Sunday, July 27, 2008

Real Windfall Profits

How about a tax on these windfall profits ?

Or what was the cost of creating these profits. Is this not an unfair windfall profit ?


Phelonius said...

My understanding is that a windfall profit is a profit made on an enterprise in which one's self or one's corporation had little to do with creating or producing. A sort of left-handed comparison would be city property taxes. Those are profits in which the city has merely to claim the right and then exact based on a civil contract.

So, to be totally fair, if Obama actually wrote that drivel that people bought, then it is not really fair to call it a windfall profit. If somebody else wrote it, then that is possible to label it as such.

Never mind that, though, as it amuses me to no end that the great hater of capitalism and free trade has made a small fortune based on the capitalist production of a book for the sole purpose of making a profit. Who woulda thunk that?

As far as Hollywood goes, there is nothing wrong with them producing a product that people willingly buy in huge dollar amounts. That is not a windfall either, since it it is based on things that they actually produce for consumption. That is the great power of capitalism, and the juicy part of selling to an audience that is sometimes less than discerning about what they are consuming.

Likewise, Irving, TX based EXXON Corp. just made record profits based on a product that is in high demand, and the world markets sets the price. I have no problem with their making a profit like that in the slightest, since they have basically had their hands tied for increasing the production of that product by the federal government.

IOpian said...

This is true and it comes from colonial times when a storm would blow trees over on a landowner's property by an 'act of God' and the owner could sell the wood beyond statutory limits placed on lumber. So it came to be known as a windfall profit.

In the 70's it was imposed more as an excise tax on profits made by price disparities as prices rose dramatically due to the Arab oil embargo on the same expenditures.

I think imposing a tax on this kind of price disparity caused by government policy is unfair. Those that caused the disparity should not profit from the mess they created.

However, in our society it is taken by the average citizen to simply mean excessive or obscene profits. This is exemplified by Obama's use of the term 'unfair' when he proposed imposing this tax again to his base.

So if he is going to use it that way it is only 'fair' to criticize others of his ilk making excessive profits.

Phelonius said...

Well it does seem to me that lately anything that looks like profits is supposed to be a bad thing. The irony is just sickening when you consider who pays for what in this country.

They keep getting all over EXXON, when in reality they are a small fry in the world economy of oil. One irony is that if we let EXXON do more domestic oil production, then their competitors are likely to restrict production to keep the price high, and as a result EXXON could still gain huge profits on every barrel of oil. What makes me happy about that scenario is that people in the states would also benefit and that money would stay here in the US and re-generate for goods and services here. Personally, I do not think it is so bad if the people of Alaska get the net revenues in part rather than out-sourcing and letting the people in a place like Yemen or Kuwait have and use all of that money.