One more economic polemic

Now that the economy tops the list of American's worries, it's interesting to hear certain candidates demonstrate their respective economic illiteracy.  Or is the anti-business, anti-trade, anti-capitalism cant just raw meat for the sullied masses in hopes to stir another rousing rendition of "yes we can"?  An Obama aid said so much to a worried Canadian official, but he was quickly rebuked for doing so.  Since Obama likes to remind us that "words matter", we should probably pay attention when he says "Exxon Mobil had almost $12B in earnings last quarter and they (won't) part easily with its profits".

Of course "part easily" suggests that some other entity (the government for remedial students of politics) has a greater right to those profits than Exxon.  As New York Times editorialist, Ben Stein, writes, "Exxon Mobil, like all gigantic integrated energy companies in this country is owned not by a cabal of reactionary businessmen holding clandestine meetings in a lodge in the Texas scrublands....(it) is owned mostly by ordinary Americans.  Mutual funds, index funds and pension funds (including union pension funds) own about 52% of Exxon Mobil's shares."  Individual shareholders own most of the rest leaving less than 1% for company executives.  So, yes, if I own 100 shares of Exxon and I get a sliver of that $12B sent to me in the form of a dividend check, I won't part easily with it, Mr. Obama.  I need to pay my rent and feed my dog.

Perhaps Mr. Obama doesn't understand a basic concept of business: that a majority of that $12B goes right back into the business in the various forms of reinvestment: higher wages, more employees and research & development to name a few.  According to breakingnews.com, Exxon barely replaced it reserves (in-ground inventory essentially) last year, it's worst year ever.  Yes, dear politicians, Exxon (and the world) is slowly running out of oil and they need to get increasingly creative to coax the sticky stuff out of the earth.  This takes money, which they won't have if they have to part with it via government diktat.

Just as IBM had to redefine its core business from typewriters to computers, Exxon needs to invest a chunk of that $12B in new technologies.  Interestingly, one such technology is a key component of lithium-ion batteries called the separator, where they have 35% market share.  Some might think its ironic that Exxon would play such a pivotal role in a technology that will likely deem the combustion engine obsolete; as a potential shareholder (Lead Dog does not own Exxon shares but watches it closely) I think it's just smart business.