One of the banks on Main Street lends a display window to local community groups. Recently featured there was a food co-op. Prominent in the display was a sign that read, in large black letters, FOOD FOR PEOPLE, NOT FOR PROFIT. This implied that there was something wrong, something immoral about profit; that if something was for profit, it couldn’t be for people.

I don’t sell food, but I do sell remaindered books and operate a paperback exchange. I own the building my bookstore is in; I live behind the store and rent the apartments upstairs. Both my books and my apartments are for people, and both bring me a profit. My income is completely dependent on customers who buy my books and tenants who rent my apartments. I do not get a regular paycheck. Each week, indeed, each day, is different and brings a greater or lesser reward for my efforts. How much money I have to pay the mortgage, the taxes, the utilities, and the other bills owning a house and a business entail—even the amount I have for food—is entirely up to the public. I cannot force them to support me. I can’t even force them into the store or the apartments. They have to come of their own free will. They have to come because they want to.

How do I get them into the store? I attract them by offering the best books I can find at the best possible prices. First, of course, I have to buy the books. There are several companies out there bidding for my business. One of them, my main supplier, sells me books in quantity. Though I don’t know what titles I’m getting, I do know the price is better than any other company’s I deal with, and the more books I buy at once, the lower the per-copy price. I then supplement what I have with specific titles from other companies. They charge more but I choose exactly what I want.

Supply and Demand

What then do I charge for these books? Certainly I can’t sell them for cost. If I did, I’d quickly be out of business. Instead, I charge as much as I can for them. Just as the customer wants the most for his money, I want the most for my product. I want to pay my bills, I want to eat, I want my store to grow and improve, and I want to save for those days when I don’t make very much. It’s not only in my interest to get the best price I can but in my customer’s as well because the more profit I make, the more secure the business will be and the more books I’ll be able to stock, giving my customer a wider and wider selection to choose from.

Naturally, I can’t sell the books for as much as I’d like, only as much as I can get. For one thing, I have direct competition. In the paperback exchange on Main Street, a customer trades in two books to get one free. In mine, he turns in one book to get another of equal value for 25¢. The other bookstore on Main Street sells a few remainders as does the one in the mall, though neither has as many as I do and their prices are higher. I also have indirect competition in the form of bowling alleys, movie theaters, libraries, and every other place people patronize in their leisure time.

My usual price for remainders is $1.98, though I do have a few at $2.98. Most things marked higher won’t sell; to my customers, $3.98 is just too much money. Therefore I can’t make more profit by raising my prices, only by lowering my costs. I make more profit on books from my major supplier, because my costs are lower, than on those from my minor suppliers. I also lowered my overall costs by building my shelves myself rather than buying them and by running my business out of the same building I live in rather than renting a separate place.

My apartments have to be profitable, too. Indeed, why should a tenant pay my cost for the apartment? He did not have to put a down payment on the building. He does not have a mortgage and is free to leave on thirty days notice, or less if he wants to forfeit his security deposit, whereas I’m tied down here. He is not responsible for the taxes, the utility bills, the maintenance, or the repairs; I am.

Competition Defines How Much the Market Will Bear

How much do I charge, then? As with my books, I charge as much as I can. And again as with my books, it’s in the tenant’s interest to do this as well as my own. If I charge too little, I won’t have enough for improvements or repairs. If the tenant’s refrigerator breaks down, or the roof springs a leak, I won’t have enough money to fix it. Two years ago, the city government here started enforcing its housing code. Without profit from rents, I would not have been able to afford the $1000 it took to bring the house up to code, and my tenants may well have been evicted by the city! It’s in the tenant’s interest as well as mine to charge as much as I can because that’s our only insurance that the house won’t deteriorate.

Still, I can’t charge as much as I’d like because there is competition in rentals just as there is in books. If I want too much, the tenant can always find another place at a more attractive price. The way to increase my profits here, as with my books, is to lower my costs. For ‘example, several years ago I had the building insulated. While it was a high initial cost, it has since more than paid for itself by cutting my monthly fuel bill in half.

To say “food for people, not for profit” is to misunderstand the necessity of profit. Without it, there may well be no food. You only have to think of the starving millions in Africa, or the chronic food shortages in socialist countries around the world, to realize that. Without profit, there is no production. With profit, production is abundant because production is what benefits others, and if you don’t benefit others with goods and services, they won’t benefit you with money.