs resources to the most efficient use. If UPS or Fedex could not deliver mail [...]

I still struggle with the for-profit model when it comes to insurance providers being owned by stockholders instead of policyholders. Is the point of insurance not to spread the risk as widely as possible (i.e. single-payer would be optimal)? Is it not a problem that insurance providers would profit more by paying out less in claims, leaving those that pay premiums fighting their insurance company at the time they need them most? Is it not a problem that my voting to provide insurance claims (dollars) to my fellow policyholder would lead to reduced profits, yet I want the same level of coverage (claims) when I get in the same jam? How do I balance these to seemingly counter scenarios? Having a pool of people with a vested interest in the profits, yet removed from the claims side of the insurance equation seems like a problem to me. What am I missing?

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here is how you balance it. You need to define the actual nature of the issue. Unlike police or firemen, medical treatment is something that requires a highly refined skill that commands a high value in the marketplace. It becomes more valuable with the increase of specialization. Specialization is the key, and it is a fundamental aspect of free markets. How long does it take to train to become a cop or a fire fighter vs. how long does it take to become a surgeon, or a neurologist, or an RN? Until people face the fact that personal skill and knowledge are in fact private property that has a value in the market place, they will foolishly assume that health care can be socialized. Good luck with that.

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[...] via Another REASON Bill Maher Is An Idiot, Profits | The Proud Profiteer. [...]

Bill maher a complete arrogant obnocoius blabbering nincompoop he must realy beleive this darwinists bull kaka its ovious his shrunken brain is indacation that his mind is too far gone for any chance of recovery from a state of pernimate stupididy

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As this lesson on profit is being laid out, I see many opportunities for corruption to invade the model both from private and government entities. (i.e. monopolies, unfair trade laws). The challenge of government should be to protect the entrepreneur from unfair trade practices. That is another lesson.

Bill Maher needs ratings to maintain his lifestyle which is why he says such things. Do people that are on the mountain looking down really understand the folks at the bottom trying to make their way up.

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What’s sad is people think Capitalism is evil, thanks to men like Bill Maher.

What is “evil” about this? If you produce what society needs, you become wealthy. Wealth is a function of how much you serve your fellow man.

Prices are profits are neither good nor evil, but they’re incredibly important. Losses are important, too.

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[...] Another REASON Bill Maher Is An Idiot, Profits | The Proud Profiteer [...]

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Bill Maher is a perfect example of someone living without a brain

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Maher is a a consummate progressive fool. He s financially and economically illiterate.

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Of course Maher believes in statism, he is an arrogant obsessive who thinks he’s smarter than everyone except the guy who’s ass he’s got his nose up– used to be Clinton, now it’s Obama. Obviously some type of compensation for knowing he’s a worthless little fuck. He wants the government to force his opinon on everyone else.

He’s just a smarmy, mealy-mouthed douchebag with some minimal entertainment-values… like a sideshow geek. Can’t wait for this stool-sample to fade into obscurity.

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Keith G.”

“I still struggle with the for-profit model when it comes to insurance providers being owned by stockholders instead of policyholders. Is the point of insurance not to spread the risk as widely as possible (i.e. single-payer would be optimal)? Is it not a problem that insurance providers would profit more by paying out less in claims, leaving those that pay premiums fighting their insurance company at the time they need them most? ”

No. Cheating or pissing off your customers never pays for long, since it costs more than it gains in legal expenses and lost business.
Courts will assign compensatory and punitive damages, as well as awarding legal fees; and the scandal will drive down stock-prices as well as driving away existing and potential customers; and courts will look at a company’s record and history of this type of thing, when awarding damages and legal fees etc.
Customer goodwill and public-image are a business’s most valuable assets, since they cost little but are worth much. So it’s in a company’s best interest to maintain a pristine record; in contrast, we’ve seen courts rule that government services like city police, FEMA, public schools etc. are under NO obligation to protect ANYONE, having complete monopoly as well as governmental immunity.
The government simply gets the least scrutiny, while having the worst record.

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Theory, theory, theory… and bla bla bla…..

but what actually happens? corporate abuse, limited access to top quality health & education, etc. remember these are KEY services that people MUST pay for whether they want to or not, so is it wise to leave it to the whim of the market? NO!! will everyone be able to afford it when required? NO!!

So when the entrepeneur needs to lower their costs they will seek more efficiency in their basic processes you say? BOLLOCKS! what will actually happen is quality will drop! open your eyes please!

All this talk of “society is telling the entrepeneur that bla bla bla..” is only amateur gibberish. Producers will charge more than the fair price and newsflash! you’ll have to pay for it.

Honestly I hate it when they preach the amazing benefits and prosperity brought to you by capitalism without leaving looking out your window and see what really happens.

In my opinion all you want to do is slag Bill Maher who will (ahem!) not read your post even if he had a hard copy in front of him, and for the simple reason that your ages behind him in reason and intelligence.

Please stop wasting your time with stupid posts like this.

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You miss the point, using old lines of corporate greed and peoples rights etc as why a nationalised healthcare system is important.

In reality, a monopolised national health care system encourages inefficiency (as there are no competitors in the market forcing you to improve) forcing consumers to accept a sub standard product, as there is no alternative.

Look at the NHS in the UK: although free, causes huge waiting lists for treatment, overcrowded hospitals and overworked staff, resulting in people not getting the care needed to them. All the while being a huge cost to the taxpayer and being a drain on the economy.

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I see Calvin is in the UK.

“these are KEY services that people MUST pay for whether they want to or not, so is it wise to leave it to the whim of the market?”

You mean where “the customer is always right?”

AB-SO-DAMN-LUTE-LY!

I can’t think of anything more STUPID than leaving them to someone unaccountable… maybe you didn’t hear about Hurricane Katrina over there in the Old Country, but I’d far rather trust Allstate or State Farm than FEMA leaving me on my roof for days.

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I absolutely agree with this post/blog. You couldn’t be more correct about Bill. What an ignorant piece of shit.

Thanks for posting this sort of thing!! People need to open their eyes about him & you’re helping that happen.

Much love,
Stacy.

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Bill Maher is very entertaining and that’s all it is

has the best political show out there and I actually agree with a lot of things he says about republicans

most republicans are a joke enough said

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