Monday, January 30, 2006

Should We Be Concerned by Exxon-Mobil's Record-Breaking Profit?

Today we learned that Exxon-Mobil posted the highest annual net income for any company in US history. $36.13 billion in profit. $36,130,000,000.

I would like to report that I did my full share in helping Exxon-Mobil reach this unheard of profit. I dutifully continued to use my car and heat my home even as energy prices skyrocketed.

I’m a big proponent of the free market and believe we should use the least amount of governmental regulation necessary to keep consumers safe and markets free from manipulation--but even I have to question the fundamental fairness of Exxon-Mobile's record-breaking profit while the rest of us pay back-breaking energy costs.

I don't know the full story here, so I won't condemn Exxon-Mobil just because they turned a big profit. After all, big profits are good. But I am generally wary of massive corporations. They have a habit of reducing competition to the point that consumers no longer enjoy the advantages of the free market. Choices decline and prices are artificially inflated. This problem is doubly bad when the product is a necessity because consumers don’t have the luxury of avoiding the product all-together.

As we continue to progress into a full-fledged global economy, we'd be wise to closely watch the biggest corporations. When the American economy matured at the end of the 19th century and the beginning of the 20th, large monopolies formed and threatened to choke off American capitalism. Theodore Roosevelt and others busted the trusts and preserved the free market system.

I don't think anything that drastic will be necessary in the coming decades. But we'd be wise to remember that sometimes the greatest threat to capitalism are the hyper-powerful corporations. We need to keep an eye on Exxon-Mobil and other corporations of similar size and power.

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