Saturday, August 04, 2012

What entrepreneurs give back to society

The trend when justifying tax on production, is that the framework that society provides made the profits that the entrepreneurs utilizing the resource got for their trouble possible, and thus it is only natural that the entrepreneurs give something back to society.

What is often forgotten is that these entrepreneurs have already given back to society. If they have made enough of the economic good so as if to satisfy their own demand, they lower the price by lowering the general demand for the good. If they have surplus and trade it for other goods, they have increased the supply, thus further reducing the price of that good. Both these effects lead to a lower price of the good, and thus people have easier access to it.

 One could argue that this portion of the price which the entrepreneurial outfit lowers is what the entrepreneur gives back to society, and does this through the market. Whether this portion is enough, is another issue. But let it not be said that the entrepreneurs give nothing back to society.

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