Excess Profits
I get a sour humor about the current discussion
about taxing excess profits of the oil companies (Nov. 2, 2005). Even
some of the Fox Network free market advocates, believe that oil company
profits are excessive - and they propose an excess profit tax.
How laughable! This is the proper action of free markets
- and if you don't like the results, then you are seeing a flaw in the
theory of free markets, not in the application of the idea.
Charge as much as the market will bear is the credo of free
markets. Of course free market are suppose to mean that unfettered access
to the market is allowed and the cost of entry is not so high that new,
alternative producers are kept out of the market. Those conditions are
not met, so we only have free markets on the charging side and not on
the competition side!
The common sense idea that most people have is that
the price charged for a product should be equal to the price to produce
the product plus a reasonable profit. But that is not the rule of free
markets where it's charge whatever you can get from the customer.
I'd like to know what Exxon-Mobils profit is per gallon of gasoline they produced last quarter. How much of the $2 to $4 we pay at an Exxon station goes to Exxon's bottom line?
