Adam Smith: High Wages, High Profits
on Tuesday, January 2, 2018Adam Smith Money Quote saying business owners fully blame wages for increasing the cost of goods, but rarely believe profits have any deleterious effect. Adam Smith said:
“Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits” — Adam Smith
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In this quote, Adam Smith is critiquing how merchants and business owners complain about the negative effects of “high wages” on goods prices and sales. However, Smith notes that they fail to acknowledge or mention the negative impacts of their own “high profits”. By “high profits”, Smith is referring to large profit margins that businesses earn by paying workers relatively low wages.
He is suggesting that high profits also contribute to increasing the prices consumers pay for goods. Overall, Smith is pointing out a double standard where employers blame only high labor costs and not their own profit-seeking behaviors for any economic issues. The quote aims to show that business owners should not scapegoat high wages alone and ignore the role of profits in determining overall production and pricing.