The Problem With Profit

"Profit is sweet, even if it comes from deception." — Sophocles

With the final implementation of the Credit CARD Act, late-payment fees on credit cards are being sliced to, on average, $25, saddling the financial industry with an expected annual loss of $3 billion. In response, credit card issuers have desperately begun searching for fees to top off their coffers, including "higher fees on balance transfers and cash advances, increased charges for overseas transactions and new or higher annual fees on cards."

This sort of economic behavior is to be expected in a profit-driven system, especially one complicated with shareholders who have no patience for falling revenue. But just because "shareholder wealth maximization" is expected — mandated, even — doesn't make it right. If the form of capitalism we practice in the United States essentially forces companies to maintain their high profit margins, even when said margins came about through unethical, anti-consumer policies, there's something seriously wrong with the way we're doing business.

For far too long, "the bottom line"  (profit) has reigned supreme in America. It should come as no surprise, then, that giant banks have written their policies in practically unintelligible small print, replete with deceptive language and hidden fees, with the clear intention of profiting off consumer ignorance. It was this "profit at any cost" mentality that allowed our financial system to grow so rich in the first place. And it's the very same mentality that led our economy into financial ruin, destroying the livelihoods of millions in the process.

Was financial regulation a step in the right direction? Yes. But as the recent credit card hubbub suggests, not even robust regulation will prevent bad corporate policies. So long as money can be made at the expense of the consumer, profit will always take precedence.

And that, my friends, is the real bottom line.

Photo credit: Muffet