Tuesday, February 14, 2006

Economics Lesson for Liberals

Now that Democrats and even some of the Republicans are dumping on the oil companies for making money, it's time to take a reasoned look at the 'windfall profits' tax. It's very simple except to the economics-challenged folks that our crack education system produces.

Stephen Green explains if for you:

Let's pretend that I run two businesses. Widgets Inc enjoys sales of a million dollars per year, with net profits of a half million. At the same time, Doohickey Corporation has earnings of a billion dollars, with net profits of 20 million dollars per annum. Now let's say that you have a million dollars, and you want to start a new business to compete with me. Would you rather make widgets or doohickeys?

If you answered "Doohickeys," then you're an ignoramus, or you might be Jimmy Carter.

Read the rest.

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