IRVINE, CA–Nobody seems to think that the oil companies have a moral right to keep their huge third-quarter profits–nobody, that is, except Yaron Brook, president of the Ayn Rand Institute.
Congressional Democrats want to punch the oil industry with a windfall-profit tax; others want these profits “rebated” to consumers. House Speaker J. Dennis Hastert (R-IL) said oil companies must invest their profits in building refineries to boost production so that they can lower prices. Environmentalists want Congress to force the oil companies to invest in alternative-energy sources. Though these people disagree on how to spend the oil companies’ profits, they agree the companies should feel morally guilty for earning their vast profits and must “give them back to the community.”
In contrast, Dr. Brook, a former professor of finance, argues that “these profits are well earned, a return on years of investing–despite opposition by environmentalists and government regulators–in new oil fields and in upkeep of refineries. These profits are the property of the oil companies–the property of their investors. These shareholders have the moral right to do with their money as they please–pay it out as a dividend, invest in new refining capacity (assuming government will allow them to do so), pay large salaries to executives, use it to buy new businesses, etc. It is their money, not ours.”
The government should not bail out companies when they are struggling (as U.S. refiners had been for a number of years); and it certainly should not penalize them when they are successful. The proper governmental policy, economically and morally, is: Hands off.
