Thoughts by Richard Bleil
News today crossed my path regarding how upset many people are by recent profits of an oil giant. Corporate greed is not a new topic in my blog, and certainly not an uncommon topic of conversation. Even today an acquaintance at the grocery store that I frequent commented on her pay rate. As people struggle with ever-increasing costs of goods and services, pay raises are not keeping pace. Americans are making more money in salaries today, but the ratio of salary to cost of living has been steadily declining since the ‘50’s. Today it is reaching a critical point and we are the verge of major social issues as a result.
But oil company profits are in a separate category. If a company decides to raise the cost of their gaming system, we have choices. We can buy it anyway, or buy a used system, or decide that we don’t need a gaming system after all. But when gas prices go up, it affects everything. And when I say it affects everything, I mean literally everything.
When that game console price goes up, it’s isolated. The price increase doesn’t affect the price of the radio I might want to buy, or the price of the services to get my car fixed, but gas prices affect everything. When fuel prices go up, the price of utilities go up. The electricity that businesses run on goes up because they use fuels to generate that electricity. The price of delivering their products to the customers and stores will increase because the cost of gas for the trucks will increase. In fact, the cost of getting the raw materials necessary to make their products will also go up, and in turn, the companies will have to raise the prices of their goods to make that money back.
Certain industries are critical to the infrastructure of our, and other, nations. Fuel, banking, and insurance spring to mind, but I’m sure there are others. Sadly, some of these companies do have a monopoly, like natural gas, electricity, and water in a municipality are often without competitors. Some create their own monopolies, like fuel companies who clearly work together to set prices so it makes precious little difference which company a driver chooses.
Capitalism is built on the premise of free enterprise. If one car company charges what I feel is too much for the quality and style of vehicle I can go to another, but if every gas company sets their prices to within fractions of a penny from one another, then I’m not paying the best price created by the competitive process. Instead, I’m paying what I have to pay, with no alternative.
I have friends who will argue for the profit margin of oil companies. They’ll argue that it’s just capitalism and point out that their profits will increase with the GOP and cost of living. What they are forgetting, however, is that in these infrastructure critical industries, their gross profit margins contribute to inflation and decreased standard of living.
Communism doesn’t work. The theory ignores human nature and the ability, and willingness, of people to “play the system” to make it work for them at the expense of others. On some levels, capitalism does work, and yet even in this economic system there are people who play it until it is on the verge of collapse. There are some laws to help level the playing field, but the reality is that some types of industry need more regulation than others.
Those corporations that are critical to the daily operation and infrastructure of our society need to be, in my opinion, tightly regulated and more so than other companies, and these regulations need to be safeguarded from the greedy who own the government.
After Republican president George W. Bush brought the world-wide banking network to the brink of destruction, protections were put in place to prevent it from happening again. Then, Republican president Trump, as a favor to his wealthy friends, dismantled nearly all of the new regulations, and today major banks are failing and, again, we’re in a national banking crisis today.
We’ve had government regulated corporations before. AT&T was, for many years, the single phone company and basically an arm of the government, not unlike the US mail today. It wasn’t until a federal judge broke up AT&T in 1984 that alternative phone company options became available. Phone services today are becoming increasingly high, although it’s not exactly a fair comparison because of the increased data services included, and so far, the competitiveness of phone companies does give cheaper alternatives to the “big names”, but there is a good chance that will eventually fail. If they do, this service will also fall into an infrastructure critical service.