Friday, May 25, 2012

When the President Talks - Don't Laugh


I can’t really resist this! The more President Obama talks during this campaign, the more we realize how unequipped he is to be President. At a recent press conference after the NATO meeting in Chicago, he managed to turn it into a campaign opportunity to get at Governor Romney.

He was trying to justify his attack on Bain Capital and rationalized why he thought that Romney’s business experience did not make him more qualified to solve our economic woes. He said that the goal of “profit maximization” by private equity was not the appropriate goal for all the people; that as a President he has to consider the needs of all our citizens not only shareholders. I wish he would tell me when maximizing profits does not benefit all the people and the consumer in the long run. This just illustrates that Mr. Obama knows nothing about economics and that another 4 years of his logic can be ruinous to our economy.

Companies that maximize profits are making products or providing services that consumers are willing to pay a premium price for, therefore, they generate higher margins over their costs. When their competitors can provide the equivalent products or services, demand goes up and prices come down and so do profits. The next step in the cycle then provides the incentive to lower production costs or improve efficiency to maximize profit. Both these actions and events benefit the consumer because they either generate demand, lower prices, or improve productivity. This translates into benefit for the consumer, which is great for the economy.

Consumer welfare is the prime reason for an economy. Skill at profit maximization translates directly into skill at governing an economy. The fact that Obama doesn’t recognize this is astonishing. His failure to understand this simple and basic tenet of economics makes him totally unfit to navigate us out of this morass.

The more profits that companies generate, the more they invest, the more they grow and innovate, the more jobs they generate, the higher salaries they pay, the more their stock appreciates, the more pension funds grow. Tell me again Mr. Obama, when are profits bad for all Americans, what segment of the population suffers when profits are good?

Now that Obama has taken this class warfare, anti-business approach, he is putting himself in a corner that will make him a one-term President. Take heart, Republicans.











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