There seems to be some concern about “excess profits”.
What is a “profit”? And how do you know what are “excess profits”?
On one level, “profit” is the difference between what you pay for something and what you sell it for. If you go on “ebay” or have a garage sale or go to a swap meet, and if you have something you paid $20 for and if you sell it for $30, then you have a profit of $10.
A ten dollar profit on a purchase cost of $20, means you have a profit of 50%. Is that “excessive”?
On the other hand, if you had to pay for the space on ebay or at the swap meet, then that would cut down your profit. And if you had to advertise your garage sale in the paper, then that cost would cut down on your profit.
What if you just stapled a sign to a telephone pole for your garage sale? Well, if you had to buy the cardboard for the sign, or the marker, or the tacks, then it cut down your profit some more.
And it assumes that you had no labor cost… you did all the work yourself. But what if you paid someone to look after your booth, or driveway, while you ducked out on an errand… another deduct from your profit. Did you buy lunch? [hot dog and a soda]… more deductions.
So, maybe you paid $20 and sold it for $30 but had expenses for gasoline, fees, food, supplies and “help” … for $20. So you ended up, instead of a profit, having a loss of $10.
You may only be a simple ebay seller, or a garage sale offerer, but you had expenses. Not to mention your time. (Is it “OK” to work for free???)
A large corporation, or a stock market, or an investor is no different… the totals may be larger, but the principles are all the same.
Profit (or loss) is just the difference between what you pay and what you sell for. It could be oil, or cars, or plastic coathangers, or airline seats or pez dispensers.
