In Defense of Capitalism & Free Markets

[dahermit]

Where do people get this odd notion that there's something wrong with the rich getting richer? It's as if they think wealth is a kind of fixed sum game, where one person's wealth can only come at the expense of another. If that were true, the wealth of society as a whole would never increase. In the same category is complaining that Exxon, or some other company, made big profits. It would be better if they made small profits? Even better if they took a loss??

It would be better if they only made a reasonable profit and the price at the pump were likewise reasonable.

 

[Hobo1]

It would be better if they only made a reasonable profit and the price at the pump were likewise reasonable.

Great idea! We get a bunch of GS-15 bureaucrats together and they can set the reasonable profit and price for gasoline everyday. They have a huge computer program which factors in all the costs of exploration, labor, transportation, cost of living adjustments all over the world, wage scales for foreign and American workers, depreciation, every possible cost you can imagine is in their computers for the oil producers, the oil refiners, and the distributors. Of course you have to factor in costs and profits from non-gasoline products like perfume and plastic and tires - all of which use oil too.

That should work so well, we can have the same agency set the cost of electronic equipment, food, and everything else! We could give a cost break to poor people and charge more to the rich people.

What a great system - should be a real hit.

 

[Dr.Who]

I would have no problems with big profits if the benefits were to the consumers in America, unfortunately companies today have no accountability for fraud (yet) and are free to move their profits from America to foreign nations leaving unemployment rampant here. How could it be the nation with the most productive workers on earth lose jobs to emerging nations, especially when we are the consumers that float these same companies? The answer is individual greed, not profit. I invest in the market and I do well, but I am not so blind as to see the vast majority of Americans have neither the ability or the skill to do the same, many never recovered from the butt dart Bush delivered in '08. So to you statement, 2% of the people control 90% of the wealth of this nation, and I don't trust that 2%

Who do you trust?

 

[Dr.Who]

It would be better if they only made a reasonable profit and the price at the pump were likewise reasonable.

The government makes more profit on gas taxes than the oil companies make selling the gas.

Are you complaining that the gov is making an unreasonable profit?

And what is an unreasonable profit for an oil company? Should they only make a 51% profit? 48%? 33%? 25% 10%? 7%? 5%? 3%?

 

[dahermit]

The government makes more profit on gas taxes than the oil companies make selling the gas.

Are you complaining that the gov is making an unreasonable profit?

And what is an unreasonable profit for an oil company? Should they only make a 51% profit? 48%? 33%? 25% 10%? 7%? 5%? 3%?

The "profit" that the government makes is on a per gallon basis. It does not change and in fact goes down when gasoline consumption goes down as it is now.

An unreasonable profit is made by oil companies because they own many of the wells in the U.S. and buy the oil from wells on privet property at a "take it or leave it", rate (research it for a real shocker). When speculators drive the price of oil up, the oil companies reap the profit and the foreign oil producers (Arabs), are blamed for the increase, "dependence on foreign oil".

Instead of calculating the percentage of a reasonable profit, I suggest a windfall profits tax on the oil companies that equal all the money above their operating cost, returned to the gasoline consumers in the form of rebate checks. Either that, or nationalize the oil companies and control what they charge as with Public Service Commission control of electricity cost.

 

[Rick]

It would be better if they only made a reasonable profit and the price at the pump were likewise reasonable.

What do you mean, "reasonable"? As determined by whom - you? A government bureaucrat? Exxon made 8% profits last quarter. The government taxes slapped on a gallon of gas are MUCH higher. You would be better off demanding that government only make a reasonable "profit" off the sale of a gallon of gas.

 

[Rick]

I would have no problems with big profits if the benefits were to the consumers in America, unfortunately companies today have no accountability for fraud (yet) and are free to move their profits from America to foreign nations leaving unemployment rampant here.

About three issues in one sentence - congratulatiosn. Why should Exxon profits benefit consumers? Their obligation is to their stockholders. About like saying I don't mind if if you get a big paycheck, if it somehow benefits me. What do you mean companies have no accountablity for fraud? Uh, yes they do.

How could it be the nation with the most productive workers on earth lose jobs to emerging nations, especially when we are the consumers that float these same companies?

Many reasons:

US labor unions have priced US workers labor to higher than it's worth.

Liberals have destroyed the US education system so we can't compete.

The US has the second highest (after japan) total corporate tax.

Liberals bedvil US companies with hordes of taxes and regulations.

Now, you tell me - why should they stay here under those circumstances??

The answer is individual greed, not profit.

Define greed. Does that mean "makes more money than I do"? Or what?

I invest in the market and I do well, but I am not so blind as to see the vast majority of Americans have neither the ability or the skill to do the same,

Baloney - all they have to do is pick a good mutual fund, and a huge percentage of americans own stock, directly or indirectly through pensions and 401ks.

many never recovered from the butt dart Bush delivered in '08.

Anyone know what he's talking about there?

 

[Rick]

n January 2011, motor gasoline taxes averaged 48.1 cents per gallon and diesel fuel taxes averaged 53.1 cents per gallon.


http://www.nacsonline.com/NACS/Resources/campaigns/GasPrices_2011/Pages/StatisticsDefinitions.aspx

http://www.dailymarkets.com/economy/2011/04/27/gasoline-taxes-vs-exxon-profit-per-gallon/

 

[GenSeneca]

The "profit" that the government makes is on a per gallon basis. It does not change and in fact goes down when gasoline consumption goes down as it is now.

(1) Do oil companies currently pay too little in taxes compared to profits?

The answer to the first question is that over the past 25 years, oil companies directly paid or remitted more than $2.2 trillion in taxes, after adjusting for inflation, to federal and state governments—including excise taxes, royalty payments and state and federal corporate income taxes. That amounts to more than three times what they earned in profits during the same period, according to the latest numbers from the Bureau of Economic Analysis and U.S. Department of Energy.​

Do you understand the difference between a direct tax and an indirect tax? Every time you hear about how some US oil company made record profits, multiply that "unreasonable" amount by 3 and that's how much government got paid for doing jack squat.

Instead of calculating the percentage of a reasonable profit, I suggest a windfall profits tax on the oil companies that equal all the money above their operating cost, returned to the gasoline consumers in the form of rebate checks.

So you're basically saying that ANY amount of profit for US oil companies is "unreasonable" and further believe that US oil companies should be transformed into non-profit organizations... or else.

Either that, or nationalize the oil companies and control what they charge as with Public Service Commission control of electricity cost.

Wouldn't that be great? Government could subsidize the cost of oil and lower it to $1.00/gal by adding $3.00/gal to the deficit. With an average daily consumption of 386 million gallons per day (140,890,000,000 gallons per year) we'd only be adding $422,670,000,000 to the deficit each year. What a bargain! Cheap gas paid for by future generations!

Of course, a more likely scenario in the wake of US nationalization of oil companies would be that government, in an effort to reduce fuel consumption, raises the cost of gasoline to $7.00 or $8.00/gal...

It's time to raise the gas tax

Even at its highest, the price of gas in America hasn’t come close to
European prices. Governments there have made taxes the keystone of their campaign to cut consumption, promote alternative transportation and go green. It’s time for the United States to do the same.

Gas prices have been rising in Europe for more than a decade, and much of the increase comes from tax hikes that now account for 40 to 50 percent of the cost to fill up. The
Netherlands and Britain have nearly doubled their gas taxes, to $4.04
and $3.82 a gallon respectively, since the early 1990s. Compare that to America, where Uncle Sam tacks a paltry 18.4 cents onto every gallon of gas.

...

European governments embraced gas taxes to cut consumption. It’s working there, and it would work here.

...

But the bottom line is cheap gas hurts us more than it helps us. It keeps us shackled to inefficient cars, undermines efforts to address global climate change, and discourages the development of alternative transportation technologies. As if that weren’t enough, it transfers ever larger amounts of money to governments unfriendly to our interests.

With oil prices at a four-year low, now is the time to act. We must increase the gas tax to cut consumption, generate revenue to repair roads, finance mass transit and and put us on a path toward true energy independence.​

Now I asked if you knew the difference between a direct tax and an indirect tax... The federal tax of 18 cents a gallon is a direct tax, government is taxing you the consumer directly. The revenue to the government that's 3 times more than oil company profits, that's an indirect tax on you, the consumer. When government suggests raising the direct tax on consumers, people rage against it. But when government suggests raising taxes on "big oil", which is an indirect tax on the consumer, people like you salivate at the thought of sticking it to those greedy bastards - not realizing that you're only sticking it to yourself.

 

[GenSeneca]

Re: Commitment to an ideology.

GenSeneca, you’ve declared yourself to be more committed than I to the concepts of free enterprise and individual freedom.

Because, by definition, I am.

Free Enterprise: Business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy. also called free market.​

Based on your statements about the subject, you reject the concept of a free market. You instead support a mixed economy, which is a market theory that seeks to find a balance between free markets and command markets by utilizing government interference, regulations, and subsidies. It's nothing to be ashamed of... If I had to guess, I'd say easily 70% of the American public, knowingly or unknowingly, supports a mixed economy. Like you, they think free markets are great in theory but in practice require some pragmatic limitations to prevent abuse, protect the consumer, and not lose sight of what's in the best interest of the country.

Individual Liberty: is a concept in political philosophy that identifies the condition in which human beings are able to govern themselves, to behave according to their own free will, and take responsibility for their actions.
​

Once again, based on your statements, you reject the concept of Individuals acting on their own free will, especially where international trade is concerned. You have no problem with using the force of government to limit or eliminate the free will of consumers. When you say that consumers can have access to cheap goods, but not the cheapest, you are restricting their free will via government edict to eliminate the option of purchasing the "cheapest" products available.

I’m a strong proponent of free enterprise and individual freedom.

Not according to their respective definitions. As I said before, you're a proponent of Mixed Markets and Statutory Liberty. I did not pick those terms at random. I'm not using them as ad hominems. I'm simply pointing out that your statements on the subjects match the definition of those terms rather than the terms you claim to support.

Claiming to be "a strong proponent of free enterprise and individual freedom" while actually espousing views contrary to the definitions of those terms is either intentional or accidental.

It's possible that you do not consciously realize supporting government intervention in the market is antithetical to Free Enterprise, or that supporting the manipulation of economic behavior is antithetical to the free will necessary for Individual Liberty. To have your conscious confronted with these facts would lead to cognitive dissonance. In an unconscious effort to avoid this internal conflict, you might go into denial, perhaps by lashing out at the person who pointed out the conflict and claiming they were only using political labels and bumper sticker slogans.

Another possibility is that you're using propaganda techniques to intentionally deceive your audience. Phrases like "Free Enterprise" and "Individual Liberty" are rhetorical examples of virtue words, words or phrases that illicit a positive emotional response. Because such words and phrases are often used as vague terms without being specifically defined, you can claim support for them while advocating for something else. Once the terms are specifically defined, this rhetorical method fails because the proposals are shown to be contradicting the terms.

This is not good reason to believe that you’re more or I’m less committed to the concepts of free enterprise and individual freedom.

I believe myself to be more committed to the concepts of Free Enterprise and Individual Liberty because my views match their definitions while your views are in conflict with them.

 

[clarkatticus]

Who do you trust?

I realize that business people are just like you and I, most work hard for the money they make and deserve every penny, especially when they have so many compliance issues thrown at them. But in the case of large corp their ability to influence the market, manipulate prices, bribe congress and do just about anything to attract shareholders rather than do what's good for America. I know not every business is a Haliburton. If a certain large box store moves in a small town, every private shoe, clothing, food, optometry, photo, and jewelry store in that small town goes out of business, along with the same happening to every small town within 20 miles. This is legal, this is ethical, no one has done anything wrong but I have to ask, is this capitalism? Is this what we want? Where is the ability to compete? You ask, what can we do to prevent corp from getting ino bed with politicians? With the recent supreme court decision, not much. McCain/Feingold bill was a start but now it's DOA. If we prevent companies from campaign finance, we should prevent Unions also. As for trust, I trust no one with the power to influence the economy without having some skin in the game.

 

[Rick]

I realize that business people are just like you and I, most work hard for the money they make and deserve every penny, especially when they have so many compliance issues thrown at them. But in the case of large corp their ability to influence the market, manipulate prices, bribe congress and do just about anything to attract shareholders rather than do what's good for America.

One hopes you are able to grasp that it is PRECISELY the ability to "bribe congress", in our current polity, that is >>>NOT<<< capitalism, but rather a regulatory regime, in which, ironically, big business often SUPPORTS regulation, because it raises an often insurmountable barrier to new competitors.

I know not every business is a Haliburton. If a certain large box store moves in a small town, every private shoe, clothing, food, optometry, photo, and jewelry store in that small town goes out of business, along with the same happening to every small town within 20 miles. This is legal, this is ethical, no one has done anything wrong but I have to ask, is this capitalism? Is this what we want? Where is the ability to compete?

Yes, that IS capitalism - inefficient, BACKWARD businesses with obsolete business models and high prices are removed by the market. Why don't all those dinky mom-and-pop stores, proud of the fact that they haven't changed anything in 50 years, for example, create co-ops with other companies in their business so that they can get economies of scale for their purchases?

 

[Hobo1]

Rick I have to agree with you 100%. As hard as it is to fight the competition in the US - especially when it is coming from overseas, this is the hand we are dealt and are going to have to play it.

Normally, US businesses have some advantages that foreign businesses do not have. One is the ability to borrow money at a lower interest rate from banks.
Two is our very active stock exchange which has the ability to provide US business massive amounts of capital.
Three is our very good educational system which cranks out workers of high quality. Four is our infrastructure - as much as people say it is deteriorating, we still have good roads, railroads, electric supply, telephone, cable TV/computer/phone.
Five is our worker dedication to work hard - some call it the Protestant work ethic.
Six is a stable government.
Seven is a healthy work environment.

You have to try to do business overseas to appreciate the advantages we have in the US.

And let's not forget the infiltration of US products overseas. You can travel to the darkest, deepest corner of the world and you can buy Coka Cola and all the other products this company produces. In every town their is either a McDonald's or a KFC or probably both - and they are packed with people. And the advantages of the word "America" is quite apparent. "American style potato chips"; Corn chips made with "all-American" stone-ground corn flour. It is really amazing how the American brand sells products overseas.

We just have to learn to complete better and harder. I often say, why can't we build a fully computer operated and controlled machine that produces socks or tee-shirts at the rate of 100 per minute? Fully automated from beginning to end. That would put an end to the import market for socks and tee-shirts into America. Our talent is to build and operate such a robotic machine. We can't compete with the sweat shops of Asia. But we can take the manufacturing to a higher level.

 

[clarkatticus]

I can agree with all of that. But banks don't make enough money loaning to companies that build automated sock machines, they make more by selling bad mortgages then turning them into derivatives and selling them again before they blow up. They also made a bundle borrowing money from the fed gov at no interest and loaning the money back out to other financial inst. at 8%+-then paying back tarp. Problem is, most banks stopped being banks a long time ago. And the small stores in each community that went out of business did so because these large box stores force unfair tax and utility advantages on the communities they go to, the community has to submit because they would need the jobs, and knowing some jobs are better than none. This is not capitalism, this is extortion. And please show me that ironic business that asks for regulation, Rick, and I'll show you 100 that a putting millions lobbying the other way. You are right, we should end lobbying and political graft.

 

[Rick]

I can agree with all of that. But banks don't make enough money loaning to companies that build automated sock machines, they make more by selling bad mortgages then turning them into derivatives and selling them again before they blow up.

That market was created by the liberal/left, when Bill Clinton appointed Franklin Raines head of Fanny Mae with marching orders to crank out billions of dollars in home loans to unqualified borrowers from his minority constituencies. He was taking his cue from leftwing groups like ACORN which had successfully threatened some banks into making such loans. Seeing the money FM was making (Raines walked away with $900 million) the banks joined in. Don't confuse the proximate "cause" with the REAL cause - leftwingers meddling in markets, the same way they created the Great Depression in the 1930s.

And the small stores in each community that went out of business did so because these large box stores force unfair tax and utility advantages on the communities they go to, the community has to submit because they would need the jobs, and knowing some jobs are better than none. This is not capitalism, this is extortion.

Boy, do you have THAT wrong! Large box stores aren't able to "extort" anything - they would be arrested for a felony. What happens is local governments, ever greedy for more tax money, sell out their constituents - there's no greed like government greed. They not only will dump the mom and pops, but use eminent domain to seize people's houses in their endless greedy quest for more money. In the USSC Kelo decision, who voted FOR such seizures? The whole lib/left wing of the USSC.

Your problem is with the leftwing ideologues, not "capitalism" - conservatives are used to people like you blaming capitalism for every dirty deed committed by the leftwing - used to be funny now it's just ironic.