Corporate Profits - Are They Evil?

It's funny how no one complains about how much money Apple is making these days, even in a weak economy. Yet, you hear politicians, usually Democrats, whining about the profits that oil and drug companies make and of course the banks.

Last night I listened to an Illinois Congressman whining about how BP makes $62 million per day, and this oil leak in the Gulf is only going to cost them hundreds of millions of dollars, a drop in the bucket. He wants to keep BP from ever obtaining a drilling license again.

What the Congressman fails to mention is the risk involved in drilling for oil a mile beneath the water. There is never any mention by these politicians about the cost of developing a new drug, or the creativity our financial institutions need to have to generate new business.

So, its ok to make a profit, until that quest for profit adversely affects everyone. Let's look at a case in point. Due to some of the crazy banking regulations created in the 1990's under Clinton, banks were forced to offer loans to homeowners who had no business buying a home. An appraiser friend of mine related an interesting story for me a while back. He appraised a home in a not-so-nice neighborhood and his value conclusion was coming in way below the purchase price. He relayed that info to the banker, who replied, "that doesn't matter, I have to make the loan anyway." The bank was being forced to make shaky loans by over zealous regulators who wanted to be sure that home ownership was accessible to everyone. Banks were forced to take on these loans, which were then packaged with other subprime loans in a security sold to an investor, and voila, you have the subprime mortgage debacle.

So, here we are now, faced with tightening oil supplies around the world, yet the politicians here at home don't want us to tap into the resources we have in our own backyard. Yes, the Gulf oil spill is a disaster and unfortunate. Obviously, something went wrong there and steps need to be taken to make sure it doesn't happen again. I heard that Chris Matthews on MSNBC suggested that we nationalize oil. I think he should take a look at the former Soviet Union and try swimming in the waters where they have drilled for oil. Not very clean over there. Would you trust your government, which can't even run the post office, to operate a business like this efficiently? Doubtful.

What I don't hear out of these politicians is any concern regarding the 11 workers who were killed in the accident. Do they really think BP had that much disregard for their own employees? Sometimes accidents happen. They are painful for all those involved. But, we move on and try to learn from them. If the knee jerk reaction is to always try to lay blame and shut a business down, nobody wins.

In this case, however, where we shut down exploration and drilling in the Gulf, there is a winner...the Arab states. Is that what we really want?