Rossputin.com Rational Thinking About Our World

At a meeting of the Joint Economic Committee, Senator Chuck Schumer (D-NY), chairman of the Committee, frothed at the mouth with the sort of rhetoric which should make all American entrepreneurs shudder.

Quoting from a MarketWatch story on the hearing:

"It isn't clear that we have [don't] anything that can be remotely called competition," said Schumer, chairman of the committee. If there were competition, "wouldn't these companies be investing in new production rather than sending back the oligopolistic profits back to shareholders? He said ExxonMobil, for instance, had spent $29 billion in share repurchases last year and just $20 billion in investing in production.

While there may be a real argument about whether the refining and gasoline marketing and transportation markets are truly competitive (I believe they are almost certainly not as competitive as I'd like, but they are also not a collusive cartel), the idea of a Senator complaining about what a corporation does with its profits is outrageous.

Schumer complains that ExxonMobil does not invest enough in new production, but how do you think he would vote if someone proposed a new refinery anywhere in his state? To a degree, our refinery capacity nationwide has been hampered by over-regulation and the type of fear that has usually been reserved for nuclear power plants (another thing we need more of). In addition, our refineries have become more efficient, so that even without adding refineries, our refining capacity has increased substantially in the past couple of decades. Still, a couple more major refineries would no doubt be a good thing for the country, and a good thing for Exxon or any other major corporation to invest in if the government weren't always in the way and so likely to interfere in their business once the refinery is built.

But beyond getting into the nuts and bolts, literally speaking, of oil industry infrastructure, it is truly maddening to hear a politician argue that a company's shareholders, i.e. its owners, should not benefit from the company's profits (i.e. by dividends, or by higher stock prices due to share repurchases and lower numbers of shares outstanding.)

If it were a politically popular business or a politically popular company, can you imagine a Senator saying that the owners should not profit from its success? Can you imagine a Senator saying that a politically popular company was somehow not pulling its weight by reinvesting "only" $20 billion dollars a year in its business?

This attack goes right along with politicians' other disgusting behavior in recent years relating to oil companies: Trying to force them to renegotiate contracts because the government made a mistake, threatening Exxon if it did not stop supporting a think tank which is highly skeptical of human-caused global warming, and today's outrageous bill in the House which makes gasoline "price gouging" a crime...a crime which could only be found by Orwell's Thought Police (or today's Democratic Party). Particular amazing is that the bill passed with 2/3 of the House, meaning many Republicans signed on to it...just adding to the reasons that voters have found the GOP and the Dems fairly indistinguishable, at least when it comes to domestic policy, in recent years.

The movement by Congress to attack, threaten, and punish oil companies, their management, and effectively the tens of millions of American who own their stock is not just wrong, it is truly dangerous. It represents everything that is or can go wrong with government, and why we must keep government as far away from entrepreneurs as possible. Chuck Schumer would have made Vladimir Lenin proud yesterday.