Tuesday, January 17, 2012

Hsieh RCM OpEd: Why Is Creating Value Good, Profits Bad?

The 1/17/2012 edition of Real Clear Markets has just published my latest OpEd, "Why Is Creating Value Good, Profits Bad?"

It's not directly related to health care policy, but rather the broader theme of defending the virtue of the profit motive in a free, capitalistic society. (I do use insurance as an example of how value is created). Here is the opening:
"Profit" is a dirty word. Profit-seeking businessmen are stock villains in Hollywood movies. "Occupy Wall Street" protestors demand, "People not profits" (whatever that means). Companies reporting healthy profits are automatically assumed to be exploiting customers and can only atone for this by "giving back" to their communities. "Making a profit" has an unsavory, morally suspect taint.

Yet simultaneously, Americans have a far more positive view of the concept of "creating value." The mainstream press lauds visionary businessmen who "create value," such as the late Steve Jobs of Apple. The business literature routinely emphasizes the importance of "creating value." So many organizations wish to be seen as "creating value" that it has become a business cliche, like "best practices" and "thinking outside the box."

But in a free society, "creating value" and "making a profit" are just two sides of the same coin...
(Read the full text of "Why Is Creating Value Good, Profits Bad?")

Those who earn honest profits by creating value should be proud of this fact.

I'd like to thank attorney-blogger Doug Mataconis for providing the Tweet which I cited later in the OpEd, as well as pointing me towards the Wall Street Journal piece on Bain Capital that I cited.