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At the trough

Corporate profits come easier when they are handed out

Young black and white pigs feeding at the trough.

“There’s a sucker born every minute”

A phrase of unknown origin—usually associated with P.T. Barnum, of Barnum & Bailey Circus fame.  Barnum would never have called his patrons “suckers”, as he always wanted to give them their money’s worth, as long as he made money doing it.  There’s only two levers to pull in making money:  take in more, or spend less.  Since Barnum’s day, this has not changed.

The notable exception is government.  At all levels, but especially the federal government, they add weights and counterbalances to the levers of business, and expect business to simply keep pulling the same levers with the same force as they did before.  That expectation is asinine; both government and business know it.  When the “unexpected” but entirely predictable results occur, like businesses fleeing overseas for more favorable tax treatment, government cries crocodile tears of “treason!” and business laughs.

Yes, tax “inversions” like Burger King are bad for the Treasury.  But far worse is the seemingly-unlimited ability of government to keep filling the trough for piggish corporations who engorge themselves with epic appetite and cupidity.  The push to “buy American”—meaning American-owned companies who make goods here—is about as American as Red Square.  The largest American companies have been multinational for many decades.  This is not the America of Vanderbilt, Carnegie and Hearst (arguably it wasn’t that America even then).  Fleecing the average consumer with promises of patriotic fervor and flag-waving is no better than Barnum’s freaks and caged animals.  It’s just a show and we pay for the entertainment and a belly full of popcorn.

Government pulls the lever of “here’s a source of money” and companies line up for the revenue.  Low-interest loans with guarantees (why burden the entrepreneurs with risk?) are there for the taking.  One of the only success stories in the Department of Energy’s disastrous loan program, Tesla Motors paid off nearly a half-billion dollars 10 years early, in 2013.  How did they do it?  Mainly through the success of entrepreneur Elon Musk’s other business:  SpaceX.  SpaceX is, of course, awash in government money.  From direct contracts with NASA, to Export-Import Bank subsidized launches for foreign clients, SpaceX likely gets 90%+ of its revenue from the government trough.

It’s not just traditional government contractor companies like Boeing and Northrop-Grumman who dine a la Fed.  Boston-area running shoe seller New Balance is lobbying the Army hard to choose its 950v2 sneaker as the standard for our military, most of whom now get an $80 shoe allowance to buy whatever they want (the Marines get a general clothing allowance).  What’s the main benefit of the 950v2?  It’s “made in America”.  The “Berry Amendment” specifies that only American-made items should be purchased by the military whenever possible.

New Balance’s revenue for all of 2013 was $2.73 billion, and they employ 4,175 people in the USA.  Nike, on the other hand, raked in $27.8 billion in their fiscal 2014, with over 50,000 employees.  Nike paid $164 million in tax on $698 million in profit for just the quarter ending June 30, 2014.  (New Balance is a private company and does not publicly report profit).  From the government’s point of view, which company is a bigger boon to the U.S. economy?  Which company contributes more to the Treasury’s coffers?  But this false-flag patriotism that requires a shoe to be made within the borders of our country will dictate which logo finds a place on our soldiers’ feet.  Without commenting on the quality of New Balance or Nike’s shoes, shouldn’t the wearer have a choice of what they put on their feet?  It’s not like our military goes into combat in sneakers.  The government is about to start an escalating sneaker war, just so one company gets more of the People’s money.

The Left’s solution is simple.  Nationalize American industry, and have the People own the means of production.  You say, hey, that’s Socialism.  Yes, yes it is, pure and simple.  If the government owns the companies, they can dole out whatever the want to whomever they want.  See how well the model worked with GM?  With Fannie Mae?  We can have the same quality and value we expect from those brands…with our burgers, our sneakers, our toiletries, our healthcare, and our pharmaceuticals.  Everything will be “made in America” and there won’t be any tax flight, because there won’t be a need for profit any longer.  The government will set a high minimum wage, or a “guaranteed living wage” for everyone, and we’ll all have a place to work.  Employment will be guaranteed, and nobody will ever be laid off, or have their job moved overseas.

Of course, there will be minor inconveniences, like bread lines, shortages, quality and safety issues, and the usual fraud, waste and abuse that accompany anything the government runs.  But those will pale in comparison to the mighty gains of having a glorious social society where everything is fairly doled out, and we all dine at the government trough.

I suppose it’s easier (and riot-averting) to maintain the facade of capitalism while government rigs the levers of industry behind the curtain.  Meanwhile, we can rest assured knowing that the basic tenets of business have not changed.  Only the methods have changed, along with the patriotic songs and solemn hymns.

At the trough, at the trough
Where I first grabbed the prize
And the burden of my profit rolled away
It was there by pork I received my bribe
And now I’m happy all the day

(crosspost)

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