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Why The Left Should Not Discourage Corporate Profits (Even Oil Companies)

10 August 2009 One Comment

I always find it odd how American Corporations are depicted as these evil entities that are killing America.  Corporations are popular targets for politicians looking to direct public outrage away from D.C. and Corporations are a logical choice.

Us Americans are always looking to blame somebody.  Rule number one of America is that it’s never our own fault.  Rule number two is that America’s politicians are also never responsible; they are always duped just like us!  Rule number three is that the blame should always fall on the party that seems to be in a decent situation, even if the reason for the better circumstances is a more strict adherence to discipline and responsibility.

If our gas prices are high, it’s definitely the oil companies faults (it’s not our insatiable consumption of fuel for our SUVs nor the government’s unwillingness to explore domestic production).  If our health care costs are high, it’s definitely the insurance companies faults (it’s not the fact that the majority of us have to pay for the lack of payments from Medicare or other government insurance programs) and lastly, if we borrowed a bunch of money for a home we can’t afford, it’s definitely the banks faults (I was drugged and forced to sign that document – it wasn’t the fact that I was too caught up in thinking about those fancy granite counter tops, I promise!).

Notice a trend?  Oil companies, health insurers and banks.  Corporate entities.  Those evil Corporations should just be abolished!  Oh wait, we just bailed most of them out.  Well, we should bail them out and then get rid of them!  Wait, err…  Now I’m confused.

Why You Should Care About Corporate Profits

Ok, get rid of your emotional reaction to what I just said and listen closely.  First, Corporate profits create jobs.  Corporations employ a huge number of Americans.  Now, I know what you’re going to say… You’re about to say that those companies should stop keeping so much profits and instead pay their hard working employees more!  Well, they could but that would hurt the bottom line.

Now, why should you care about the bottom line?  Do you have a 401(k)?  Or any sort of retirement fund?  How about a pension?  Do you have any money in the stock market?  Well if you answered yes to any of those questions, corporate profits are very important to you because they drive stock prices.

Getting back to our example Corporations, there are multiple banks, health care companies and energy companies in the Dow Jones Index of 30 companies.  Expanding to the 500 companies in the S&P Index, we have a great chunk of companies (if you have the exact percentages, leave a comment).  So here’s the deal… corporate profits go down, so does the stock market and so does your retirement accounts.

How many times have we heard the comparison about how a teacher is so underpaid compared to oil executives, mortgage broker, Alex Rodriguez, or fill in the blank with your favorite target.  Most states have pension funds for their public school teachers and what do you think is in the pension funds?  That’s right.. U.S. stocks.  Same thing for other government workers and countless of retirement accounts of every day Americans.

Corporate responsibility, ethics, fair treatment of workers are all important, but equally important are corporate profits because without them, our savings and retirement funds are going to diminish quickly.  And yes, many of you probably have exposure to oil companies, so the next time Exxon announces record profits, perhaps you should hesitate before launching an anti-corporate tirade to your buddy.

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