*Gasp*

You mean, GM isn’t in healthy financial shape like the executives would love to have us believe? Color me surprised. We did not save jobs, we did not save a business, we merely leeched money off of productivity to subsidize an unproductive business making lousy products (if the products aren’t lousy, why did the company need a bailout?). The U.S. auto industry has become so bureaucratic and reliant on government it no longer serves the needs and preferences of the individuals. When companies work to please government and not to please people, you have corporatism – NOT a free market.

Ah, the beauty of government working with large corporations and trade groups to favor certain corporations and industries through legislation. Add regulatory burden on small businesses, monopolize competition (or “protect profits”) of corporations, and do it all through laws passed by individuals who have no understanding of the economy or business. Corporatism at its finest.

With legislation pending in Congress that could put a price on greenhouse-gas emissions, the energy-gulping chemical industry is trying to position itself to emerge as an unlikely winner.

Chemical makers are one of the biggest energy users among manufacturers, expelling about 5% of U.S. carbon dioxide emissions, according to government data. They face heavy costs under a proposed system to cap emissions that would require the industry to purchase permits to pollute.

But a so-called cap-and-trade system would also boost demand for some chemical companies’ products, from insulation to solar-panel components, because those products would help others cut back on the energy use.

“This is really our sweet spot,” said Calvin Dooley, chief executive of the American Chemistry Council, an industry trade group.

http://online.wsj.com/article/SB124416259816487393.html

“We can do without butter, but, despite all our love of peace, not without arms.  One cannot shoot with butter, but with guns.” — Joseph Goebbels, Nazi Germany’s Reichminister of Propaganda

Throughout time, governments have strong tendencies to simultaneously splurge on both domestic spending and the more sinister business of warfare. This is referred to as the “guns versus butter” economic model. “Butter” is synonymous with domestic spending, while “guns” is synonymous with military spending. As with any economic goods or services, there is always scarcity of labor, machines, raw materials, land, et cetera. Individuals find it very easy to understand that if you want to spend 100% of one’s resources on “butter,” no “guns” can be purchased or vice versa; there is always a trade-off.  Steel can be formed into either a refrigerator or a tank; it can not be used for both.
(more…)

In recent years profits have gotten a bad name from many people and politicians. Profits are said to take advantage of others, encourage greed, among a variety of other allegations. These concerns can be legitimate but often miss a crucial point.

Profit represents the reward for taking a risk. You wouldn’t start a business if you knew you weren’t going to make more than you would spend creating that business, would you? However, if you can increase your income more than your expenditures through that business, you’ll feel much more inclined to continue with the operation. Obviously, people cannot survive operating a business at a loss.

Profits do not come without work and risk. It is only possible to make a profit if you can offer a product or a service that people want, in an efficient manner. No matter how greedy you may be, in a free market you cannot survive without efficiently producing a product that has market demand. You cannot force people to work for you, you cannot force people to invest in your business, and you cannot force people to purchase your product. Your greed is limited to free and voluntary exchange.
(more…)