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Profit’s bad reputation is unearned, But it’s not true that only sellers can make a profit. Buyers do also, though in a non-financial sense, because they prefer the thing they obtain to the money’s alternative use. Moreover, to the extent that they pay less for an item than they were willing to pay, buyers make an additional profit.

https://libertarianinstitute.org/articles/tgif-on-giving-back/

by Sheldon Richman

P&G, the maker of popular household brands like Tide and Downy laundry products, is giving away $10,000 in college scholarships. That’s $1.5 million and 150 scholarships in all. My problem, aside from its encouraging college attendance, is with how the company is promoting the program. The television ads proclaim that the company sees the scholarships as a way of “giving back.” I’ve written about this before, but some further thoughts might be useful.

So, to whom does P&G wish to give back? Not to existing customers exclusively. The only eligibility requirements are U.S. residency, a minimum age of 16, enrollment in or acceptance by an undergraduate program, and free registration at P&G’s website. The online application does ask applicants if they are first-generation college students and where they do their laundry, which sounds creepy. The program is called a “sweepstakes”, and multiple entries are apparently allowed, so the winners are apparently picked randomly. The winners’ checks will be sent to the schools.

The “payback” angle that P&G touts will sound good to many people. (“Aw, that’s so nice.”) I suppose P&G never even considered entries by saying:

Because we at P&G are always looking for ways to increase our profits by creating goodwill, keeping our current customers from looking at rival products, and luring new customers from our competitors, we are giving away 150 scholarships worth $10,000 each. We’d prefer you to just buy our great products, but if that’s what it takes to get good publicity, so be it. Enter today!

That would offend too many people, though pro-market and pro-free-enterprise people like me would be approvingly amused. Why call it “giving back”? Unearned guilt, what’s why.

Adam Smith famously wrote that we do not believe the grocer puts food on the shelves because they are nice people (which of course they may well be). They do it because that’s how they earn a living. Smith wasn’t being pedantic. He was acknowledging that shoppers already know this. He writes, “We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” (Sometimes we talk of our own necessities, for instance, when we can’t find what we want. But we know the grocer doesn’t help us out because he loves us.)

The “logic” of payback addresses the matter from the seller’s, not the buyer’s, side. Smith could have addressed grocers by writing:

It is not from the benevolence of the customers that you expect your income but from their regard to their own interest. You address yourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Telling this to merchants would hardly be necessary. No merchant thinks his customers are doing him a favor by shopping in his store.

See the rest here

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