PRICE AND MEN
Bill O'Reilly wishes hard, though. He lamented the fact that the oil companies made twice as much last quarter as they did per quarter two years ago, a fact that O'Reilly views as proof positive that these behemoths are "gouging." However, the curmudgeonly commentator's emotionalism aside, there's a very simple reason why Big Oil has a glut of cash: they have already made much of the investment necessary to find the crude and build wells and pipelines, so now they can reap the rewards. Moreover, oil has leapt from $20 a barrel to $60 on the international market, something over which domestic oil companies have little control because they don't produce enough black gold to influence prices.
But the stake through the heart of O'Reilly's argument could be the fact that the industry reports lower retail profits than Wall Street expected, suggesting that they actually absorbed some of the cost on the marketing side.
Finally, many oil companies do boast huge raw-number profits, but this is deceptive because these companies are enormous. For instance, ExxonMobil reported a profit of $25.33 billion in 2004, besting every company on the Fortune 500 list. This isn't surprising, however, given the fact that it is set to overtake Wal-Mart as the nation's largest corporation. Nor is it damning, for in terms of gross profit margin the oil giant ranked only 127th on the list. Its margin currently stands at a modest 10.7 percent.
Of course, though, many may still side with O'Reilly, who is trying to shame the oil companies into reducing their profits for the good of the country. When addressing the doubling of profits, O'Reilly opined, "They can maybe make them 2/5."
Undeniably, they could voluntarily reduce what they charge for their crude, but this reminds me of a conversation I had about nine years ago with a starry-eyed, liberal neighbor who was supportive of the scheme to socialize medicine. Try as I might, I just couldn't disabuse her of her misguided notions, as she just kept on rehashing something to the effect of: "This is so important, it shouldn't be about profit. They should be doing it for the right reasons."
Yes, wouldn't that be grand? People shouldn't commit crimes either; New York City drivers shouldn't be rude, jihadists shouldn't blow up children, lawyers shouldn't accept obscene contingencies, cereal should be $1.50 a box, and the lion will lie down with the lamb. I also would appreciate it if hard gym floors that provided resistance to heads that make unfortunate, high-velocity contact with them wouldn't cause contusions of the brain, being as I suffered same when I was thirteen. Because, you see, not getting brain damage is really, really, really important. But something being important doesn't grant it a special dispensation from the laws of physics . . . or the laws of economics.
It's not that I don't believe in charity, it's just that I actually know what it is and isn't. When a person voluntarily sacrifices some of his profit so he can help his fellow man, it's charity. When the government forces a person to sacrifice some of his profit to help his fellow man, it's called something else: bad economic policy. What's the difference from an economic standpoint? In the latter case incentive is removed while in the former it is not.
Incentive to earn is reduced when you prevent people from doing what they want with their earnings. Thus, whether or not people's incentive to earn will be reduced when their money goes to charity simply depends on whether or not that is something for which they want money. Forcing someone not inclined to give to charity to do so has the same effect as preventing the Sisters of Mercy in India from giving: it reduces the desire to acquire money.
Ah, but shouldn't everyone be motivated by the higher calling to help others? Sure, but a fact of human nature is that most people won't be and, one last time, the laws of economics/human nature apply in all situations . . . like it or not. You can't legislate away the frailty of man.
Incidentally, since I mentioned healthcare and my neighbor, I'll relate something germane. On Thanksgiving Day a doctor to whom I'm very close mentioned that many of the people presently entering the medical field are bottom of the barrel and that "medicine is in more trouble than people think." Part of the reason for this is that doctors are working longer hours with greater malpractice risk, and the profit motive has been reduced. Thus, the field attracts fewer of the best.
Ah, the fruits of government intervention, the nectar of which creates deadly problems, such as waiting lists for many procedures up in Canada. Do you perceive a pattern - gas lines, bread lines, healthcare lines? Well, don't despair. Just make sure you achieve party apparatchik status before the dark day comes, then you may still get decent healthcare.
The bottom line is that medical care may be expensive, but to use a variation on a Dr. Walter Williams line: would you rather have great healthcare available at $250 an hour or no great healthcare available at $50 an hour?
And now to the question oft-asked in this piece: what is gouging? The truth is that it's something for God to judge, not the government. The communists thought they knew what people "should" be giving and making and they reaped the whirlwind. From each according to his means and to each according to his needs? If you enforce that principle through government, the result will be fewer people with means and more people with needs.
Lest I be misunderstood, I'm no apologist for big business. Since my brain damage was only temporary, I'm wise enough to be cynical about virtually all worldly institutions. What concerns me, though, is that these misunderstandings about economics make people easy prey for demagogues who demonize big business and use prejudice against it as a pretext for creating even bigger government, as they transmit their subliminal "workers of the world unite" message and galvanize support for more control over the private sector.
Regardless of how you feel about oil, lawyers, widgets or cereal, there's no question that our economic prescriptions are more consistent with our visceral passions than with sound principles. We afford some the right to free commerce and divest others of it, and often the only rhyme or reason evident is that we somehow, some way have come to believe that we have a right to the fruits of some people's labors at prices that suit our fancy. It's that expectation and conditioning of which I spoke.
But I'll tell you what my conception of a true gouger is: big government.
I find it appalling. People come unglued over commercial price increases or the possible emergence of a quasi-monopoly. Yet, the very same folks utter nary a word about a government that forcibly extracts fifty-percent of our income every year with its monopoly over the life of every American.
For sure, periodically we witness brouhahas over two-dollar Automatic Teller Machine fees, as if these businesses strong-arm us into availing ourselves of their service at the point of a gun. But the beauty of the free-market is that we are provided with alternatives. If you don't like Coke, you can drink Pepsi or RC; if you don't like Ford, there's always Chevrolet, and if you don't like ATMs, just mosey on up to the teller's window. But what are our options if we object to a robber-baron federal government that has overstepped its bounds, overfilled its coffers and overspent its treasury? Moving to a different country is impractical and moving to another state is ineffectual. For, regardless, from sea to shining sea the same intrusive central authority holds sway. This is the monopoly I detest.
Then there's the salt in the wound. While Uncle Scam fleeces us to support his bloated budget replete with pork, his minions present themselves as economic saviors who have come to deliver us from the evil of those who are our economy's rising tide.
But even during the recent gas price-spike, the government was the biggest villain of all. While oil companies were making that nine cents per gallon, gasoline taxes amounted to about forty cents per gallon on average (sixty-three cents in New York). Yet, as the oil men were vilified by oily, posturing politicians who purported to be in the common man's corner, how often did we hear our compassionate leaders propose rescinding gas taxes? Truly shameful, indeed. It is not only the government's right but its duty to keep its claws out of the taxpayer's pockets as much as possible. However, it has no right to meddle in the private sector based merely on collective caprice.
But meddle it does. Not too long ago oil executives were asked to appear before two Senate committees to justify their profits. Good job, Barbara Boxer and company, you've even convinced a few hapless sheep that you really care. I'd like to see someone grill the politicians and force them to justify their confiscatory taxation.
After all, if taxation accorded with the intentions of the Founding Fathers, most of us would have thousands more to spend each year. Then we wouldn't have to worry about paying a few dollars extra for gasoline or a couple of bucks on ATM fees. We would have plenty more for our children's education, for healthcare, and many other things the nanny state says it's going to help us with after it both drives up their costs and steals the very money we would use for their acquisition.
So, Uncle Scam, save the sanctimony and the posturing, spare me the paternalistic offerings and patronization. You can steal what's mine, but don't spit down my back and tell me it's rainin'. It's an insult to my intelligence.
Of course, scapegoating industry is most convenient. It keeps our focus off the entity that truly enslaves us, the one we work for until June of every year. Why, if the little peasants weren't busy rebelling against big business, it might actually occur to them to rebel against big government. And we can't have that now, can we?
here for part -----> 1
© 2005 Selwyn Duke - All
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Selwyn Duke lives in Westchester County, New York. He's a tennis professional, internet entrepreneur and writer whose works have appeared on various sites on the Internet, including Intellectual Conservative, nenewamerica.us (Alan Keyes) and Mensnet. Selwyn has traveled extensively in his life, visiting exotic locales such as India, Morocco and Algeria and quite a number of other countries while playing the international tennis circuit.
Of course, though, many may still side with O'Reilly, who is trying to shame the oil companies into reducing their profits for the good of the country.