Last July, I watched a mine operator tell a crowd here in Birmingham that he was quitting because of the attitudes of regulators and the public toward the work he did. Wednesday, I learned that six congressional Democrats are trying to make another part of Rand’s book come true. They’ve proposed a Reasonable Profits Board — to decide how much money oil companies are allowed to profit. The market clearly isn’t good enough for these looters and moochers.
This group of economic illiterates is led by U.S. Rep. Dennis Kucinich (D-Ohio). They want a board — completely appointed by the president — to set a target for what a “reasonable” profit would be for oil companies. Any profit that’s slightly more than that would be taxed at 50 percent of the “excess profit.” If a company’s profit reached more than 105 percent of the allegedly reasonable profit, 100 percent of the “excess profit” would be taken as a tax. The bill is called the Gas Price Spike Act.
There’s no such thing as a “fair profit” or a “reasonable profit.” Those things are determined by one thing and one thing alone — the price point at which a willing buyer and willing seller can come together. If there’s a profit at that point, the seller has an incentive to produce more of the product. If there’s not a profit, the product isn’t going to be produced, because there’s no incentive. People who naively believe they can regulate profits are simply trying to regulate prices from the other end. It won’t work — and there’s no rational basis on which to decide what is “reasonable.”
What should we compare this to in “Atlas Shrugged”? I haven’t read the book lately and don’t remember the names of all of the boards and bureaus the government set up in the story. I do know that each one was more unsuccessful than the last — and each produced more unintended consequences than the last. The idiocy produced by Kucinich and Co. would similarly fail and would similar cause consequences the these Democrats don’t yet foresee.
By the way, ExxonMobil makes an average of 7 cents per gallon profit on gasoline. Government gasoline taxes averaged 48.1 cents per gallon in 2011. Now tell me again who’s taking too much money.
The only optimistic thing I can say is that the bill doesn’t seem to have advanced beyond the proposal stage. I doubt it will. Well, there is one other positive thing. Kucinich lost his primary election last month, so he won’t be around to try to drive us any further and faster on the path to ruin. The bill’s other sponsors are U.S. Reps. John Conyers (D-Mich.), Bob Filner (D-Calif.), Marcia Fudge (D-Ohio), Jim Langevin (D-R.I.) and Lynn Woolsey (D-Calif.).
I just wonder how long it will be before someone introduces a bill to enact the Anti-Dog-Eat-Dog Rule. Are Democrats cribbing their economic proposals from Rand’s book today? It’s appearing more and more that way.
Note: A hat tip to reader Kathy Freeze for bringing this incredible story to my attention.