Reply to Democrats At convention: let's ban corporate profits

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[quote=Anonymous]One delegate doesn't speak for a party.

However, many corporations are not profitable.  The average movie in Hollywood doesn't turn a profit and many of the lamented "agribusiness firms"  earn 2% profit or less per year.  Most corporations try to hide any profits, since they have to pay taxes on them.

Standard economic theory tells us that in an efficient, competitive market economy, all firms should be earning close to zero profits.  This is because if an industry is very profitable, other firms should enter it, driving the price and revenue down.  The reason that doesn't happen in the real world is that some industries have high start-up costs, which makes it difficult for new firms to enter.

People are still willing to run, participate in, and work for such firms, because they get salaries from such companies, sometimes ginormous salaries.  These salaries are counted as a cost, are thus deducted from revenue, and therefore don't count as profit.

Signed,
An actual economist[/quote]

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