Suppose you own a business. You invest, take risks. You labor. You make handsome profits.
And now a politician walks into your business. He or she says “I want to take those profits and I want to put them into ...”
How do you think you might react?
By now you may have read this was Hillary’s reaction to the massive profits reported by Big Oil recently.
She spoke to the Democrats’ national committee folks. She said “The other day the oil companies reported the highest profits in the history of the world. I want to take those profits. And I want to put them into a strategic energy fund that will begin to fund alternative smart energy; alternatives and technologies that will begin to actually move us toward the direction of independence.”
If you own a business, this ought to chill you to the bone. A person who may some day lead your country feels she has a right to your profits. She feels she has a better idea for their use. And she feels that should empower her to take them.
I cannot remember when a mainline politician sounded so much like Karl Marx.
Now you may say “This only applies to Big Oil.” But how can you possibly know that?
Profit is profit. It comes from investment and reinvestment. It comes from taking risks with the investment. All businesses take great risk with time and money. Profit is the return when their investments are sound.
The profit you earn in your small business is no different than profit earned by Big Oil. You invest $100,000. They invest hundreds of billions. You take risks: Your location may be good. Or bad. Your product or service may prove popular. Or not. Competition may wipe out your profits and drive you into bankruptcy. Oil companies take risks: The oil they find may be too expensive to give them a profit. A Chavez or Putin may confiscate their investment.
You make a rate of profit. That is, a percentage of what you take in ends up as profit. Oil companies make a rate of profit. It is a lower percentage than newspapers and broadcasters earn. Good chance it is a lower rate than you earn, in your small business.
You lay your profit alongside what you invest. You ask: Is this rate of profit better than what I would have got if I left the $100,000 in the bank? Oil companies ask the same. That rate of profit - alongside the fortunes they have invested - is a decent rate. But nowhere near as good as in other industries.
Oil profits today. Drug profits tomorrow? Microsoft and Google profits in future? And how about your profits?
As long as your leaders feel your profits belong to them - simply because they know better places to spend them than they feel you do.... Why don’t you complete that sentence.
And while you’re at it, ask your partners how they feel about politicians grabbing the profits. The partners who invested in your business. Call them shareholders. For, after all, when politicians confiscate a company’s profits they take them from all the shareholders.
In fact, they would be taking money from shareholders of all public companies. By this I mean that theft such as this would drive millions of investors from the stock market. That would bring stock prices down for sure.
This theft would also drive your gas prices higher. If Big Oil sees its profits stolen, it will not risk the billions it does to find and deliver cheap gas.
Do you own a business. Do you own stock in any company? Do you own a mutual fund that does? Maybe in your 401k? Or in any retirement fund? There is an excellent chance you own stock in the oil industry - through one of the above. Hillary’s hands are creeping toward your money.
From Tom ... as in Morgan.
For more columns and for Tom’s radio shows (and to write to Tom): tomasinmorgan.com.