A Nation of Fools by Peary perry (www.pearyperry.com)
How the word ‘Profit’ get to be a four letter word?
The dictionary defines the word ... ‘profit’ in the following manner: “ the monetary surplus left to a producer or employer after deducting wages, rent, cost of raw materials, etc.: The company works on a small margin of profit.”
So how is it that our current administration sees the profits gained by the banking system as ‘excessive’ and ‘unacceptable’ and has decided to impose a tax on these entities? Well, excuse me, they didn’t exactly call it a tax, they referred to it as a fee or a levy. Which in my mind is the same thing. You can call it what you want, but any so-called fee, levy, fine or whatever… is in essence a tax . Pure and simple. If I want to go fishing, I need a fishing license, which is a fee to the government for the right to fish…I have to pay the fee which is a tax for the privilege of fishing. People who don’t care to fish do not have to pay the fee so they aren’t taxed for it.
Obviously none of us like to reward bad behavior and the banks certainly have fallen into that category over these last few months. However, to punish those who not only paid back any loans they received from the gubmint (government) and to have made a profit on top of their problems smacks of gubmint interference in free enterprise. Those of us who have looked at the root causes of the financial collapse know that gubmint policies (both Democratic and Republican) requiring loans to be made to subprime borrowers without proper oversight was the underlying cause. Hopefully those policies have been corrected and rules put into place which should prohibit the disaster we saw occur just recently. I certainly hope so.
If the banking industry managed to correct their woes and have monies left over for bonuses, as far as I’m concerned, good for them. For the gubmint to step in and make a decision that their profits were excessive and their bonus structure improper can lead us down a path that capitalistic countries should not want to travel.
How much profit is enough for any one industry? Who decides this in the future? Is it wise to let the gubmint mandate the percentage of profits anyone is allowed to earn? Is 5% too little and 10% too much?
Some years ago I was in Washington D.C. and was eating dinner…the guy next to me asked me what I thought about Bill Gates. I told him I thought Gates was an American hero. The guy said he thought Gates made too much money. I argued back with … “how much is too much?” He didn’t have a solid answer. Did Bill Gates help bring computers into nearly every home in this country? I’d venture he had a lot to do with it. Does his personal wealth hurt me in any form or fashion? Not that I’m aware of.
By levying a tax on the profits of banks in our country we will end up levying a tax on any and all of us. Profits in and of themselves are not evil; they generate more capital which in turn invests in more enterprises. This is a concept I find easy to understand and cannot for the life of me figure out why others have difficulty with it. The stock markets would have zero growth and collapse if all companies lost money or had no profits to share. Isn’t increased share prices the result of good performance? Why punish those who are doing good?
These banks or any other for profit enterprise will pass their extra charges (taxes, fees, fines..etc) to the consumer…which is us. If you buy a hamburger, the cheese is extra, banks will charge for their cheese. You want to return to the days of walking into a bank to cash a check or use the closest ATM? Watch that fee get increased. You and I will pay part of the tax, won’t we?
Sure we can move from one bank to another in search of lower rates and monthly operating fees, but for how long? If the gubmint decides to penalize all lending institutions who made a profit then where do we go when the fees to us are coming from all institutions, large and small?
Even more ominous is which industry will be next? Suppose they decide that your business or my business earns too much money, does this cause us to look for more ways to become more profitable and more efficient? I think not. No I believe if you take the profit incentive out of business and industry you will destroy the capitalistic society we currently enjoy. The alternative is to plod along like good little comrades and silently eat our cold gruel.
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