Wednesday, June 25, 2008

Profit!

The gnashing of teeth has become deafening regarding the profits earned by any and everybody associated with petroleum (that would be the supply side, not the demand side).

Try this on for size. Assume for every dollar invested by a company, they received an $800 return on that investment. What can and should they do with that money? Largely, they would turn that $800 right around and reinvest it in the company. They would pay the workers, fix equipment, buy new equipment, try and figure out how to better produce that investment, etc., etc.

How would you feel if the "company" pocketed $100 of that for themselves? What if you knew that it was possible that the risk was very real that whatever money the company invested could be completely lost?

Folks have come to loathe petrol companies, but what folks don't understand is that the economic world that God created is NOT a zero-sum game. What I mean by that is just because Hank gets a dollar does not mean that you won't get a dollar, too, and possibly more!

Here's the deal. One ear of corn yields on average 800 kernels. Considering that only one ear of corn grows upon each stalk, that's a staggering 800 kernels that grow from only one, an 800% return on your investment!! I'm happy to be getting 10% on my IRA's!

Now be real, does the farmer pocket all that? No way. He eats some. He has to save a mess of it to plant for next year. And some of the return has to go to keeping the plow and combine running, purchasing fertilizer and maybe irrigation, and, and, and. You get the idea.

Who else benefits from the farmers 800 to 1 kernel investment? You and I who do not plant corn. We can boogie to the local supermarket and pick up some of the Green Giant's finest. If you are richly blessed in July and August by living in the heartland, you can go to the local farmer's market and buy some of the sweetest sweet corn on the planet.

So why aren't CNN, Barack Obama, Fox News, or John McCain railing upon the farmer for receiving an 800 to 1 return for each kernel planted? Because they have come to understand how God's economy works regarding corn (though they don't acknowledge the source of economics).

While the petrol problem does not directly correspond to corn, the economics still applies in many ways. Because the oil companies have so many dollars does not mean that any of us are being deprived of dollars. The fact is, we remain a people richly blessed.

1 comment:

Anonymous said...

Well said. I was just "Pondering" about my many months in Kosovo and Ecuador earlier today. Thinking of the little kids running after us "Americans" every day asking for change and food. My son doesn't have to do that, nor do I. We are richly blessed and I thank God for it.