“Who is John Galt?” asks Ayn Rand’s average American, rhetorically, in her 1957 masterpiece Atlas Shrugged. In Rand’s futuristic world, this often-repeated line symbolizes a malaise that has befallen the country, a result of decades of punishing success in the name of society as a whole.
While we have not reached the level of complacency Rand warned about in Atlas Shrugged, our overall level of economic education is (in my opinion) abysmal. Several years ago, and more than once, increases in gasoline prices elicited demonstrations of our collective lack of economic understanding. “Big Oil” took a very public whipping. Remember Hillary Clinton in the Senate saying, “I want to TAKE those [oil company] profits?” (As an aside, she did collect some of those profits, personally, in the name of her Foundation, but I digress.) Shameful rants by politicians filled the evening news and the local papers, leading me to ask the pointed question, “Who owns ExxonMobil?” Aren’t those owners responsible for all the trouble in the “Big Oil” industry?
Most people would have been surprised to find that they and/or their parents, teachers, firefighters, police officers, bus drivers, soldiers, and so on are the owners of ExxonMobil. Nearly everyone with a pension, an IRA holding equity mutual funds, a 401(k), or any similar investment account, are the owners of ExxonMobil, which is among the most widely-held stocks in the world. The dividends received from that ownership pay the pensions for retired people all over the country. And growth in the company spurs the increases in value of your personal retirement accounts. Not exactly an evil purpose, as I see it.
By the way, 85% of ExxonMobil shareholders are Americans.
Fast forward to today, and our inevitable and determined protestors have a new focus. This time, it is Bernie Sanders’ so-called “Democratic Socialism,” which I simply shorten to “Socialism.” With his supporters, their mantra is, “capitalism bad; socialism good.”
I should remind everyone that this is really not about ExxonMobil. It is about capitalism, which today is being maligned as an economic model. Wouldn’t the protestors who are “feeling the Bern” be surprised to know that their own “evil” parents are most likely owners of not just ExxonMobil, but other symbols of American capitalism? Unfortunately, I imagine that a lot of those very parents would be just as surprised to learn that themselves.
Today, at Donald Trump political rallies everywhere, the socialist disrupters are out in force, trying to prevent him from speaking, and touting their love for the socialistic form of society. After all, it sounds so good on paper!
Since we sre dealing with ExxonMobil, let’s continue a bit further. What is it about this supposedly evil corporation that actually affects our lives? Start simply by saying that the average person can travel over 20 miles on a gallon of gasoline that cost them about $1.96. and is available at all times, 24/7/365, in their own neighborhood. Think about this – where did that gasoline originate?
Crude oil is found in the most Godforsaken places on Earth, from deserts to massive plains, where the winters are harsh enough to discourage any but the most hearty. Worse yet, it is far underground. Not ideal circumstances to produce an inexpensive product that has to be transported to a refinery, processed, and transported again to a gas station near you, in order to not inconvenience our pampered lives.
By comparison, a gallon of life-saving insulin costs $9,400, and your black printer ink costs you $2,700 per gallon. Human blood is $1,500 per gallon, and nail polish $890 per gallon. Gasoline is about $1.96, when produced by large corporations such as ExxonMobil, and a large portion of that is paid to the government in the form of taxes. Hmmmmm.
Obama, Clinton and Sanders want to shut down oil and coal production, favoring so-called “clean” energy sources. I see it now, in their world, “Please fill it up with sunshine, and change the seaweed.” At least, don’t fill it up with nail polish, because I can’t afford it. Give me a break!
What would happen if the government took over the oil companies? Perhaps an historical look would be instructive. Mexico nationalized it’s main oil company in 1938, when President Lazaro Cardenas expropriated nearly all assets of the foreign oil companies operating in Mexico. This move was very popular in Mexico, where the citizens resemble our current crop of liberal protestors. But things don’t always work out as planned.
PEMEX was formed from the confiscated assets, and before long started to experience problems. Under tremendous pressure, FDR initiated a boycott of Mexican oil and foreign travel to Mexico, and the Mexican government relented, paying $23.9 Million to the former owners of the assets. Did that make it all better? Hardly.
From peak production of 3.4 million barrels of oil per day, production declined to 2.8 million barrels by 2014. Despite huge reserves of natural gas, Mexico has to import most of its needs. Citizens are denied prosperity by a state-owned company that is inept and not growing. Mexican reserves in the deep waters of the Gulf lie dormant due to the lack of available technology in PEMEX. Independent American companies have no problem with the depth of the water, as our privately-held technology far outpaces that of PEMEX.
Looking further south to Venezuela, a country blessed with massive oil reserves, and at the same time cursed with socialist ideology, we can take a huge history lesson. Some say the Venezuelan reserves are the world’s largest, yet problems plague the industry. Hugo Chavez came to power in 1999, and represented all that is socialism.
After a failed attempt to nationalize the oil industry in 2002, Chavez succeeded in staying in power in 2004. He used that effort to assume, by majority vote under duress, that his socialist policies would now be implemented, and would, of course, succeed. Under the careful watch of Chavez, along with nationalization of television, radio, and most anything else that makes a country’s citizens live free and prosper, oil production fell by more than 25%. Unfortunately, his death resulted in a continuation of the same socialist policies under Maduro. When will they ever learn? WILL they ever learn? Will we?
Is oil the only, or even the best, example of socialistic failure? Hardly! Remember the failed automobiles called the Yugo, the Russian Lada, and others? There’s an old joke about the Lada that goes like this: “What’s the difference between a golf ball and a Lada?” Answer: “You can drive a golf ball 300 yeards!” Bada-Boom!
These cars are examples of the gross inefficiency and lack of innovation in enterprises owned by socialist or communist governments. One doesn’t need to look much further, but take a look at the satellite map of the world at night. Contrast North Korea, which is a virtual blackout, to South Korea, where millions of people live in modern, well-lighted comfort.
Is there any going back to our roots? Not if we continue to “compromise,” which is simply a slow leftward drift toward socialism. Some are looking to accelerate that slow drift. We owe it to our children and grandchildren to curtail the slide.
And by the way, ExxonMobil was a merger approved by President Bill Clinton.