Standard incentives

Some great commentary from Karl Smith about the “what’s the incentive to hire more workers?” lament:

What’s the incentive to hire more workers? To make ever more profit!

There is no “enough profit.” More is always better. More profit yesterday. More profit today and still more profit for breakfast tomorrow.

As I have said to associates before: If you ever find yourself thinking “maybe we have made enough money” stop. Reflect on how you feel at that exact moment. Commit that feeling to memory. Because that is how it feels to be completely and utterly wrong in every conceivable way.

In the same way that some people only blame greed when the economy is in the tank, forgetting how the boom times earlier were motivated by the same thing, firms are always looking for more profits—yes, even when the economy is in the tank.

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Author: rfmcelroyiii

Student and instructor of economics.

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