Diary

Make No Mistake, Liberals Love Profits

Progressives routinely display their disdain for the concept of profit. Barack Obama, Hillary Clinton and a host of other Liberals have used words like “excessive”, and “immoral” to describe profits. When several petroleum companies posted large profits a few years ago, Hillary Clinton proposed a “windfall profits” tax, meaning a tax levied beyond normal corporate taxation simply because the company is doing “too well” in the eyes of the Government.  President Obama made his philosophy known in a speech delivered on April 29, 2010, “At some point you’ve made enough money.”

 

My personal belief is that profit, if legally obtained, has no moral connotation at all. An exceptionally large profit for one company over another in a given industry represents an imbalance in the market, driven by technology, costs structures and basic competiveness. The free market usually resolves this imbalance automatically as companies strive to compete. Some companies rise, while others fall. Some recover their market share; others go out of business, while younger, hungrier entrepreneurs enter the market.

 

Interestingly enough, the Progressives who claim to disdain profits, in actuality love them. Exxon-Mobil was demonized by Government and the Media for its record $45.2 billion profit in 2008. At the same time it paid $116.2 billion in taxes to the Government, a fact which did not make the headlines. That works out to $318 million per day in taxes in 2008, enriching Government coffers. Exxon Mobil’s CEO explained in an interview on PBS that their high profits are a result of the volume of their production and that the Government profits two and a half times more than Exxon-Mobil itself. When the economy was on fire and fuel consumption was high, Big Oil moved a lot of product, good for them—but more so for Uncle Sam.

 

By the way, 52% of ExxonMobil is owned by mutual funds, index funds and pension funds. Two million people are stockholders and less that 1% of that company is owned by “ExxonMobil corporate insiders.” ExxonMobil is largely owned by the common man, who profits from their profits.

 

 So why the Government demonization of corporate profits? Simple. It serves their political goals. The anti-profit, anti-corporate, populist message resonates with the common man. The Administration wants you to feel screwed each time you fill your gas tank, buy groceries, pay your electric bill or visit a doctor.  Make no mistake, though. They do not want the companies working as non-profits. They do not want corporate America to slash their prices, and hence their revenues, to the bone. They want the companies to make profits, large, large, immense, excessive, immoral profits, so they can demonize them in the Media, sway public opinion against Corporate America, and seize the profits in the form of taxation–all with public support. They want the little guy to think of the Government as their great equalizer. Even though the common man won’t see a dime less at the pump or the grocery store, the goal is to make him feel better knowing the Government is sticking it to the Corporate Fat Cats, recovering the common man’s money from the greedy Corporations. The Government is laughing all the way to the bank. The common man is still paying out the nose and Government collecting the spoils.

 

Whereas Corporate profits are used to reward investors, invest in new technologies, equipment or processes, and expand operations, the Government follows a similar model. The Government equates profit with expansion. The more revenue they receive, the more Government expands. The Government purchases property, builds buildings, fills them with offices, computer servers, basic infrastructure and hires employees. They do many of the things corporate America does with their profits. However, they pay for it all with the money generated by the private sector, the profits earned by productive corporate entities. They do it with money paid by the consumers of the company’s products. They confiscate that money, expand their own infrastructure and employee base, all the while generating no revenue of their own. They create jobs which rely totally on the profits of real world companies to sustain. I call it the parasite economy. For every Boeing Company or Ford Motor Company, there are a few hundred little Government agencies or branch offices, filled with clerks, middle managers and bureaucrats, providing some service the Federal Government has no business providing, all living off the life-blood of Corporate America.

 

While it is true this model does create good-paying Government jobs with great benefits (both of which has recently exceeded the average salaries and benefits of private sector jobs), it also drains the producing economy of resources and transfers it to the parasite economy. The truth is the producing economy would utilize this capital far more efficiently. Decisions regarding corporate capital are not taken lightly by companies looking to make a profit. They make the best decisions possible, develop the best strategies possible, to ensure capital is invested wisely, in the most productive manner possible, with the best return on investment. Invariably, this means better products for consumers, expanded markets, more jobs, more opportunities and, of course, more profits. The Government Parasite economy has no such motivations. They are not required to make good decisions. Since there are no profits by which to measure their performance, they are either evaluated solely on the services they provide, not on how effectively or efficiently they proved them. These agencies must spend all their money by the end of the fiscal year, even if it means wasteful spending, to ensure they get the same amount or more in the next budget. If they make a poor decision, it doesn’t matter—as long as Boeing, Ford and the real producers make good decisions.  When things go bad in the private sector and profits plummet,  it becomes apparent to all how just how large the Parasites have become—and friends, today there is more blood in the tick than in the dog.

 

JC

 

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