The Economic Illiteracy of Liberalism

Hillary Clinton and Barack Obama, on their most fiscally lucid day, are economic illiterates. And will continue to purvey their nescience of economic voodoo into their administration if elected to the presidency. All the while trying to convince a thriving nation that it is in the throes of dystopia.

If you are so naive, or blinded by advocating change void of any discernible reason for change, to subscribe to the droning nomenclature of the liberal faction of Congress, or more specifically, the two Democrat presidential nominees, about the unfairness of the oil company’s profits, perhaps your system can be eradicated of this foolishness with a sizable dose of education.

Hillary Clinton and Barack Obama apparently have a sincere loathing for the oil and gasoline industry. They both have designs, albeit dissimilar in nature, to undermine a classic capitalist industry.

Clinton, in her best Bolshevik comportment, believes that oil company profits are the property of the government and are being selfishly distributed to the company’s shareholders. In a speech to the Paul’s of the Peter and Paul equation, she articulated the following to a horde of liberal partisans on the eve of this past Tuesday’s primary: “We have a choice, we can choose to have you continue to pay the federal gas tax this summer or we can choose to try to make the oil companies pay it out of their record profits.” She was quoted earlier this year, after the oil industry as a whole reported their record $150 billion in profit for 2007, “I want to take those profits and put them into an alternative energy fund that will begin to fund alternative smart energy alternatives that will actually begin to move us toward the direction of independence.” She has as recently as this week, stated that she, if elected, will break up the OPEC cartel. To the discerning eye, the OPEC oil cartel’s modus operandi is indistinguishable from the labor unions that Clinton is so intimate with.

Barack Obama has a different schema to pillage the oil company’s profits. With staying true to his nonsensical rhetoric, he has chosen the arbitrary number of $80 per barrel of oil, and proposes to tax the oil companies 20% on the price above this obviously random benchmark. It is evident that Obama believes there is a price gouging conspiracy within the oil industry. The fantasy that he harbors, believing the U.S. oil companies have a dial at their disposal which they can turn, on a whim, that will summarily adjust the global price of oil–oil which they did not produce–is self evident. He also wants to resurrect the failed windfall profit taxes, circa 1970s, and apply it to the oil companies. His plan is more concrete than Clinton’s as he intends to charge the oil companies $15 billion, using his 20% racketeering methodology, based on last years profits. As with Clinton, Obama has not presented a plan designating which oil companies would be taxed and how the filched profits would be distributed and for exactly who’s benefit.

As is standard fare among demagogues, Clinton, Obama, and the rest of the liberal congress, need you to believe that at the apex of each oil company, exists a J. Paul Getty sitting in an ivory tower personally amassing all those billions of profits, with the exception of the company’s upper executives, who share in the unclean profits, all the while thumbing their noses at the American citizenry. This liberal concept of oil company ownership and profit distribution vis-a-vis the reality of ownership and who actually reaps the benefits of the profits, is as starkly contrasted as white and black.

Who owns the oil companies and who is profiting from their success? If you are an American citizen with a retirement account, you probably own an oil company or companies. 98.5% of oil company stock is owned by IRAs, mutual funds, pension funds, individual stock holders (excluding oil company employees). This leaves 1.5% of the oil industry owned by corporate management. To be a working class citizen, is, according to liberals, a misfortunate existence of which no pride can be enjoyed because other’s financial fortunes are greater. And, according to liberals, this position in life begs for a government to protect you from the iniquitous oil companies, which if you have a retirement account, you probably own and are benefiting from more so than other investments in your retirement portfolio. 100 million people in the U.S. with incomes less than $70 thousand per year own oil company stock in one of the forms referenced above and are creating retirement wealth, thanks to the oil company’s record profits, yet their crusaders want to take away this gambit of a secure retirement without rolling the dice on Social Security.

The amount of $150 billion must be disregarded in the respect to the oil industry’s profit margins. The oil industry averaged approximately 8.3% profit margins for the year of 2007. Contrast that with the following profit margins: pharmaceuticals 18.6, software, etc. 17%, household products 11.3%, insurance 1.7% telecommunications 9.6%, food, beverage and tobacco 9.4% and real estate 8.9%. This could only be seen as gouging from the perspective of an economic illiterate.

History is a wonderful teacher for the intelligent to prevent repeating the same mistake twice, but to the uncomprehending ideologue, there is never a lesson to be learned. The windfall profit taxes that Carter instituted in the 1970′s, had the presumed economic effect that logic would expect, and history has demonstrated, that a liberal economic policy would produce. One could expect no other result unless they share the same economic illiteracy that Carter possessed, and currently shared by Clinton, Obama, and the liberal faction of Congress.

Carter’s Crude Oil Windfall Profit Tax Act taxed the oil companies 70 percent on the difference between a market-determined price of a barrel of oil and a much lower arbitrary price set by the U.S. government. Before Ronald Reagan ended the windfall profit tax, the tax had pilfered $82 billion of oil industry profits that could have been used for exploration, or the building of more refineries. Not one penny can be directly accounted for after Washington took possession of the profits. Other effects, other than the lost profit, 1.6 billion fewer barrels of oil were produced within the U.S.; the price of a gallon of gasoline rose sharply; the U.S. dependency on foreign oil rose 18 percent during the era of the windfall profit tax. That is the economic policy that Clinton, Obama and the liberal faction of Congress is offering a country teetering on a recession.

Punish the oil companies. For what, prey tell? What possibly can the oil companies do? They are severely limited on where they can drill for oil–because of Congress–they have been forbidden to build new refineries since 1975–because of Congress– they cannot lower the demand for oil; they cannot reduce their costs (which can only increase if forced to pay the federal taxes on a gallon of gas which is twice the profits of the oil companies).

The only thing that surpasses the abhorrent condescension of the economic snake oil the two Democrat mountebanks are selling and the dissimulating as gunslingers, hunters, champions of blue collar America, are the legions of economic illiterates who are begging to purchase said snake oil for the sake of change, yet simultaneously being void of any idea of what would change and to what.

Posted to Politics | Comments (5) | Email This Post | Tags: Barack Obama, Hillary Clinton, Oil Companyh profits, windfall profit tax