Data Update 6 for 2026: In Sea... Note

Data Update 6 for 2026: In Search of Profitability!

The core purpose of any business is profit generation for survival and success. While noble social missions are commendable, they cannot sustain a business without profitability. Attempts to broaden business objectives beyond profit to include social good have proven detrimental to both businesses and society. Milton Friedman's 1970 assertion that a business's primary responsibility is to increase profits remains a strong argument. Critics have challenged this view, initially by suggesting a focus on cash flows and long-term profits, and later by advocating for incorporating broader social and environmental responsibilities. Concepts like stakeholder wealth maximization, ESG, and sustainability have emerged, but the author argues they have failed to deliver on their promises. These initiatives are criticized for prioritizing virtue over business sense, lacking clear definitions, and falsely suggesting that good deeds can be achieved without sacrifice. The author believes Friedman was right and that focusing on how businesses, as profit-seekers, can advance social good and curb externalities is the more effective approach. Profitability metrics, though imperfect accounting substitutes for economic profits, are crucial for assessing business success. Analyzing profit margins across different sectors and industries reveals significant disparities driven by unit economics, economies of scale, and leverage. The technology sector, despite its high overall operating margins, demonstrates a wide range of profitability among its companies. Financial services are excluded from typical margin analysis due to the unique nature of their revenue reporting. Ultimately, consumers and voters shape the businesses they get through their purchasing decisions and political choices.