Friday, April 28, 2006

Two Things Corporations Don’t Do

Gasoline prices are currently at or near all time highs. It really doesn’t matter when you’re reading this. The fact is that virtually everything that you purchase is currently at its all time high. It’s called inflation. It’s a natural by-product of capitalism and is nothing to be feared. Get used to it.

Nevertheless, it seems that petroleum prices have gone beyond the natural bounds of inflation, so people are looking for an enemy to blame.

It’s easy to blame oil companies. So oil companies are currently out of favor. They tend to rotate with the pharmaceutical companies, insurance companies, Microsoft, and Wal-Mart. At any given point in time, at least one of those will be in the dog house with consumers. Today it’s the oil companies. In a couple of months, one of the others will take over the bad-guy slot and oil companies can go back to business as usual.

Since we’re always blaming big business for everything from droughts in the Sahara to floods in the Midwest, maybe it’s time to have a quick lesson in economics. The following are two basic truths of big business. Don’t argue with me. You know I’m right:

Corporations don’t make profits

Corporations don’t pay taxes

I have yet to meet a liberal that understands these concepts. At least none that would admit it in public. Because if they would be honest and admit that these are true, they would have to reconsider every shred of public policy that they’ve worked so hard to establish in the last fifty years.

What do you really think happens when corporations make profits? Do you think it just goes into the pockets of the fat-cat executives? Well, yeah, some of it does. And I suppose you could make arguments as to the appropriateness of that. But even if the highest paid executive would distribute his entire year’s salary to all his customers, it wouldn’t put any more than a couple of bucks in your pocket. Executives make a lot of money because there are a lot of customers out there.

The dirty little secret that liberals don’t want to admit is that virtually all corporate profits go back to the shareholders. And we  are the shareholders. You and me.

Much, if not most, of the public stock of large corporations is held by mutual funds and retirement accounts. ira’s. 401k’s. You can rejoice when a corporation announces record profits because a lot of that money is going to be paying helping you put gas in your Winnebago in a few years. When corporations make money, we all make money.

Liberals would have you believe that it’s not fair when corporations make so much money. So they would rather impose insane “windfall” taxes on corporations. They have this crazy notion that they can tax corporations and nobody will notice it. They never met a tax they didn’t like, and they especially like the ones that they believe “nobody” pays.

Of course, they forget that corporations don’t pay taxes. It’s just part of doing business. It’s figured into the cost to the consumer. Sometimes the consumer actually “sees” it, as in the case of his utility bill or telecommunications bill. But most of the time it’s just baked into the cost.

Every time I read that some huge corporation has just received some big tax break, I say hurray, because I just put more money in my pocket. And when I hear that they have reported record profits, I say hurray again, because I put even more money in my pocket.

I thank them, my retirement fund thanks them, and some day my Winnebago will thank them.

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