Of all things championed and loathed by my friends across the aisle, I find none so fascinating as their pure, raw hatred for capitalism. And this, despite the fact that most of them receive their livelihood from companies engaged in such. In fact, on the entire planet there exist only two options for an individual’s provision. One may sell his knowledge and skills in exchange for food, clothing and shelter (in other words, engage in capitalism) or, he may simply take such provision from society and depend upon someone else to contribute on his behalf.
The reason for the left’s angst against all things capitalistic remains unclear since it boasts no root in reason or logic. Apparently, they see capitalism as the enemy to something they call equality regarding which, if pressed, they cannot even come up with a workable definition. For instance, they want racial equality. Really? Imagine, if you will, T. Lee equal to say, Lebron James. Do they really think Lebron wants to be some pudgy little white guy who can’t dunk? They want men and women to be equal too. Really? I have to say the first time I saw Scorch naked, I was real glad we weren’t equal. And I’m always amused at people who would eliminate hiring discrimination based on sex, but want to legalize prostitution…but I digress.
In general, three elements make up the concept we call capitalism…investment, risk and reward. The term ‘investment’ includes time, energy, training and monetary investment. ‘Risk’ refers to the degree to which the investment may be subject to forfeiture. You might come out ahead or you might lose whatever you invested. ‘Reward’ is the payback one may reasonably expect in return for his investment, factoring in the varying degrees of risk associated with the investment.
One form of investment is savings. Right now putting $25,000 into a certificate of deposit will generally give you a return of just over 1%. The return is very small. In fact, if you factor in inflation you end up with a net loss. However, the risk factor is also very small. When your CD matures, your money together with accrued interest will almost certainly be there. Other savings instruments, like treasuries, mortgage-backed securities, stocks…these all offer varying rates of return…generally from 0-10%…with varying degrees of risk. There’s an apartment building here in Watonga that will return about 20% annually to whoever buys it. Now that’s a great return but the risks are also relatively great.
Oil companies generally operate on about an 8% profit. Though not in a technical sense, profit equates to ‘return’ in that it is the ‘reward’ for one’s risk and investment. This 8% is a low return relative to the egregious amounts of investment capital necessary to operate an oil company. The risk factor is equally formidable. The relatively small return is made up for by the huge volume created by operating in a global market, so the dollar amounts appear huge.
Those on the left cry foul over the “huge, record-breaking profits” being reaped by the big evil oil companies, demanding they be excoriated by confiscatory taxation and punitive regulation…for a paltry 8%. Furthermore, the left insist that the federal government stop subsidizing oil companies to the tune of 4 billion dollars a year. Hmmm…
The US government does indeed invest about 4 billion dollars a year in oil companies…sort of. Much of this “investment” comes in the form of “tax breaks,” which just means the government is NOT confiscating that money from the private sector…but I’ll cede the point and call it a government subsidy even though it really isn’t…again, I digress…
Now, let’s see what the government gets in return for its investment. According to the American Petroleum Institute (API) the oil industry delivers to government coffers about 86 million dollars…per DAY. That comes out to roughly 31.4 BILLION DOLLARS ANNUALLY. Now, lets see here…that comes to…uhhhh…mmm…an annual return of…800%.
So bastardize the oil companies for their paltry 8%, demonize them and punish them for their efforts, and DAMN the government for making a 4 billion dollar investment every year that yields an 800% return, and that further, “supplies most of America’s energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.” So the liberals think we should increase that 800% return by reducing our investment and expecting the same result….but shame on big oil for their little bitty 8%, let’s go ahead and reduce that. Several words come to mind, but none that I can use here.
Liberals. They hate capitalism for bringing an 8% return to big oil, yet they just aren’t satisfied with a mind-blowing 800% ROI for big government, even with the added benefit of millions of jobs and trillions of dollars invested in energy projects. The truth is, a 4 billion dollar investment that returns 31.4 billion dollars is one that needs to be made year after year after year. It’s the 500 million dollar investments in bankrupt solar panel companies that need to stop.