Frustrated by listening to @joerogan and @jordanbpeterson on the issue of "living wage." Otherwise intelligent people get the discussion completely backwards. Businesses do not pay workers and suppliers out of their profits: they make profits if they produce more value than cost.
It is a common but fundamental mistake to look at the numbers after the fact and, therefore, inadvertently reverse the course of time. Businesses pay for resources based on what they think they can charge for the product they're going to produce. The actual outcome is uncertain.
In other words, Apple bought resources needed to produce the first iPhone without knowing it would sell or at what price consumers would want it. The resources were acquired without information about revenue on hand--demand for it (and any product) arises much later.
The same with every generation. Just because iPhone 1 sold well doesn't mean iPhone 2 will, esp. considering competitors can enter the market and potentially undercut Apple's offering. *Every* purchase of inputs is made anticipating a selling price that is yet to be discovered.
The problem is partly the assumption that the selling price and quantity--demand--is known beforehand, which it is not. It is partly also the assumption that demand is fixed/stable, which it is not. It's impossible to pay resources today using the profit you earn tomorrow!
My column explaining this issue, which apparently confuses most nowadays: mises.org/wire/more-spen…
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