I agree with the author that pursuit of profit maximization by the corporates leads to diminishment of general welfare
of nation at large.
Firstly,in any competetive environment the only way to survive in long run is to innovate continuously.Innovation makes the process
of any company more effecient and provides edge in comparison to rival companies.Ulimately the one company survives and dominates the
market in terms of setting the price. This stutuation is called monopoly situation where customers' choice is very limited and they
are bound to purchase whatever the mopolist produces.This suboptimal situation causes severe harm to public welfare.
Secondly,there are few producers and sellers in natual resources market for example oil. Those producers always try to maximize their
profit by regulating the prices of those naturally scare resources.Hence , customers are bound to pay whatever prices set by those cartel of producers.
Thirdly,a company always try to maximise profits by minimizing costs.Often this cost minimization exercise entails to use natural resources for example burning trees which comes free of cost.This causes overall fall of public welfare.
Fourthly,political parties at the power are often backed by the big business houses.Those business interests can influence the policy making powers of the politicians in terms of reduction corporate profit tax rate, tax exemption,subsidies which implies drop in tax collection. This in turn causes curtailment of expenditure for public welfare.
Given all the reasons above it is quite evident that desire for profit maximizing costs public welfare to a great extent.Be it in form exorbitent price or from detorioration of environmental conditions, its the general public who suffer.
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Analysis of Issue -Please comment and vote
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[email protected] » Mon Dec 22, 2008 9:48 am
Avi
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