Before we go into anything in depth, I want you to take a look at your own paycheck. For illustration, I’ll do one:
Gross (what you earn): $1,000.00
Net (what’s left after taxes): $ 650.00
Still looks pretty good; especially if you add a bunch of zeros on the end.
But wait, you aren’t done yet. You have to pay for utilities, a baby sitter, couple of loans, cars, etc.
So, when all is said and done, let’s say you have $100.00 left. With that you need to fix the roof, buy food, buy gas for your car, and maybe put some in the bank for a rainy day. That $100.00 is known as your profit margin, and in our little example here, that is 10% of your gross pay.
Now let’s take a look at the Big & Evil that we, the little people, always have to have, according to the government. These are those Someones keeping us down; you can pick your favorite whipping-boy here.
Big Bad Insurance Companies – car, home and health. Am I giving these guys a pass? Not at all; but what you don’t know is when various politicians throw out those huge numbers, 99.9% of the time those huge numbers are the GROSS. That said, most of the time insurance companies have some pretty dandy net profits, too; at least until something bad happens. For example, a hurricane hits Florida; the coast is usually the hardest hit, it usually has the most expensive homes, cars, etc. and Big Buck$ go rolling out so those folks can rebuild their houses. In the exact same spot. And YOUR insurance rates go up. But just let an insurance company try to place some restrictions on what they will and won’t insure. The law suits fire up and the politicians start yelling to the roof tops about how “big insurance is screwing the little guy”.
Big Bad Oil – especially Exxon! Heck, Exxon rules the world, doesn’t it? It sets those hideously high oil prices to rape the “little people” because Exxon rules! Well, except when it doesn’t. Exxon is number 16 on the list for size and oil reserves; BP and Chevron are lower than that. Oil prices are set on the world market by investors and it is “usually” based on supply and demand. Except for that last big run that no one has quite been able to explain yet; however, Exxon is not allowed to play the market and, believe me, if it ever did THAT would be major news. In contrast, there are no such rules for OPEC or other “state run” oil companies who are all much larger than Exxon and whose countries are absolutely dependent on oil for revenue.
Oh, here’s a little tidbit. Exxon’s PROFIT MARGIN is 8-10%; please see paycheck above. To put this in perspective for you, electronics, clothing retailers and others operate at a 15-25% profit margin.
Tidbit #2: when they talk about the USA consuming 24% of the world’s energy, what they don’t tell you is that “per capa” use means individual energy consumption compared to other industrialized countries with about the same wealth, but smaller populations. Guess what? Our “per capa” usage is just about the same.
Let’s look at Big Bad Pharma, too (pharmaceutical companies). It costs millions of dollars, sometimes billions, to bring just one new drug to market. First is the Research and Development phase, then come the safety trials, then all the jumping through hoops with the FDA, and last, but not least, of course and inevitably, the law suits. I am actually amazed that any new drugs are even developed in this day and age. I can just about bet that if all this regulatory, law suit crap was going on way back when that penicillin would have never made it out of the gate. Ever think about that?
Bottom line here: are all the above companies perfect? Heck, no; they are run by humans and, this may be another real shocker to you, they are run for PROFIT. Yep, a profit! And better yet, the more profit they make the more folks they hire; you know, those “‘little people”. And some of those companies actually have profit sharing plans.
Wow!
Yet in this day and age it seems that many folks think businesses are here to provide jobs. Wrong. People start business in order to make money. They take the risk, put their own money at risk, and if they are very,very lucky it works. Most don’t, but jobs for the “little people” is just a nice benefit if it does work. They do not owe you a job, and to be perfectly honest they don’t owe you any of their profits, either. Hint: the day companies are ordered to share the majority of their profits with their workers they will leave and there isn’t a law that can be made that can stop them. Call them greedy if you will, but how greedy are you?
One other thing about the big, bad and uglies noted above is that they employ loads of folks that buy stuff; “little people” that buy cars, houses etc. All those things that help this economy churn along. Big corporations, big business, or Evil Greedy Folks when they make money, they spend money and put money into the economic engine. Call it trickle down if you want but has money ever trickled up? It is much much harder to start a successful business now, thanks to government regulations, but hey, if you want business profits then go get yourself some stones, hock or mortgage everything you own, and give it a go; that’s how those big, bad, ugly guys got started so have at it.
Evil investors and evil stock market players? Well, hello…if you have a IRA, 401k, or just about any type of retirement or employer stock option plan YOU ARE AN INVESTOR and whoever handles your IRA, 401k, etc. is an EVIL stock market person. And you know what is going on right now? Me, you, and other small investors are bailing out; WE are actually driving the stock market. Hey, I’m right there with you…trust me. The problem is that stocks are vital to companies both large and small because it is part of their operating capital. They use that money to expand and (drumroll, please) they use it to BUY STUFF. When they make a profit it means they pay out more in capital gains and dividends. Are you still with me here? If they raise the tax on capital gains and the dividends tax then YOU and ME will pay more. I know the politicians like to frame it as only the rich will take the hits, but that just isn’t true. It’s US. And if you take the time to look deep into your mutual funds you will probably find utilities, insurance companies, and pharmaceuticals whose capital gains and dividends fatten your retirement. Even you state, local, and federal employees will find that much of your retirement is invested in corporate bonds.
Now, back to where I was. WE – the small investors – are leaving equities in droves because we’re spooked; we have very right to be but at the same time we are hurting ourselves. No, I’m not jumping back in yet, but I must be honest with myself, too. And in that being honest I also have to admit that Main Street won’t get fixed ’til Wall Street is fixed but right now no one is doing anything to calm our jitters. All we are hearing is about the greed on Wall Street, evil CEOs; yes, some CEOs are absolute pukes, but for every bad CEO there are hundreds of good guys, hundreds of good mutual fund managers, bankers, and real estate speculators (anyone in your family ever buy a rental property?) There are loads of very good, honest folks that are getting painted with the same brush. You hear volumes about Maddof but did you know that not one dime of the money he swiped ever hit the stock market? Did you know that even if it had, and combine that with the outfit that just got popped this week, that all that money would not amount to .001 (1 decimal point of 1 decimal point) of the money that has left that market?
In this day and age it seems we need a Big Evil “Something” to blame everything on and, frankly, it’s working. Buying into the political blame game spin is just a way to keep us from looking harder at the people who are now running the show in Washington. Tell me – exactly how does someone who gets elected to Congress on a salary of $169K a year end up as a millionaire, anyway? Many do but most folks don’t seem to notice.
So what is the point of this rant? I hope that anyone that reads this thinks about it for a while. We’re being told that we, the “little people” are getting screwed or lead down the thorny primrose path and it is Evil Corporations or Evil CEOs that are doing it. But the reality is that it is the folks in D.C. that way too often, on our dime, become millionaires and, I don’t know about you, but I’m not seeing one penny of profit sharing.
Oh yeah, that $13.00 a week. I forgot. And you single folks get $7.95. Don’t spend it all in one place.