Wednesday, April 23, 2008
Capitalism works like this ...
On his syndicated radio program today, Nashville-based talker Phil Valentine asked the following question (and I'm paraphrasing here):
Why do oil companies have to charge the prevailing market price for their goods?
With oil companies taking in record profits, I'm sure a lot of people are asking the very same question. "Can't they just lower their prices to give all us Ordinary Joes a break?" they ask. Well, here's a newsflash for such-minded folk: Publicly-owned businesses aren't in business to give anyone a break; they're in business to provide goods and services the public at large desires and - AND - make a profit.
That said, corporate directors have one primary job: to maximize profits so that their company's stock increases in value. A company can't do either of those things by selling the goods it produces at below-market prices. If'n that sounds like a bad thing to you, well, direct your Web-browser to the Communist Party's site and click the "join now" button.
With that off my chest, I'd like to tell ol' Phil this:
Any CEO or corporate board member who proclaimed that he or she wished to provide the goods produced by his or her company at prices below what the market dictated would face an immediate shareholder revolt ... and he or she would soon be looking for another job. And that's why you ain't gonna see any oil company selling gasoline below what the market is dictating.
So there.
Why do oil companies have to charge the prevailing market price for their goods?
With oil companies taking in record profits, I'm sure a lot of people are asking the very same question. "Can't they just lower their prices to give all us Ordinary Joes a break?" they ask. Well, here's a newsflash for such-minded folk: Publicly-owned businesses aren't in business to give anyone a break; they're in business to provide goods and services the public at large desires and - AND - make a profit.
That said, corporate directors have one primary job: to maximize profits so that their company's stock increases in value. A company can't do either of those things by selling the goods it produces at below-market prices. If'n that sounds like a bad thing to you, well, direct your Web-browser to the Communist Party's site and click the "join now" button.
With that off my chest, I'd like to tell ol' Phil this:
Any CEO or corporate board member who proclaimed that he or she wished to provide the goods produced by his or her company at prices below what the market dictated would face an immediate shareholder revolt ... and he or she would soon be looking for another job. And that's why you ain't gonna see any oil company selling gasoline below what the market is dictating.
So there.
# posted by Joltin' Django @ Wednesday, April 23, 2008 
