Basic Economics/Supply And Demand.
If I sold 100 people a product for $1.00 with an 8% profit I would make $8.00 in profit from an investment of $92.00.
However If I increase the supply to 1000 and sold people the same product with a lower demand at the price of $.95 I would make a profit of $30.00.
I just increased my profit by lowering the price and increasing the demand. And I made an extra $22.00 in doing so! When you play this game on as massive of a scale with the oil industry YOU MAKE MILLIONS!
Taxing Profit
Now another follow up. After I made my $30.00 and the goverment taxed it by 55% I would be left with 13.5 dollars in profit left over. What Am I going to do to compensate for this? Im going to rase my prices to $1.90 if I want to make up for the lost profit. Who suffers from this? The consumer! Not me!
Taking a cut in Profit when the goverment taxes you more
What If I take the cut in profit? My shares would go down because people wouldnt be investing in my company. They wouldent invest in my company because they arent making money in my company. WHAT AM I GOING TO DO TO COMPENSATE? RAISE THE PRICE OF MY PRODUCT BECAUSE IF I DONT I WILL GO OUT OF BUSINESS AND THEN YOUR REALLY GOING TO HAVE A CRISIS! BECAUSE LOWERING THE SUPPLY ONLY FURTHER INCREASES THE DEMAND! INCREASING THE DEMAND WILL ONLY INCREASE THE PRICE FURTHER! Whats the other alternative? Firing Workers which would Lower output wich would increase demand which would raise the prices!
Cutting Taxes
Now lets say that the goverment cuts the taxes I pay to have equipment on goverment property in order to make my product! Lets say that the goverment charges me $0.10 to use this land to make my product and they cut my taxes by 50% and give me a tax break. After the tax break my product that did cost $0.92 to make now costs $0.88 to make! I then could lower my prices further, increase the demand, AND MAKE MORE MONEY!!!!! This would also increase my number of investors which would increase my output! Further lowering the demand!
Raising Taxes
However what if the goverment wants to raise my taxes? I would need to do one of two things. I could increase the price of my product. Or I could fire the people that work for me! Since firing the people that work for me will only lower our production and lowering production would cause me to lose money and stock holders, I have no choice but to raise the price of my product to maintain my current product output, profit, and number od stock holders that depend on me! This is necessary also to keep my company from going under which would greatly increase the demand and price of my product!
Capping Profits
But what about Obama's plan? What If they were to cap my profit at $60.00 and take everything that I made over $60.00? In other words I could be making a $90.00 profit but Obama would take away $30.00 of that because it is above the cap! What Am I going to do to respond to this? IM GOING TO LOWER MY PRODUCTION BY FIREING WORKERS AND SHUTTING DOWN FACTORYS! THIS IN RETURN WILL GREATLY LOWER THE SUPPLY WHICH WOULD INCREASE DEMAND! I WOULD THEN NEED TO FIRE EVEN MORE WORKERS BECAUSE THE HIGH DEMAND CAUSED THE PRICES TO GO UP WHICH INTURN GAVE ME MORE PROFIT THAN THE CAP ALLOWES ME TO HAVE! Why would I do this? Because Why invest and work to make $90.00 when im only getting away with $60.00? I WOULD BE LOSING MONEY ON THE BRINK OF BANKRUPTSY IF I DID NOT DO THIS! IT MAKES NO SINCE!! Would my stockholders invest in my company when the goverment caps all posibility of making even more money? Hell no they wouldent!
This crap is common since and basic economics! However most liberals in congress are lawyers that have never owned a business "that wasent subsidised by the federal goverment" and have no experience in the economy what so ever, so they have no clue what the hell they are talking about!
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06-22-2008, 07:45 PM
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