In praise of obscene profits
By Tom Quiner
[youtube=http://www.youtube.com/watch?v=jmt2j0fWdYE&feature=player_embedded]
Are profits good or bad?
Liberals decry them as being “obscene” if they seem to be too much. How much is too much? I think it depends on the industry. Oil, banking, and pharmaceutical industries in particular raise the shackles of liberals when they have good years.
A few years ago, ABC’s Jon Karl used the “O” word when questioning Speaker John Boehner:
“Is there something obscene about gas company, oil and gas company profits being that high when Americans are struggling just to fill up the tank?”
You can see the built-in bias in the question that there is, in fact, something obscene about it.
Writing in the New York Times, Sarah Ludwig excoriated the banking profession:
“So when did banks receive the divine right to make obscene profits? Yes, banks are corporations with shareholders, but they also exist at the behest of the public and have clear public functions and obligations.”
One of those, I guess, is not to make too much money according to liberals.
I ran across a Yahoo website that posed this question:
“Why did Mel Gibson make obscene profits on his movie, ‘The Passion of the Christ?'”
Add religious guys (with a conservative-bent) to the list of those who shouldn’t make obscene profits, according to liberals.
For the record, Mr. Gibson couldn’t get anyone in Hollywood to finance his movie or distribute it.
He had to dip into his own pocket to make the film, investing $25 million in a project in which he believed.
The movie Hollywood rejected was box office gold, making Mr. Gibson a very rich man. As economist, Walter Williams, says in the video above, profit is the residual the entrepreneur, such as Mr. Gibson, receives after paying all of his expenses, such as land, rent, wages, and interest. Profit is what’s left over for the entrepreneur for taking the risk.
In the case of Mel Gibson, Hollywood wasn’t willing to take the risk. Perhaps they thought there was no way a gritty movie about the crucifixion of Jesus Christ would make them any money.
They were wrong and Mr. Gibson reaped the reward for taking a huge risk.
He was paid his “residual” for this risk.
Interestingly, the same liberals who decry Mr. Gibson’s “obscene profits” don’t say a peep about the obscene profits made by pornographers who so terribly exploit women in their x-rated films.
Go figure.
This subject of profits raises an interesting question: is there ever such a thing as obscene profits? After all, profit is the goal of corporations, not an accidental by-product of their existence.
What do oil companies do with their profits? They look for more oil. They refine their techniques to make the process of finding and extracting their commodity more efficient and environmentally safer. They create more jobs. And they pay their investors dividends out of their profits.
Nothing obscene about that.
Who are their investors? A lot of them are retired, middle class Americans.
Don’t you wish auto companies were as profitable as the oil companies? They evidently didn’t give the public what they wanted and needed taxpayers to bail them out.
This raises another question: why don’t liberals ever complain about obscene losses?
The U.S. government is running massive deficits. Why? Because liberals keep voting for more government programs which require more government spending.
We just don’t have the ability to pay for this massive expansion of government at the federal, state, and local level without destroying the economy.
We’re watching the results of liberal ideology play itself out in California.
Democrats have controlled the legislature there forever.
Government unions have had their way with taxpayers. The state is in dire straits.
The city of San Bernadino just filed for bankruptcy. Why? According to city officials: escalating pension costs and lucrative union labor agreements.
San Bernadino had to file for bankruptcy protection despite slashing their payroll by over 20% over the past four years. It is the third California city in recent weeks to file for bankruptcy protection.
More are expected to come.
How did California and the rest of the country get in this mess? Liberalism.
Democrats have collaborated in expanding public sector unions. These unions have exerted their clout to extract obscene benefits at taxpayer expense to be paid out decades from now.
How bad is it?
It’s bad. By next year, according to the Center for Retirement Research at Boston College, we taxpayers in the 87,000 some-taxing districts in the U.S. will be on the hook for over a trillion dollars in pension plans.
The most liberal state in the union, California, the one with the coziest relationship with public sector unions, is on the hook for a half-a-trillion dollars in unfunded liabilities alone.
Let’s stop talking about obscene profits.
It’s time to start talking about obscene spending.
