Exxon Mobil

Exxon Mobil announced "record" (depends on how you look at it; Exxon is far from the most profitable American company by any real economic measure) profits today, and leftist Democrats immediately jumped on that as a way to deflect voters from the INSANE refusal of Democrats to ALLOW (not subsidize) development of our own domestic oil, and other,  resources (offshore drilling, ANWR, oil shale, nuclear power, coal, etc).  Attacking Exxon will not reduce gasoline prices ONE PENNY (as Democrats know), but this is an opportunity for Democrats to DEMAGOGUE--what they do best (certainly THINKING is not their forte').

Let us state a truism:  One coumpany earning profits of 10 billion dollars is NO different from 100 companies earning 100 million dollars each, if the profit margins are the same.  Google, for example, is MUCH more "profitable" than Exxon, but not as BIG.  But it is fallacious to say profits are "obscene" when one company has a cerain profit margin on a LARGE equity base, while not obscene if 100 companies make the SAME total profits on the same profit margin, but with each having 1/100 of the equity base. 

Notice, however, taht this blog is almost always right.  What have I told conservatives for YEARS?  I have told conservatives that BIG MERGERS are a DISASTER politically for conservatives and the free market.  That is NOT because the profits of the "merged" companies suddenly become obscene when they are the profits of one company , instead of several.  It is because it gives LEFTISTS a chance to do exactly what they are doing:  DEMAGOGUE on the matter by attacking "Big Oil" or "Big Drug" or big corporations in general--giving them an easy argument that ONLY big government can counter these large corporations. 

Firtjer. tjere is NO reason to allow BIG MERGERS of healthy companies.  Exxon is a perfect example.  Exxon used to be SEVERAL seaparate companies, with adequate resources to compete on their own.  That included Gulf, Mobil, and several other very profitable, separate companies.  The present Exxon Mobil is the result of BIG mergers that never should have been allowed.  As stated, they are a godsend to Democrats.  Beyond that, however, there is NO reason to allow them under free market theory.  Free market theory assumes an infinite number of free market units, and that none of the units are big enough to affect the market by themselves, or in tacit ccombination with a few other big companies. 

I have told you recently, corretly, that T. Boone Pickes does not agree with free market theory  I have also told you that these big corporate empire builders, like those who formed the present Exxon BY MERGRE, do not believe in free market theory.  Too many conservatives do not truly believe in free market theory, becase they fail to recognize that BIG MERGERS violate free market theory by creating entities that are too BIG.  That is the real problem with Exxon.  It is NOT that Exxon makes such obscene profits.  Bill Gates' Microsoft was MUCH MORE profitable, and Bill Gates himself became RICHER than anyone connected with Exxon.  (I question, by the way, whether Bill Gates really believes in free market theory, but at least Microsoft did NOT primarily grow from MERGER.)   The problem is NOT "profits", but SIZE created by MERGERS that should never have been allowed.

It follows that the size of Exxon does not necessarily have anythng to do with the price of gasoline.  The price of gasoline might well be the same if Exxon were 10 separate companies, instead of one huge one.  But the size allows Democratic demagoguery, AND  it reduces the decision makeers and competitors (two key advantages of free markets over the CENTRAL PLAINNING in which T. Boone Pickens and leftist Democratts agree).  Ten companies instead of one means TEN decision makers (managements) instead of ONE.  It means TEN competitors instead of ONE.  Over the long term, that probably will have an effect on the price. Even if it does not, however, if you really believe in free market theory TEN separate decision makers representing competitive units are better than ONE.

Now are Democrats making this point.  Don't be silly  Democrats LIKE big corporations.  They have no interest in preventing corporations from merging.  They may DEMAGOGUE by mentioning it from time to time, but they are not serious  That it because they KNOW that the larger the corporation, the more leftist Democrats can DEMONIZE (demagogue about) the corporation.  That is what is happening now, and it is exactly what I have been telling you for more than 4 years (well before gasoline prices became a problem).   It happens in Big Drug, and everywhere else BIG MERGERS have created these huge corporations (for nogood free market reason, since the mergin corporations had more than enough assets to compete as independent companies).

I repeat (and you should know by now):  This blog is always right.  The whole distorted, miserable saga of Exxon Mobil has proved it again.  Think of how much better it would be for free market advocates if Exxon were still 5 separate companies!!!!  The profits would not be "record".  The villain would not be so convenient.  Nope.  Those mergers were a disaster for conservatives and free market advocates, and a godsend to leftist Democrats trying to DISTORT and DEMAGOGUE the significance of the profits.

By the way, do you want proof that leftist Democrats (not to mention John McCain) do not believe in free market captalism.  Consider their assertion that Exxon Mobil has an OBLIGATION to use its profits to benefit the public, the way DEMORATS (central planners all) are instructing.   Out of what "free market manual" does that socialist view come?  None, of course.  IT is a Democrat CONCEIT that profits of corporations, as well as wages of us all, belong to DEMOCRATS (the government, which Demcorats regard as the same thing), to be used as DEMORATS desire. 

The problem, of course, is that even these huge oil compniaes (who don't much, as stated, believe in free markets themselves) play into this by suggesting that they ARE acting in the "ublic interest", as if they AGREE that they have an obligation to do so. 

Free market theory suggests that the opporunity for PROFIT (the very engine that makes the thoery work) will entirce MULTIPLE decision makers to allocate resources where the opportunity for profit is greatest, simply to earn that profit.  This means that resources are automatically allocated where the public as a whole VOTES (with their pocketbook--more reliable than any political vote) that the resources should be allocated.  In this case, that SHOULD mean MORE DRILLING, except that Democrat CENTRAL PLANNERS have excluded the most promising ares from drilling.  Not that this free market allocation of resources does NOT rely on corporatiions acting in the PUBLIC interest.  In fact, the theory assumes that the private entities will act in their OWN interest, but with the RESULT being that the public interest in the best allocation of resources is advanced.  It DISTORTS the theory if businesses are trying to figure out what the PUBLIC interest is, rather than acing in their own, private interest, because that is again CENTRAL PLANNING rather than the free market at work.

And you wonder why I, as a conservative who believes in free market theory, get depressed.  You should at least not wonder where you will get accurate information.  Day in and day out this blog is proven right, even as to future predictions (such as the way leftist Democrats USE big, merged corporations for their own demagogic purposes).