Tuesday, September 01, 2009

Price Gouging and Windfall Profits

Every couple of years the crazy lefties pick a new villain and tell the American public that we are being price gouged by said villain. How are they sure that we are being price gouged? We are being price gouged because that industry has just reported "Windfall Profits". Every time I have gone and looked at the real numbers I have discovered that the very same industry charging essentially the very same prices has recently had losses or very small profits for many quarters running. This rarely mentioned fact leads me to believe that the industry isn't price gouging me. A more likely explanation is that the profits in that industry are cyclical, sometimes for reasons obvious to me and sometimes for reasons not so obvious to me.

Who is really price gouging me? To answer that question, consider the following things that we all spend money on.
  • housing
  • transportation
  • energy
  • food
  • entertainment
  • clothing
  • vacations
  • furniture
Add up everything that you spend money on that private industry delivers to you. What percentage of your income does the "stuff" you get through voluntary transactions with for profit organizations competing in an open market cost? For me, and I assume for many of you, it's less than half. Notice I didn't ask what percentage of your paycheck but what percentage of your INCOME, you know that number bigger than your paycheck that theoretically exists out in the ether before government takes a big chuck of it leaving you with that smaller number printed on your paycheck.

If you add up all the taxes that you pay (and you should include the money your employer hands over in taxes on your behalf that isn't counted as "income") and you make six figures you probably pay around half of your total income in some form of tax.
  • Social Security tax
  • Medicare tax
  • Federal Income tax
  • State Income tax
  • Workers Compensation tax
  • Capital Gains tax
  • Property tax (if you rent you pay this indirectly)
  • Sales tax
  • Energy tax on your electric bill
  • Gas tax at the pump
  • Telephony taxes
  • Federal Aviation taxes on every airline ticket
  • Road use fees for license plates
The list goes on and on. You can no longer even die in this country and not be taxed in the transaction. After I pay all my taxes I have less than half my income left so I know everything I spend money on from the free market costs me less than half of what I earn. It's 3rd grade arithmetic. While that point sinks in I also want you to consider that I didn't include all the embedded corporate taxes that we pay when we purchase something at the store. Always remember that corporations don't PAY taxes, they COLLECT them from their customers. Estimates of the amount of what you spend on goods and services that are really embedded taxes are in the 20-30% range.

So whose price gouging me? Government is. I give them more than half of every dollar I earn for which I get the following things:
  • the US military
  • associated intelligence agencies and federal police forces
  • the US Coast Guard
  • the US border patrol & customs
  • fire fighters
  • police
  • paramedics
  • roads to drive on
  • air traffic control
  • government schools
Sticking out like a sore thumb on that short list are the border patrol and government schools neither of which manages to remotely accomplish their stated objectives, but I digress.

Ah, the savvy lefty politician says, but you are paying largely for the Social Security and Medicare you will get when you are older and retired. HORSE PUCKY! I will never see a Social Security check. I say this with more certainty at 41 than I did at 21. The math simply does not work. By the time I am eligible the program will HAVE to be means tested. At this point I'm not sure I'll even get Medicare. It's almost as flat broke as Social Security thanks to the politicians in Washington robbing both systems blind for forty years.

If I had all the money that the federal government has stolen from me in the form of Social Security and Medicare taxes in the last 20 years I could retire quite comfortably now without needing government assistance ever. Instead I'll be paying ever higher chunks of my earnings in those taxes for many years to come with little hope that I'll see ANY return on that "investment".

So the next time you hear some left wing politician telling you that the oil industry or the health insurance industry or some other industry is price gouging please remember that it is that very politician who is the real price gouger. It is very hard to stay in private business while price gouging. The federal government has been doing it for over a century and I see no end in sight.