Whatever Are We to Do About “Profiteering?”
Posted on May 3, 2007 by Robert Ringer
Just when you find yourself agreeing with Bill O’Reilly on a few issues, he blows it by getting on his populist soapbox and sounding like he’s addressing a protest rally in front of the Lincoln Memorial. When he starts ranting about oil companies being guilty of “price gouging,” “profiteering,” and “windfall profits,” he comes across as the reincarnation of Vladimir Lenin.
Roger Ailes should hire someone to educate O’Reilly on the connection between freedom and free enterprise. You cannot preach about liberty and, at the same time, babble about limiting a company’s right to make as much profit for its shareholders as possible.
The other night, O’Reilly outdid himself when he had Chuckie Schumer, Hillary’s partner in mischief in New York State, as a guest. Schumer is the consummate politician — meaning, of course, that he is without shame.
With his infallible political finger always communicating to him which way the winds of discontentment are blowing, Schumer’s standard answers all get back to more regulation and higher taxes. So I wasn’t surprised when, in response to O’Reilly’s grudgingly admitting that “what the oil companies are doing” is probably not illegal, Schumer predictably responded, “It’s probably not illegal now, but we have to change the law.” Nice.
Unfortunately, conservative radio and television commentators insist upon offering the same old (though true) counter-arguments: Oil companies aren’t responsible for higher gas prices … the industry as a whole earned only 9 percent on sales last year … the U.S. doesn’t have enough refineries … the Big Five petroleum companies invest billions annually in drilling for new oil … etc., etc., etc.
But all these arguments miss the point: Customers do not have a moral right to any gas or oil at any price, but oil companies do have an absolute right to charge the highest prices they can possibly get for their products.
If you own a restaurant, do you think the government should have the right to limit what you can charge your customers? Most would argue that people don’t need gourmet restaurants, but they need gasoline.
This, however, is a false premise, for at least two reasons. First, “need” is a subjective word. When I say I need something, what I really mean is that I want it. Second, just because I say I need something doesn’t give me the right to take it from someone else.
In a free-market economy, you don’t punish companies for being successful. If that’s the name of the game, the government should go after Google, which has a profit margin that’s about three times that of the Big Five oil companies. Where does it stop?
It is not just a company’s right to charge whatever the market will bear; it’s every company’s absolute duty to do so for its shareholders. Sadly, a large percentage of the population will never be able to accept, or even comprehend, the free-market premise that the primary purpose (some would argue the sole purpose) of a company is to make as much profit as possible.
Interestingly, in order to accomplish that, companies have no choice but to curb prices when consumer resistance rises. Consumer resistance is an entirely different matter than customers whining and complaining to politicians to use government force to bring about prices that they believe are “fair.”
Which is why even a monopoly cannot charge any price it wants to, and why new competition is always hovering on the horizon with better, less-expensive solutions. For example, in the energy business, there is ethanol, battery-powered cars, and Canadian sand oil, to name but a few potential alternatives to fossil fuel. Adam Smith laid all this out some 230 years ago in The Wealth of Nations, so it’s not like it’s a modern-day revelation.
The fact that gas and oil prices continue to rise proves only one thing: Notwithstanding their outcry of discontentment, consumers have not yet experienced enough “pain” to curb their use of gas and oil. But at some price, they will. And that’s when gas and oil prices will stabilize, or even drop. It’s called supply and demand — a smooth-working, natural mechanism that the socialist mind cannot comprehend.
O’Reilly keeps telling his viewers that he’s looking out for them. Maybe so. But when he spews out Bolshevik chatter normally reserved for college kids with virgin brains, he insults his audience’s intelligence.
C’mon, Bill, this is Liberty 101 stuff. Spend some quality time with the good guys and gals at the Cato Institute or the Heritage Foundation, and you’ll be amazed at how it will force you to be consistent in your thinking on the all-important subject of liberty. After all, you don’t want to come across to your audience as a pinhead, do you?
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