Protesting Gufus
The Exxon shareholders meeting held in Dallas today is the latest opportunity for economic gufus (or gufusses, if you prefer) to demonstrate their practically omnipotent ability to ignore reality. The Dallas Morning News describes the context of the meeting and mentions some of the conflict here.
Protesters believe gas prices are too high. Here’s the reality. When gas prices are too high, people will stop buying gas–or at least buy significantly less of it. And as the demand goes down, so will the profits of the companies selling it. If people are willing to pay $4/gallon to drive to their Memorial Day weekend getaway, then gas prices are not too high for them. If a man takes his car to work every day instead of the bus, then gas prices are not too high for him. And when he starts taking the bus instead of driving–that is, when all of the men like him begin taking the bus instead of driving, then prices will come down to the point where he and all his friends are once again enticed to spend their money on gas. It is not a conspiracy. It is an economic reality. (And by the way, those claiming that international forces are unduly depleting supply can complain about how much pressure it puts on American pocketbooks when they face the pressure put on an Indian or Kenyan who earns an annual salary worth about 75 gallons of gas per year–or much less.)
And here’s another reality. The oil companies have profited, and that fact is good. Profit is good. The profit-motive is good. (Profit is not equal to greed. Profits, once earned, can be used just as altruistically as egoistically.) What profits indicate is not that a company or person is greedy. Quite the opposite. Profit is an indication of how much an economy owes the person who holds the profit. Bill Gates’ billions are an indication of what everyone else owes him for creating a product which benefited them so much they were willing to go in debt to him. Debt? Yes. The money he has is simply a marker of how much the economy owes him for what he put into it without taking the equivalent amount out of it yet.
When a man complains about profit he is complaining about the benefit he received from the profit-maker. That’s the reality.
So here’s what the protesters are really saying: “You should give us your product for less than it’s worth in this economy even though our protesting proves its worth more to us even than you are charging right now.”
Tags: Culture, Economics, Free Market, Politics
[...] same issue about economics and the free market arose about oil prices, and is discussed in this previous post. The ideas are simple. But apparently, not very many people have thought of them lately. So [...]