Wednesday, June 6, 2007


RealClearPolitics has a great article entitled "Why Is Profit a Dirty Word?".


"At a recent press conference Sen. John Kerry was upset as he snarled, Oil companies in America are reporting record profits. Record profits.'

"When did profit become a dirty word?

"I wish the oil executives would face the media. They could say something like:

"'What are you complaining about? What do you think we do with our profits? Buy fancy cars and homes? Well, we do, actually, but nearly all the money goes to looking for more oil and following environmental rules that you want us to follow. You should want us to make more profit. Anyway, we make less profit per gallon than your beloved government takes in taxes.'

"But Big Oil never shouts back at the reporters. I guess I can't blame them, given the hostility of the economically ignorant media.

... [Explaining how gas is not at record highs once one factors in inflation.]

"Even if gasoline prices set no record, Congress surely set a record for inanity. What else are we to say about an anti-'gouging' bill passed last month by the House that would make it a crime to charge "unconscionably excessive" prices, 'tak[e] unfair advantage of unusual market conditions," and "increase prices unreasonably' during an emergency?

"Please. Lawyers will get rich debating vague words like those. Laws are supposed to be clear so we'll know in advance what's legal and what's not. But there's nothing clear about those 'crimes.'

"That's not legislation. It's legislative posturing. Considering the perverse incentives of electoral politics, I'm amazed this bill got only 284 votes.

"And Congress should know better. After Hurricane Katrina, Congress had the Federal Trade Commission investigate price gouging, and so the FTC studied price spikes going back years. But it found 'no instances of illegal manipulation.'

"If the politicians do enforce anti-'gouging' rules, it will be akin to capping prices, and we tried that before. It was a disaster. Drivers had to wait in long lines, and some couldn't get any gasoline. Only when price controls were lifted did supplies rush in, and only then did prices go back down.

"Markets don't work? That's a myth.

"Why did prices spike in recent weeks? It's just supply and demand. Demand is up 3 percent, while supply is up just 1 percent.

"And gasoline is still a bargain."


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