When used properly, profits keep businesses healthy and self-supporting without relying on shareholders, the government, or bad actors to get involved.

But absurdly excess profits shouldn't exist, and absurdly excessive wealth hoarding by individuals should never be allowed to happen.

[–] queermunist@lemmy.ml 10 points 10 months ago* (last edited 10 months ago) (2 children)

That's not what profits are.

Profits are the what is left over after upgrading equipment, paying employees, doing R&D, investing in expansion, and every other business expense. Profit is literally the money left after subtracting expenses from revenue. All profit is wealth hoarding, definitionally.

Profit is theft and it always has been.

[+] Showroom7561@lemmy.ca -6 points 10 months ago (1 children)

In business, you can't predict what your expenses will be next year or in 10 years, so you need profit to act as a buffer. Some years, your revenue exceeds your expectations, and you profit that year.

This could allow you to spend more money on those legitimate business expenses next year, or bank it for years when your expenses exceed your revenue.

Even a non-profit has to have leftover to bank for the future, expand, etc.

But consistently having billions in profit tells me that there's a massive problem somewhere, and it's more than likely as a result of wage theft or gouging customers.

[–] queermunist@lemmy.ml 5 points 10 months ago* (last edited 10 months ago) (3 children)

That's not what profit is either! Funds that are set aside for future expenses or to act as a buffer are also just business expenses.

Profit is purely the money that is left after all that shit. Profit is the money the business owner and/or shareholders take for themselves, after everything (investing, saving, wages, everything) has been subtracted. Profit is literally only the money they take for themselves.

Your impression isn't unique - most Americans don't really understand what profit is. But like I said, profit is theft and it always has been.

[–] realitista@lemmy.world 1 points 10 months ago (1 children)

Actually he's correct as to the dictionary definition of profit. What you are describing are called dividends in business parlance.

[–] queermunist@lemmy.ml 2 points 10 months ago* (last edited 10 months ago) (1 children)

The dictionary defines profit as "income in excess of costs" i.e. subtract all expenditures from revenue, that's profit. It gets more complicated, there's gross profit vs net profit, but money that is specifically set aside by the business for the future is an operating cost.

Dividends are just a way for profits to be distributed to shareholders.

[–] realitista@lemmy.world -2 points 10 months ago* (last edited 10 months ago) (1 children)

That's my point.

You said

profit is literally only the money they take for themselves.

But the money they take for themselves are called dividends, and is a subset of profit. Profit can stay in the business too.

[–] queermunist@lemmy.ml 2 points 10 months ago (2 children)

Well, no, dividends are specifically how the profit is divided up among shareholders.

When the money stays in the business it stays in as "retained earnings" and they become an asset of the company i.e. the money they take for themselves. I'll admit the language is actually less clear here than I thought, because retained earnings are also sometimes referred to as "undistributed profits" and I'm not actually sure if that's an accurate way to refer to them or if it's just a jurisdictional tax thing. And also because those undistributed profits can then still be reinvested they don't technically count as a business expense because those retained earnings were from a previous fiscal cycle and- it's all a mess lol

[–] Zink@programming.dev 2 points 10 months ago (1 children)

I think we have to consider that from the perspective of many shareholders, receiving dividends vs increased share price is basically the same thing. I know all my accounts are set to reinvest dividends, for example.

So if a company reinvests all its income and grows like crazy, the shareholders will profit from that growth even if you might say “profit” wasn’t distributed.

[–] queermunist@lemmy.ml 1 points 10 months ago

Or if the company does a share buyback, or gives out huge bonuses, or buys an "office" in a tropical location that's actually just a vacation spot that they can use for a tax shelter, etc.

Basically, I overstated my case before. There's lots of ways to use business expenses to distribute profits without actual reporting profits.

So in conclusion, death to capitalism 👍

[–] realitista@lemmy.world 0 points 10 months ago* (last edited 10 months ago) (1 children)

I don't see how you can consider leaving it in the company being "taking it for themselves". You can't do anything with that money other than pay for business investment or expenses. At least until it's turned into dividends.

[–] queermunist@lemmy.ml -2 points 10 months ago

I reject the idea that the company is some legal person separate from the people that run it. They are the company, they can choose to use that money however they want. If they want to pay out huge bonuses from the profits, they can. It's their choice.

Just because they might choose to use that money to fuel growth or buy back stock or something doesn't mean it isn't theirs.

[–] Showroom7561@lemmy.ca -1 points 10 months ago (2 children)

Yeah, I guess that's how modern corporations are using profits.

I come from a small business and charity background, so salaries/wages/employee benefits would be considered a business expense. Profits would be banked and used to cover expenses in the future.

[–] queermunist@lemmy.ml 5 points 10 months ago

It's different on a small scale because the line between "business expenses" and "personal expenses" can sometimes get blurred. Though technically, if the money is earmarked for future use then it is definitely not profit. That's a business expense.