Parent says "the free market should have squeezed profits to zero." Theory says that the free market should squeeze economic profits (not accounting profits) to zero. That has already happened: $500,000 (annual revenue for 2 people) - $250,000 (COGS: 50% of revenue) - $50,000 (commissions: 10% of revenue) = $200,000 (gross profit) - $62,500 (cost of capital: 5% of 250 * $5,000) - $50,000 (economic depreciation: 250 x $5,000/25) - $100,000 (cost of labor: 2 x $50,000, including benefits) = - $12,500 (economic profit)