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Spineless Corporations

Shocking! Outrageous!

Several oil industry executives testified before the Senate last week, and demonstrated what's wrong with corporations today. The trouble is that they're totally spineless and without any sense of moral outrage. Fortunately, that's a void I can fill.

Consider the testimony of Lee Raymond, CEO of ExxonMobil. Keep in mind the context — Congress had been openly talking about the possibility of imposing a windfall profits tax in order to seize the recent record profits of American oil companies. Mr. Raymond's testimony made three main points:

  1. The industry is very large and there are no quick fixes.
  2. The industry's profits are volatile, but its investments in infrastructure are not.
  3. The hurricanes proved that markets work.

His testimony was clear and persuasive and well-documented (see the appendices), but something was conspicuously absent. It isn't proper to merely talk about facts and figures in a situation like this. Certainly facts and figures are important and I'm glad Mr. Raymond discussed them, but I believe he had the responsibility, as head of ExxonMobil, to represent the interests of the corporation's shareholders. He did not do this.

He should have reminded Congress that the corporation and its shareholders have the right to profit. For-profit corporations are created for the specific purpose of earning money for their owners. It is morally reprehensible for Congress to threaten — and make no mistake, these hearings were a direct threat — to take away the profits the oil industry has earned.

Congress has never offered any justification for its desire to expropriate these profits. The oil industry had large profits due to the supply disruption caused by the hurricanes? So what? How exactly is that supposed to justify a windfall profits tax?

As has been pointed out in many other places, the oil industry doesn't have particularly large profit margins compared to other industries, and the oil industry isn't the only industry to become more profitable due to the hurricanes. Yet the oil industry is being singled out, without justification, and brought before Congress to be scolded on national television.

This is an outrage, and the oil executives should have been visibly outraged. They wasted their opportunity to make a strong moral defense of their profits. They wasted their opportunity to put Congress in its place. They wasted their opportunity to begin to overturn the century of irrational disrespect and hatred of their industry, going back at least to the forced breakup of Standard Oil.

I'm very disappointed. More righteous indignation and less apologetic sniveling, please.

Hank Rearden, where are you?

Tiny Island