The news has been all abuzz since Exxon reported record earnings for 2005 - record earnings for Exxon, record earnings for the oil industry, record earnings for any company on the face of the earth. Yesterday the President defended Exxon's right to make such earnings but they didn't deter everyone from environmentalists who call Exxon a polluter to social activists who claim Exxon made its money on the backs of the "little guy" by gouging gas customers. There is a growing movement of those who think we should impose some sort of windfall profits tax on the company or force them to contribute money to aid the poor. Lost in all the knee-jerk liberalism is the facts underlying Exxon's enormous income statement.
Who profits the most when a company like this makes ungodly amounts of money? Well, first and foremost, there is the tax man. Included in Exxon's income statement is an interesting figure of $100 billion. That's the total taxes on the year's activity! I suggest to you that the federal government of the United States and the governments of the states individually could not function without the money Exxon pays to them. But no matter, if Exxon didn't earn all that money and pay all those taxes, someone else would. They didn't invent fuel. They simply run a company which does a better job of pulling it from the ground, refining and delivering it than any other company in the world.
Then there's the $18 billion in capital and exploration costs. That effort and the other operations of the company provide a huge number of jobs. And many of those jobs pay quite well. The money funds home and other purchases, college educations, etc. Nobody is lining up to say Exxon busts unions, pays beneath subsistence wages, or doesn't offer healthcare for workers' children.
There's also $23 billion paid to shareholders in the form of dividends and share buy backs. Who the heck are these shareholders who got all this money and who, after all, are the folks who really get the $36 billion record earnings after all these costs are disbursed? There's a couple of blue blooded, rich white guys to be sure. Some are probably even from Texas and some may even make personal contributions to the Republican party. But most of the earnings goes to mutual funds and huge throngs of people who own shares in their private accounts. Anyone seeking a "safe" investment probably has a few shares of Exxon to go with their holdings in P&G, GE, etc. The largest owners of Exxon shares are, of course, institutional investors. Institutional investors are comprised mainly of mutual funds like Vanguard, Fidelity, Wellington, et al. Most of these funds probably have money from retirement funds like your employer 401K.
So, to wrap this up, when we speak of the unspeakable profits of Exxon, we should make sure to target all these human partners of the corporation. Corporations may be given personhood by operation of state law but they are hardly capable of doing all those good things we imagine rich people can because they are intangible - they don't walk around like you and me. Our governments are the largest partner of the company. Next up is probably all those employees - the ones whose kids go to school and play on sports teams with your kids. The rest of those "big rich guys" are you and me.
Can we now stop speaking about evil corporations? Liberals really should have paid more attention in school when teachers explained how American capitalism works.