ExxonMobil and Goodwill (charity)

Economics Economics Questions
1

Hello all:

Background: I came across a discussion about Exxon on another board last week. Of course, the social democrats were moaning about the record quarterly profit posted by Exxon. I replied that with all the bad economic news out there, you would think people would be applauding some good news. No response from the social democrats except from one who uttered that Exxon’s profits would be more acceptable if they contributed to the “public good”. To refute that, I simply went digging and found all kinds of initiatives that Exxon funded, including the United Negro College Fund, the Mickelson/ExxonMobile Teachers Academy, the Africa Health Initiative, etc, etc.

One of the social democrats has posted this:

"Hmm… just out of interest - if the government had done all of the above [funded the charities], paid for by levying tax charges at the oil companies which were then, in turn, passed on to the Consumer… wouldn’t you now be saying that it was a bad thing that hard-working Americans were funding things like the “United Negro College Fund” and education for people in other countries…?

“I mean… the costs for all this were passed onto you guys at the pump - just the same as tax is. How come it’s now suddenly become a good thing…?”

My response would be that the consumer has a choice; if the consumer doesn’t like that Exxon spends money on goodwill, they can find another alternative. Can the answer be this simple? Because, he responded to another post with this:

"Right. Or, in other words, it’s a ‘false choice’ that you’re creating for yourself to justify your own support of big business. Yes, I’ve heard the same argument before - “Tax is bad because you can’t get out of paying it, but Capitalism is good because if you don’t like how a company is operating, you can simply spend your money somewhere else”.

"And in theory, that sounds perfectly sensible - as most systems do, on paper. In practice, though, you don’t really have the choice you’re convincing yourself you do. As you say, all of ‘Big Oil’ has these similar programmes. Where, then, do you go if you want to ‘choose’ to buy your oil from a company which doesn’t do this?

“Hey, if you don’t like the fact that Company-X is paying its directors massive dividends and bonuses, you can simply go to another company”, they tell me. Well, great. I don’t want to give my money to a company which pays its top people massive bonuses, far in excess of inflation, at a time when record pump prices are hitting ordinary people hard in the pocket. So… can you tell me which oil company I can go to which doesn’t do this?

“Choice is, sometimes, an illusion, my friend.”

2

Big Oil does this because it needs to buy protection from government repression. There would be no reason for it, as a corporation chartered to produce oil and nothing else, not to pass on the profits to shareholders and thus fund more capital investment and expand supply. Only the threat of government power makes this necessary.

3

Tell him to start his own oil company and stop whining that no one else is making the world into the way he wants it.

4

The quote:

“Choice is, sometimes, an illusion, my friend.”

Is false. You have choices with petrol providers. You just don’t like the choices. Too bad. Things in the real world are scarce and they are owned by someone else. You have to pay these some elses to use or get their things. That is reality. The Communists promised that people do not have to pay for these things and all would be better if the Communists provided all. The results were disasterous.

I can give you one choice where you will almost certainly like the result worse than your current ones. That is to place the Obama Windfall Profits Tax on petrol suppliers. Then they will either supply less petrol or raise the price further to offset the tax or the worst thing: Stop drilling and supporting new petrol or petrol alternatives. Then we will be stuck with high prices for the longer term as well as the short to medium term.

5

Also, there is a difference between lacking an option and have an option violently denied you.

That your debate partner is not able to find a willing sex partner is no crime, but him preventing the voluntary interaction of others is.

6

Non-consumption/setting up one’s own companies are options. This is just whining and it glosses over the issue of whether the government is even justified in the first place to tax. It isn’t.

-Jon

7

It’s not a good thing. Let’s skip past the point that “the consumer has a choice,” because really his choice is one among a handful of state-supported cartels. State-supported cartels are effectively an extension of the State itself.

The correct answer is that in a free-market, it would likely be up to individuals to provide charity, since, as your friend points out, the donations are simply passed on through the prices you pay at the pump. These donations given by corporations are part-and-parcel to the tax code and its various loopholes, which create balance-sheet-favorable opportunities for companies.

8

Exactly. Stranger et al talk about Big Oil as if these firms were run by honest free-market businessmen but in reality they are nothing of the sort.

9

It’s a tough situation to be in because on one hand you have to defend the generic class of ‘business’ from people who say it’s too evil to be allowed to roam free in an unregulated market, but on the other hand you have to establish that businesses get away with a lot of stuff because they’ve bought out the government.

I guess the way out of this is to just emphasize that without government to protect it, ‘business’ wouldn’t be getting away with half of the stuff it does now.

10

We all have blood on our hands. That is unless you have completely seceded from the system.

11

So, working at McDonalds and driving on ‘public’ roads, for instance, is morally equivalent to joining the military, being the CEO of a big fascist oil company, or running a fraudulent bank in the city/wall street ?

I thought libertarians were interested in making very clear that mercantilism is not ‘capitalism’ ? But if “we all have blood in our hands” (highly debatable), then we are all supposed to shut up ? Or even defend Fascist Oil as some just did ?

12

I do not.

What makes oil fascist?

13

You should point out that last quarter Exxon Paid out 32+ billion dollars in taxes last quarter, and compare that to 11 billion profit. How much more do you want them to forcibly hand over to the government and public ownership?

14

Maybe people buying oil paid 32 billions in taxes ? Exxon simply collected the money and handed it to their political partners ?

15

Welcome to the prevailing problem of vulgar libertarianism. Some people have a preconcieved vested interest in defending big buisiness as it is, and free market rhetoric is a handy tool to misapply in order to defend it.

16

Taking all of the barriers to entry into account, this response is kind of silly.

17

Anyone who thinks market forces still apply within a state economy must be a vulgar libertarianism. All true anarchists know that the state suspends the laws of economics.

18

Incorrect characterization of my position. That simply doesn’t logically follow from what I said.

Yes, market forces still apply, but market forces become warped and corrupted, incentives are skewed and buisiness and state tend more and more to have a symbiotic relationship. It makes no sense to defend all of that which takes place within markets irrespective of context. It makes no sense to use the theoretical conditions of a free market (such as the free choice of the consumer and the ability to freely compete) to defend the existing conditions of an unfree one (in which consumer choice and the ability to enter in competition is drastically restricted to the benefit of a small amount of firms in bed with the state).

It is ridiculously erroneous to argue as if we currently have consumer choice and free competition, so the “you can start up your own buisiness” or “you can shop somewhere else” or “your can work somewhere else” or “you can become self-employed” lines of argument don’t hold as much weight when we are dealing with the current system. Indeed, it becomes the economic equivolent of the love it or leave it argument.

19

I have a vested interest in defending capitalism, and business both big and small. You can call me vulgar, but I’m not interested in your voluntary socialist paradigm.

20

My “paradigm”, if I could be said to have one, is along the lines of market anarchism, individualist anarchism, left-libertarianism and agorism. I don’t hold a voluntary socialist paradigm, I merely aknowledge its validity as a possible form of organization in a free society. I’m not a socialist of any sort. So nice straw man. It really is amusing how people like you have the gall to red-bait me, meaningwhile the actual reds are doing the opposite, they’re characterizing me as a “petite burgeousie individualist” who should be shot after the revolution. Something tells me that this says alot more about you and them than it does about me.

So you admit that you have a vested interested in defending buisiness and that which takes place within markets irrespective of the extent to which it is in bed with the state or a product of the state? You don’t see any dangers about that? You don’t see anything wrong with buisiness at least insofar as it has a relationship with the state? If you can’t figure out the problem with defending the status quo in the name of free markets, then I don’t know what to tell you. A moment’s reflection should reveal the grave error that this is. Such a vulgar defense of the status quo does a disservice to the cause of free markets.