Bar Owner Complains Of People Drinking Tap Water – Oi! Where’s My Profits?

At first glance this seems like a most obstreperous demand. A bar owner in Bristol is complaining that people are drinking water – just tap water! – in her place. This means that there’s no profit to be had. So, order that fruit juice, that pint, to go with your meal.

At second glance this is just how the economics of the industry work and have done for a long, long, time. Someone coming in for a plate loses a restaurant money.…

See More

When Is Uber’s Loss Really A Profit?

If you’re thinking about Uber’s IPO then there’s the one number that you want to find out. We’re going to leave the finding out of it as an exercise for the reader because we’re like that. It is, however, the one number that is important in this whole process.

For we can see that Uber’s losing money. We can also see that it’s lost a lot of money since conception. And there’s always the hope that it will make money at some point in the future.…

See More

Ooops! Patisserie Valerie Looks To Have Been A Scam All Along

As soon as Patisserie Valerie got into trouble we around here started to mutter that perhaps there was more to it than seemed. Or even, less to the previous business than we’d all been told. The point being that once the scam – and it was a scam – is known then it’s very difficult to work out how big it is. For, once this particular form of cashflow scam is started there’s no real and obvious point at which it should stop.…

See More

John Lewis Slashes Profits Payout Bonus – Why Inequality Falls In Recessions

The John Lewis Partnership has a rather unusual structure – the firm is owned by those who work in it, the partners. OK, this isn’t that unusual, a firm of solicitors operates the same way. But it’s unusual for something as large and capital intensive as a retail chain. The side effect of this ownership structure is that when there are profits they’re paid out to those staff. We can call it a dividend, a profit share, a bonus, but it’s what it is – the profits being paid out to the owners.…

See More

Jeff Bezos Will Be Annoyed Amazon Has Made A Profit

It’s clearly a little difficult to be absolutely certain about this but there’s good reason to think that Jeff Bezos will be more than a little annoyed that Amazon has just made a profit. For the basic business plan these past couple of decades seems to have been to avoid doing that. Further, the basic plan seems to have been to do what every lefty on the planet insists businesses should do – and haven’t they been giving Bezos and Amazon stick for doing exactly that?…

See More

London Street Gangs Are Economically Rational – Now For The Labour Party, Eh?

An interesting little study from the environs of London. Gangs, street gangs, aren’t about protection of social, geographic or racial turf these days. They’re about extracting the profits from the drugs trade. Good, that shows that Da Youf are economically rational. For there is a great deal of money in said drugs trade and armed might is the only way to protect said moolah. We may well not like what they’re doing, even prefer that the system didn’t tempt into doing it, but it’s a rational response to how the system is:

London’s gangs appear to be driven increasingly by a desire to profit from the illegal drugs market rather than a determination to protect their neighbourhoods from outsiders, a study has found.

See More

Jeff Bezos Will Be Pissed – Amazon’s Profits Double

Or perhaps Jeff Bezos won’t be annoyed. For Amazon is one of the few companies out there where reported profits are near entirely under management control. That’s an odd claim of course for we generally think that companies are profit takers. And Amazon of course is in that sense, their gross margin is hemmed in by what consumers are willing to pay, the competition they face and all that. But Amazon is one of the few companies where the translation from gross profit to net is really under the control of that management.…

See More

As Even The Environmentalists Agree, We Should Privatise Fisheries Regulation

This isn’t the way that most people will understand this but it is the way that it is. We should be privatising the regulation of fisheries by privatising the fish. For we’ve – again but this time from the environmentalists – the insistence that a profitable fishery is one with a higher level of fish in it than purely the sustainable level. Or rather, the optimal fishery stock for profit is higher than that for mere sustainability.…

See More

Vince Cable Spouts Drivel

Sadly, we should in fact expect better from Vince Cable than this. He was professionally trained as an economist after all, actually worked as one. Which is why this little piece of drivel is so disappointing:

A tax on turnover clearly isn’t the perfect solution. Most economists would agree that profit is a fairer basis for taxation than revenue, given that profit is essentially a form of “rent” that would not exist in a perfectly competitive market.

See More