Here is what the teacher said:

“… the goal of business is to make a larger profit and the easiest way to save money is to pay your workers less.”

What is interesting when you first read this statement, is that it appears to be factually correct. After all, if you cut your payroll costs (assuming revenue remains the same), profits/income will obviously go up.

This is simple math, right?

Simple math it may be, but it is also a simplistic understanding of how successful businesses operate in the real world.

While cutting costs in order to “make a larger profit” may be the “easiest way to save money,” a business will not remain solvent for the long term if this is its strategic plan.

But businesses don’t make larger profits simply by “saving money.” They make larger profits by capital investment which leads to greater productivity of their workers.