13 November 2007

Who mourns for the Titans?

According to this story about oil profits, oil companies are going to have difficulty keeping their profits as high as they have been. But of course no one's going to be crying over it: they make billions in obscene profits.

In our innumerate society it is irrelevant that those billions have rarely amounted to more than a profit of around 10% -- give or take a few percentage points. (And yes I have been tracking.) We are supposed to believe, according to the "innumerati", that once a company makes billions it is immaterial that those billions represent a profit of only ten percent. The relative size of the business in terms of the amount of business it does and the scope of its operations are irrelevant.

The word on the street is that the issue is "obscene" profits -- like the obscenity of a 10% profit, which is "obscene", recall, because that 10% amounts to billions, rather than millions, or merely thousands. And whatever the profit margin (as a percentage), billions of dollars in profits are obscene. If those billions represented a paltry 2% they would probably still be called obscene. Even, ostensibly, if some of the people with a right to a share of those profits are old people who own shares of mutual funds whose managers wisely invested in petroleum companies.

I suspect that the real issue is the whole concept of profit. For some, making a profit means selling something for more than it's worth. If you, as a car dealer, buy a car for $30K and then turn round and sell it for more than $30K plus your cost of doing business, then you are ripping people off by selling the product for more than it's worth. (Never mind that two people rarely place identical values on identical goods.) It's just that, for now, "obscene" profits are easier to attack than non-obscene profits. But this is only because economics and mathematics educations stink to high heaven in our republic. As a consequence, people truly believe they can talk meaningfully of profits without considering the margin, as opposed to just the dollar figure.

And it's easy to dislike petroleum companies. (Actually, the behavior of many corporations, though perhaps not most, make them all relatively easy to dislike, especially those which make very bad CEOs into very rich CEOs. Honestly: why shouldn't people think ill of companies which will pay CEOs 364 times what the average employee makes just to run these same companies almost to the brink of disaster?) Where else can you just raise and lower your prices based on the market cost of raw materials?

Well, actually, just about everywhere. In my little corner of the world, people in the construction business have difficulty bidding jobs and guaranteeing the price for as long as 30 days from the date of bid due to fluctuating lumber costs. Sometimes the price can change drastically in the space of just a few days. And it doesn't matter where you get your lumber -- Lowe's, Home Depot. They raise their lumber prices because the lumber companies have done so.

I remember a period, over a decade ago when I was running a restaurant to put myself through graduate school. There were floods and droughts in various parts of the world. And these weather phenomena played havoc with my food costs. On several occasions it would go something like this. One week I might get a case of good lettuce for, say, $16. But the next week a case of lettuce would cost me $30. Why? Flooding in the area of the world my lettuce was coming from destroyed most of the lettuce crop. My supplier, incurring a higher cost, kindly passed that cost on to me.

Now, we decided not to pass that cost on immediately to the customer, betting that the crops in other parts of the world would be better and, thus, the cost of lettuce lower. We were right; and our customers never knew. Yes, it hurt the bottom line a bit; and yes we recouped our losses over the weeks and months after the Great Lettuce Crisis. But it was still a bet, still a risk; and we could have lost that bet big time. (Previously, in a similar crisis, we raised our prices and some of my customers treated me like an oil executive.)

The person who really increases your price at the pump is the owner of the station at which you fill up; and that may not be owned by a petroleum company like ExxonMobile. Apparently, some station owners leave prices alone, betting that crude price (but certainly not refining costs!) will drop again, allowing them to recoup their losses. That's their choice. But the companies that actually supply the local station owner may not have that choice in the long run.

And even if they do, 10% isn't very much. If it is, my employer is more obscene than an oil company. My employer aims at, and usually hits, a profit of 12%. Heavens to Betsy! Twelve percent? I suppose I should take him out back and shoot the greedy, thieving bastard.

(I don't know. Maybe 10% is obscene. That would explain why so many Christians don't tithe.)

Of course, I take some ribbing from my center-left Christian brothers for defending oil companies. But here's the thing. Too many of them seem to me to think that oil companies are evil for various reasons. Perhaps they are. "Vengeance is mine," says the Lord. And these brothers of mine seem to think that they are the instruments of God's justice, seeking to punish the evil oil companies by confiscating their profits and distributing them to the poor. My only problem, if these oil companies are evil, is that the God of these brothers of mine who think they are serving His purposes requires that an accusation be confirmed by two or more witnesses and before a competent and duly authorized tribunal (see Deuteronomy 19.15). (Yes, there are Christians like this on the Right as well. I think I've demonstrated that I am a critic of their approach also.) Now, in that same Law, is stipulated that if accusers make false, unfounded accusations then they are to receive the punishment that the accused would have received had he been found guilty (see Deuteronomy 19.16-19). I wonder how those brothers of mine would like it if someone simply accused them of wrong-doing (or simply of making "too much" money) and helped themselves to some fraction of their profits (i.e, what is left of their take-home pay after they pay all their bills)?

I also have "secular" scruples as well. It is almost a sacred, fundamental principle in U. S. law (see Const., Amend. 5) that before the accused is deprived of life, liberty or property he has a right to confront the evidence against him in a court of law.

The Left have enjoyed telling us about all the rights that the present Administration is slowly wiping away. Perhaps that's true. But when you want to deprive people -- even corporate entities (owned by people, by the way) -- of some of their property for making "too much" profit without accusing them of breaking a law; when you want to do that on the basis of such an accusation, without even bothering to prove the case in a court of law; when you want to do that, without giving the accused the opportunity to confront the evidence against him -- then you're not in much of a position to talk about who's hard at work depriving people of their rights.

It just comes to this. If you are going to insist on treating people like law-breakers, then you ought to demonstrate the law-breaking. And if you want to treat people like law-breakers for making "obscene" profits, then write your congressman and let's get a law passed that will define "obscene" law-breaking and out-law it. But remember, the Constitution prohibits ex post facto laws. So, you can get those evil, greedy oil companies for their future "obscene" oil profits, but the "obscene" profits they've already made are pretty much theirs. Alternatively, Justices Breyer and Ginsberg, et al, could always apply their notion of "public use" in defense of seizing those "obscene"oil profits; or, they could find some obscure provision in the laws of some advanced European nation (maybe Belgium: those cats are always ahead of the curve) which prohibits "obscene" profits.

Just remember: Someday, someone could be coming after your obscene 10% -- give or take a few percentage points.


About Me

James Frank SolĂ­s
Former soldier (USA). Graduate-level educated. Married 26 years. Texas ex-patriate. Ruling elder in the Presbyterian Church in America.
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