Capitalism is Not a Dirty Word


by Rick Stephens - Date: 2007-02-02 - Word Count: 431 Share This!

Exxon recently reported that their annual profit for 2006 was in excess of $39 billion dollars. Notice I did not say earnings, I said PROFIT. When this was being announced on the evening news, the reporters interviewed several people who were pumping gas into their Luxury SUVs at their local Exxon station. They were all singing the same song, "It is immoral for Exxon to make that much money while we are spending over $2.00 a gallon for gasoline." Some were even suggesting that the government take action to keep Exxon from making that much money.

Does it make you angry to hear that kind of news? Not me. I believe in capitalism. It is the American way. It is why this country has propelled itself to become the world leader in commerce. It is why we have the highest standard of living in the world. It is why Bill Gates can go from being broke to the richest man in the world. It is the "American Dream." To expect our government to put restrictions on corporate profits is an insult to our way of life. Besides, the report on Exxon did not explain the whole story. In order for Exxon to earn $39 Billion in profits, it had to spend $338 billion, making its profit margin a slim 10.46%, hardly anything to write home about.

Why aren't we complaining about Citigroup who earned 24.03% margin by gouging us with credit card interest? Or how about Pfizer and Merck, pharmaceutical companies who earned 22.82% and 19.59% margins respectively, while many of the people in this country can't afford medication. No, instead we cry over Exxon's earnings, not realizing that each year we spill more gasoline at the pumps than the Valdez did off the Alaskan coast.

Exxon is no different than any other business. They sell their products at a price based upon what the market will bear in order to make money, support economic growth, and satisfy their stakeholders. If you are unhappy with the profits of Exxon, buy your gas someplace else, stop driving around in inefficient, gas guzzling automobiles, support other forms of energy as a way to reduce our dependency on oil, car pool, use mass transit, but stop whining when you hear reports that prove capitalism works.

By the way, Microsoft earned 25.86% margin last year and soon we will all be forced into buying their new operating system, Vista. Are you enjoying that big screen TV you have in your living room? Texas Instruments earned 18.51% margin last year. Face it, Capitalism is not a dirty word.

To Your Success,


Related Tags: profits, earnings, profit margin, capitalism, exxon

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Rick Stephens is a recognized business advisor and consultant. He specializes in working with small to mid-sized business owners to strengthen their business processes and ultimately grow their business. Rick has been accredited by the Institute for Independent Business, an International accrediting body for senior executives.

Rick holds an MBA from the LeTourneau University located in Longview, Texas.

Rick Stephens is the Principle Advisor of the Consulting firm RG Stephens & Associates located in Plano, Texas. Rick offers business owners the opportunity to meet confidentially to discuss any business issue they may be experiencing. His initial meeting is always free and without obligation. Call him at 972-578-7895.

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