02 May 2008
Eeek! Exxon-Mobil posted record profits for the quarter! Help! Evil, cruel nasty capitalists are gouging the world's citizens. Congress and some democratic presidents are talking about hitting these firms with special, higher taxes - by the way higher profits always translates to higher tax revenues.
No one is talking about GM's $3.3 billion loss for this quarter. They are, after all, just more evil, nasty capitalists. They must be punished for their proliferation of SUVs and gigantic pickup trucks (not to mention their environment crushing HUMMERS).
The problem, as usual, is that these enterprises are made up of people responding to a very volatile market. We have never had so many "buyers" in the market at once. This is represented by growth trends in India, China, and other parts of the D&E (developing and emerging - the new euphemism for second world) world. When the American public finally gets a grip on basic economic principals, they will stop spending on perishable entertainment and start saving more - especially in the markets.
Wealth begets wealth, or in short, it takes money to make money. Hernando DeSoto has identified the best approach to ensuring success in developing economies is to make certain the people have access to capital. Loosely translated, they need clear title to the things they own or make. This enables them to leverage, trade and work their way from a subsistence existence to self-sustainability. Do a Google search for micro-loans. This is a very successful practice in which small groups or individuals are made reasonable loans in order to support some small business they operate. Often these loans are a few hundred dollars, and the returns have been stunning.
People do not need "fair trade" buying programs - which simply foster a single output economy (see oil). They need the flexibility and resources to adapt to their markets and thrive.
People also need to spend some time and understand the power of the markets - the uninformed tampering with is destined to bring unwanted results.