Many Things In Our Society Shouldn’t Be “For Profit”

for-profitI’m sure this article will get plenty of “you’re a socialist” and “communist” comments from right-wingers, but I don’t really care.  Especially when these “insults” come from people who can’t even define the terms they’re using to insult me.

But I’ve long maintained that certain areas of our lives shouldn’t be “for profit.”  Now by that I don’t mean that these specific institutions can’t make money, pay their employees well and provide solid benefits.  But I don’t believe everything in this country should be a corporate controlled “for profit” revenue generating machine.

For example – banking.  Banks should provide a service.  That’s it.  Banks like J.P. Morgan Chase shouldn’t be making $18 billion in profits.  Again, I’m not saying they can’t make money to provide their services, pay their employees a decent wage and provide solid benefits – but $18 billion in income from a company that provides a few basic services?  Come on.

Insurance is another.  Insurance is an essential item for most Americans in many facets of our lives.  Be it health, car, home – most Americans need insurance in several different forms.  But why the hell should companies be making massive profits in an industry where they promise to provide a service for people, then do everything possible to not provide the service their customers paid for?  I once went to an interview for Farmers Insurance where the guy conducting the interviews told everyone that their job wasn’t to find ways to cover people, but to find ways to not cover them.

Think about it.  When an insurance company operates, its profit is derived from not paying out money on claims.  That means every single time someone files a claim to the company they’re paying to insure them when disaster strikes, that company is actually doing everything possible to not pay out because not paying is better for profits.  It also means that insurance policies are often worded in such a way that it gives these companies loopholes to find ways to not pay out when claims are filed.

School is another thing that shouldn’t be “for profit.”  Why the hell should schools be making a profit by providing an education?  Schools can still pay their professors, staff, administrators, deans and all their employees a decent wage without operating like a company that’s trying to squeeze as much money from its students as possible.

You can add hospitals to the list too. Why should hospitals be operating “for profit”?  When someone’s life is on the line, I don’t think the quality or cost of their care should be based on what’s best for that hospital’s profits.  This also trickles out into the cost of health insurance.  Hospitals milk insurance companies for as much as they can and that expense is then passed on people who purchase health insurance.  The access to, and quality of, health care shouldn’t be based on how much we can pay or how much profit can be made from it.

There are several other services that I could have included but I didn’t want this to be too long.  Now don’t get me wrong, I’m not against companies making money.   Notice these are service industries I’ve listed.  Services that are crucial for most Americans.  Crucial services that many of these companies are draining the American people dry by extracting as much money from all of us for the sake of growing their profits.

And while I’m all for companies making money, I just don’t believe everything in this world should be based on a “for profit” system.

Allen Clifton

Allen Clifton is a native Texan who now lives in the Austin area. He has a degree in Political Science from Sam Houston State University. Allen is a co-founder of Forward Progressives and creator of the popular Right Off A Cliff column and Facebook page. Be sure to follow Allen on Twitter and Facebook, and subscribe to his channel on YouTube as well.

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  • Jim Bean

    When you say ‘not for profit’, what immediately comes to mind is Amtrak, USPS, and DMV. The profit motive is the only thing that drives fiscal prudence. Government will grow until it consumes everything, if allowed.

    • Morgan O’Brien-Bledsoe

      Which have all been purposely bogged down with red tape and regulations that no other business would ever allow. So what’s your point? Get money?

  • Chastity Renee

    “Fiscal prudence”??? Greed took the laws and law won at our expense.

  • Phil the observer

    I used to work for a health insurance company…and YES, they did do everything possible to NOT pay a claim…Which would explain why I don’t work there anymore.

  • Sandy Greer

    I guess my questions to the author would be:

    1) How much profit is too much profit?
    2) Which companies are allowed to profit and which not?

    3) What is our goal in making the case against profit?

    • TX Independant

      My question is what business is it of yours? Why is it acceptable to demand that people stay out of one’s love life on this site, but it’s acceptable to determine fiscal responsibility of others? If I balance my checkbook and live within my means, or start a company and provide MORE VALUE THAN I COST, what right do you have to determine what I do with my money. Money is nothing more than the means in which we as a nation have determined one’s value.

      • Phil Keast

        A person’s love life rarely has social impacts (and those that do, such as paedophilia, are discouraged with legal and social consequences that can, and should, destroy the perpetrator’s happiness and liberty).

        A persons fiscal activities, however, do have social consequences, and screeching that “its mine, mine, all mine” overlooks the question of how much of that added value goes into your personal stash, and how much is directed to social development. If it just goes into your pocket, that is greed, pure and simple. If it is used to improve the society you live in, that is a recognition of your moral responsibility. Of course, most hard-line capitalists (from all parts of the political spectrum) deny that they have any moral responsibilities with respect to the disposition of their assets. These same people often seem to think they have no moral responsibilities at all.

        Finally, if a person’s value is determined solely on the basis of their wealth, then it is a very telling indication that the one doing the valuing has left the realm of ethics, enthusiastically embracing the culture of greed and prejudice. Any society that devalues most of its citizens as being of little value because they are on the receiving end of the economic shit-stick has diminished, if not completely abandoned, any claim to the moral high ground on any ethical issue.

      • Sandy Greer

        It seems I owe you thanks again. Both for your answer (brilliant, as usual) AND for running interference with the Troll who came in a full 7 DAYS after my OP.

        I suspect it’s the same Troll I just came from, in Abraham Lincoln. Irritating. Though the timing was better, there.

        Anyway, I feel better now, thanks to you. 😉

  • Mofo

    When I saw the meme and read it first thing I thought was “It’s not. It’s based on the quality of food you ingest, and the level of activity that you exert.” 🙂 Doctors and stuff isn’t health care. It’s not health care when you go to the hospital to fix something after you’ve fucked it up. Health care is preventing health problems in the first place by taking care of your body.

    • Jill Lybarger

      So all health issues are do to lack of exercise and bad diet? So, when I’m hit by a drunk driver, I could have prevented those injuries by not having a hamburger for lunch?

      • Mike Turner

        red herring…

  • Larry Gilmore

    No, I wouldn’t call you a socialist or communist, but I would have asked if you had even a clue about what you’re posting here. In the political realm you are spot on, however, you’ve fallen into the same trap that politicians fall into, thinking you are bright enough to make comments on everything.
    This is just a big fail. It really isn’t the dollar amount you should fixate on, it’s the percentage of profit a business earns that should be where concern starts. Big dollars but low percentage of profit means lots of money moves through the business. Some insurers have profits in the billions, but those billions represent a profit margin of a couple percent, meaning 98% of the money they have taken in gets spent.. somewhere. They spent it, in claims, overhead and yes, even executive compensation. I hate standing up for CEO pay as I do think it is outrageous, but even that is small potatoes in the money that moves through a insurance carrier.
    The major health insurance companies in my state have a margin of around 3%. The fast food companies in my state have a margin around 35%. Maybe they could pay a better wage and have a smaller margin to work from like 30%. Asking somebody to run tighter than they are with a 3% margin is asking for disaster.

    • Joe T.

      I think you should likewise take some of your own advise and not fixate so much on just the profit margin of insurance companies. You’ve fallen into the trap of believing the simple lie that Wall Street has told about health insurers. You’re right that they do move a lot of money, but prior to the ACA’s requirement kicking in that 90% of the money they take in premiums must go to covering the actual health care of their insurance holders a lot of that money wasn’t doing that. It was going to padding the wallets of CEO’s and corporate execs who sought to increase their stock and profit margins by offering less and less coverage to customers while continually raising their premiums. They also had no incentive to lower medical costs as it just provided another excuse to gouge customers further. Let’s also not forget the billions (yes, billions) the healthcare industry spent in lobbying and donating to political groups that favored them.

      So while their profit margin may have seemed small, their return on equity was much higher, usually north of 15%. Maybe still not as good as the fast food companies, but as you noted they move a hell of a lot more money than the fast food industry does as well, ironically thanks in no small part from the fast food industry. It’s not just a matter of profit margins, but how all the money that they are raking in is actually spent. If they weren’t doing so well on that “narrow” profit margin, why did Wall Street continue to invest heavily in them? Prior to the ACA a large percentage of their “overhead” didn’t go to providing the services their customers paid for, and many of them are still fighting it every step of the way.

      I would say Allen’s article is still pretty spot-on in its argument. Because of the healthcare industry in this country we pay more than any other industrialized nation for our healthcare yet receive poorer service than most of them, which is why the World Health Organization ranked us 37th in the world in terms of overall healthcare. Having our healthcare under a for-profit system clearly isn’t benefiting anyone but the execs of those companies and their stockholders while millions are denied basic healthcare and a decent measure of life.

      • Larry Gilmore

        Actually Joe, the ACA requires only 80 cents on the dollar collected be used in the compensation of doctors, hospitals and others in the healthcare fields. I have no idea what state you’re in but if you checked directly with your state office of insurance you should be able to find out directly who makes what as insurance financial statements are public record as they are involved in the rate process. In my state (WA) the top three insurers are non profits, and do run very low margins.

        You also seem to shift your point into the stock market and I have to ask what does stock valuation actually have to do with day to day operation of a business? Isn’t stock valuation a reflection of what others see when they look at a business?

        As far as your claim about how and where monies were spent, it would fall upon your state insurance office to oversee this. Health insurance before ACA has basically been subject to state oversight. In Washington state where I live, in 1994 we adopted a health care model, maybe you’ve heard of it, Hillary care? It was a Pos for about 6 years, then with some democratic adjustments along the way, it started working and working well. In fact I would venture to state the ACA has some of the least impact on where I live than probably where you live. The ACA is in dire need of plan design fixes to be successful, just as Hillarycare was. In fact, I am of strong belief that WA’s version of the Clinton plan would have been a better choice to roll out for the country. I hope that doesn’t make me a conservative koch brother follower in anybody’s eyes here. There were working models of healthcare working in this country before the ACA. They should have been used instead. But giving credit to our former secretary of state and next president would make some wonder why she isn’t president now. With adjustments her plan worked for the past 14 years and would have been a much easier transition. How’s that for conservative jargon for ya?

        As far as the WHO study that ranked the US 37th, I think we should be lower, actually and it is the quality of our care that pushes us up that high. But if you’ve actually looked at the information, you’ll find it a bit flawed as it was apparently done in 2000 and has not been repeated since. It’s been used a lot to make an argument, but really look at the data and ask yourself why we’re even 37th?

        We are the most obese nation on the planet with 6 southern states set to have 55% of their populations reach morbidly obese status in 6 years. Yes, more than half those populations will be shaving years off their lives via consumption. We are the only nation on the planet where the abundance of food is killing the population.

        You take a closer look at that study and start to question the “statistics” involved and maybe you won’t cite it anymore. We could go through pages of the study and come away with a lot of wtfs?

        #3 on the “list” San Marino population 32.500, they had 247 deaths last year. #4 Andorra population 85,000
        #5 Malta population 416,000

        USA 2012 population 312.8 MILLION. 2.5 million deaths in 2012.

        San Marnio death rate % of population .0076
        USA death rates % .0079, really four decimal places out before you get a difference?

        I’ll cut it short here because this has a life of it’s own but I’ll leave you with this thought.. using the WHO study is similar to using Hitler on the internet. When you have to pull it out in the conversation, you’ve run out of facts. Look closer at the study and ask hard questions… there’s a reason it hasn’t ever been done again.

    • TX Independant

      The posts of Joe T is an illustration of the ignorance of people that can barely manage their family’s budget, yet they want to speak as though they understand business or global economics. To put it in perspective, 3% margin is no different than a family living paycheck to paycheck. A single ugly event will bring everything down. The company’s money is used to pay their employees! These people want higher pay, but lower profits? That just doesn’t work. it’s like saying, I want to buy more, but work less! Oh, that’s right, credit cards, the magic source of money. It allows one to live beyond their means which is a progressive’s mindset. They claim conservatives are against change, and the truth is what divides the nation is those that live within and out of their means.

  • Eddie Krebbs

    I’d add Government to your list. (Despite all those screaming that govt should be run like a business).

    Odd thing is that you’d think the conservatives would be in agreement with the govt not making money. After all, to make money while providing the same services, it would have to take more money in.

    • Erika Frensley

      You’re right. Gov’t is a nonprofit, and should be seen as such. Gov’t provides basic amenities (safety, health (food inspection), security, governance, infrastructure, basic human needs), which should be amped up in bad times and can afford to be amped down in good times. Gov’t is not a business, has no requirement to make money, and should operate generally the opposite of the normal business cycle (more funds/jobs/support in bad times when business is tightening up, scaling back the support in good times when business and jobs are more plentiful).

  • Billy Gamble

    1) Banking now is far different from what it used to be. Before you put $100 in the bank with 5% interest, and the bank uses that money to loan someone $100 at 10% interest. The loan is paid back, you get your $5 and so does the bank, and everyone is happy (expect maybe the person with the loan, but it depends on what they did with the money). That’s a perfectly fine “for-profit” business model for a bank. It’s the convoluted and predatory models they’ve become that’s the problem.

    2) Insurance is another one that it’s more what it’s become than the premise. We need to make it so they can’t write a dozen loopholes into every paragraph and cover it with jargon that takes a law degree to decipher. They need to be written in plain language so people know what they are paying and what they are getting.

    3) School is an iffy one. There are tons of private schools that provide a far better education than public schools. And then there are some that are pretty much on-par with public schools. I would say getting rid of them is too far, but also can’t think of a good way to keep them tied to the market, since education is one where there’s a limited number of schools you can put in an area before none of them are economical, so competition for students is limited.

  • The Voice of Reason

    You’re insane.

    The one’s who shouldn’t be paid are the wastes of space who contribute nothing to society, like bloggers and pundits. Doctors deserve every penny they make. And nurses are woefully underpaid. Pharmaceutical companies spend billions of dollars of their own money, failing over 95% of the time, and need to recoup those loses with the medicines that do work. Banks make money honestly, loaning money to people to build homes and expand their businesses and hire new workers. So *of* *course* they should be able to make a profit. Their numbers are so large that most liberals can’t comprehend them, so here’s a small number that will make sense to you: 1%. That’s the profit the bank is making. Insurance companies are the targets of unscrupulous individuals who seek to get something for nothing. They have a business model you clearly don’t understand, and aren’t smart enough to look up on wikipedia.

    Like most liberals, you are a broken person. And let’s be honest here, progressive are just liberals that are ashamed to be labeled as such because they know that in their hearts they are hypocrites like Dan Durbin who pays his female staffers $11,500 LESS than their male counterparts but then wants to make income equality a platform issue for his re-election campaign. The Equal Pay Act of 1963 already addresses this issue, but then it was put into law by some guy named Kennedy so I wouldn’t expect you to know about it. Those pesky facts getting in the way of your liberal views. Again.

    Oh, and look out your window sometime. If you want to make those changes, you need to change every country on earth. Start with Sudan, you’ll enjoy it there.

    • Joe T.

      Wow, I have to wonder what you’re smoking to make such delusional rantings seem like “reason” to you. First off, he spoke about insurance and hospitals not operating on a “for profit” model. Doctors and nurses can still receive just compensation for their work without patients being gouged for money or denied benefits. Incidentally, it’s the insurance companies that determine how much gets paid to them for services rendered and the hospitals that determine their salaries, so if a doctor or nurse is getting underpaid while the insurance and hospital are making a profit, where do you think it’s going? Incidentally, most doctors and nurses in this country are equally fed up with health insurance companies as they interfere with their ability to provide proper treatment to patients. Those same doctors and nurses have advocated for a single payer program in this country as well. As for pharmaceutical companies, they seem to be doing quite profitably charging us over twice or more what people in other countries pay for the exact same medications.

      Your statement about banks earning money “honestly” actually made me laugh out loud. Perhaps you missed that little thing called the Great Recession, conning the American taxpayer to bail them out for the risky behavior they made with other people’s money. Or how about the millions of illegal home foreclosures they got away with and to a large extent are still doing today? Oh, and perhaps you should go look up the LIBOR scandal while you’re at it, one of the greatest financial scams ever pulled off by your “honest” banks that has potentially cost people and governments the world over billions of dollars which they have still not been brought to make a full accounting for. If you honestly think banks only make 1% profit you clearly have no understanding of either finance or business and should refrain from commenting on either.

      Likewise, your dim opinion on liberals and progressives comes from an obvious ignorance that goes far beyond both groups to the world in general. That said, I would never think to lump you in with other conservatives who still possess some modicum of intelligence and reason.

  • Kayjulia

    I agree with you. Some places in the world have implemented your ideas, and they are doing very well. Yet, most Americans will deny that it can be done or should be done. Americans feel they are exceptional and that only they know how to live, everyone else is just not exceptional.

  • Phil Keast

    I was going to keep quiet on this one, it is just way too controversial, as many of the comments so far demonstrate, but I just can’t seem to help myself.

    Firstly, and I digress here, it is not only the conservatives that fail to understand socialism and communism, there is down here a particularly virulent left wing organization called The Socialist Alternative. They advocate all manner of extreme positions that basically equate to fascism of the masses, with them in charge. I enjoy/despair of my occasional encounters with them as when I ask them if they’ve read Marx they invariably admit that they haven’t, and then go on to demonstrate that they are utterly ignorant of what socialism and communism really are. But then if you’ve followed any of my posts you’ll notice that I enjoy a little political “baiting” (as opposed to debating).

    The problem with “for profit” as a/the motivator of business models lies in the fact that companies have shareholders and boards of directors. By law the board of directors are required to act in such a way as to maximum the return on the investments of the shareholders, being liable to lawsuits and potentially jail time if they implement policies that in any way fail to maximize the shareholder’s returns (although most boards have plenty of lawyers up their sleeves that any shareholder initiated lawsuit for malfeasance would be unsuccessful).

    As for not-for-profit business models, many NGOs and charitable organizations manage just fine, banking sufficient funds each financial period to allow for inflation and the growth of the organization while channeling all other income into the provision of services (which includes fair remuneration of employees, purchase and maintenance of equipment, rent, utilities, etc.). So clearly it is possible to run an organization successfully on a not-for-profit business model. The question then becomes, should a particular industry/company be run on the not-for-profit business model?

    Personally, I believe that most “service” industries should be not for profit, but even then managing to gain a a certain amount of money above and beyond expenses is reasonable.

    For example: Yes, pharmaceutical companies do need to pay for past and future research, but this can be covered by treating such research as an expense that can be amortized over a period of time. Insurance companies need to have a discretionary fund to cover the possibility of a major disaster which they find that they cannot avoid paying claims on [the issue of the transparency of policies and the tactics used to avoid paying legitimate claim is a separate issue]. I’m not say that either the pharmaceutical industry or insurance industry should be run as not-for-profit industries, merely pointing out that, even under a profit-based business models there are ways to reduce the excessive prices taht limit their access to certain market sectors without suddenly making a loss. There are always special cases, but in general, even both not-for-profit companies and not-for profit organizations need to be able to achieve an annual income in excess of expenses in order to make provision for future growth or for unexpected contingencies.

    Other industries have a perfectly legitimate reason for operating on a profit based business model, although excessive profit, not expressed as a percentage. A 1 billion dollar annual profit is obscene, regardless of how much money passes through the organization. No company needs that much profit.

    The real issue is what industries should be run using the not-for-profit business model, and which shouldn’t. There are many industries that I personally believe should be run on a not-for-profit model, based on fundamental human rights to food, shelter, water, health care, education, etc., but as a starting point for determining what sorts of organizations should be not run-for-profit there is a simple yard stick. If it is described in the Universal Declaration of Human Rights (yes, I know, the USA makes it own laws and is not dictated to by the UN, though it should be noted that it was drafted by Eleanor Roosevelt, among others) then it should be run on a not-for-profit basis.

    Universal Declaration of Human Rights

    Article 22:

    Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international co-operation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.

    Article 25:
    (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
    (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

    Article 26:
    (1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.
    (2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.
    (3) Parents have a prior right to choose the kind of education that shall be given to their children.

    Article 28:
    Everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.

    Oh, and just for good measure, seeing as I’m going to be flamed and abused for daring to suggest that anyone outside the USA has a valid option on human rights.

    Article 2:
    Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex,language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty.

    • TX Independant

      I disagree with your determination that $1B is too much. Look at the margins. $1B that employs 100s of thousands of employees and maintains millions of shares of stock that is going to peoples’ retirement investments is really not that much when you think about how many people that 1B is spread across. However, if the margins are high, then there’s room for reinvestment… but again, who are you to say what’s best for someone else? If you have a debt free life, and have disposable income, is it acceptable for someone to walk into your home, and demand that you give them a place to live because they determined that your computer and internet access demonstrates excessive means? I think not.

      • Phil Keast

        The $1B figure is merely a starting point for discussion, the actual number, whether expressed as an absolute value or a percentage of money passing through the company during the period over which the profit is determined is of no consequence.

        Profit is income above and beyond that required for the payment of expenses involved in the generation of that income, including proper remuneration of employees (lets include 7 figure salaries and benefits for CEOs and members of the Board of Directors as reasonable remuneration), the purchase of necessary materials, goods and capital assets required for the operation of the business (lets include luxurious offices for senior executives), setting aside sufficient funds to cater for growth, replacement of capital assets, and unexpected events, and lets add a return of 15% growth in the value of shareholders’ investment’s (don’t want to discourage investment and undermine capitalism too much, do we). Any income remaining after all those expenses, is profit, pure gravy, just accruing interest or sucking capital into bank accounts. It is non-productive and the utilization of that capital for economic improvement on projects with positive social impacts is surely better than just doing a scrooge and tossing it in a vault so you can self-indulgently roll around in a pile of coins.

        If you have that much disposable profit, try the time-honoured tradition of philanthropy (both personal and corporate). It seems to be working for Bill Gates (whose apparent shift from money hungry capitalist to philanthropist through the establishment and on-going support and oversight of the Bill and Miranda Gates Foundation has, provisionally, redeemed him in my eyes).