Monday, May 19, 2008

Excess Profits

Have you ever heard the term, "excess profits"? It's an interesting term. The political left uses it to imply that companies that are efficient, well run and who have positioned themselves to have a product that people both want and need, are somehow ripping off the public. Never mind that the public can invest in those companies. Never mind that the public has already invested in those companies through their pension plans, RRSP's, 401k, etc. What the political left really means is that someone else has something we want and it's OK to take it. The technical term for this is stealing, but the political left has reassured themselves that it is OK.


Blogger Rileysowner said...

The only place where I can see the term "excess profits" used is in cases of monopolies or virtual monopolies either unintentionally or through collusion. In those cases it is not that a market system allows giving ones business to another supplier who provides the same or almost the same product or service for a better price. In those cases "excess profits" might be a reasonable description.

8:00 p.m.  
Anonymous jgriffin316 said...

I thought excess profits only applied in monopoly situations, when a regulated company makes more money than it agreed it would. An example of this would be Bell Canada before the nineties. They were only supposed to make an operating profit of 15%, any more than this was an excess profit that would have to return to their customer base.

9:08 p.m.  
Blogger Shawn Abigail said...

Quite right. That is the original meaning of the expression. However it is now being made to apply to any successful company, and particularly oil companies.

9:41 p.m.  
Blogger Rileysowner said...

The question with oil companies is whether there is really a competitive mark or if there is a virtual monopoly that either intentionally or unintentionally manipulates the market by collusion or by blocking new entities from entering the market.

3:02 p.m.  

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