Capitalism going too far?
I'm for capitalism. I'm against communism. That's a given.
This morning, however, I'm starting to wonder how much longer those ideals will hold up. Sure, it's most likely that they will until I'm pushing up daisies, as a high school law teacher of mine used to say, but a news report this morning made me think twice about the concept of open markets.
Which oil company it was, I cannot remember - it was 6:50am when I heard the news report. This monolith reported net earnings for Q1 of 2007 as being in excess of $700 million, some 31% higher than the same quarter in 2006. Not so long ago I ranted about TD Canada Trust reporting record earnings throughout all of fiscal 2006, rather annoyed at the way in which the bank so gleefully announced how competitive it was becoming in the world market. My conclusion was that competitive for TD Canada Trust meant how great investors (read: shareholders, not customers) are seeing their holdings perform.
Why be annoyed at record profits? They come at a time where prices at the pump are at all time highs. The last time we paid in excess of $1.10 a litre at the pump was when Katrina hit the refineries in the Gulf Coast. There were no hurricanes of consequence in recent weeks and/or months and the world market and politics are relatively stable at the moment. Bank profits have skyrocketed while new bank account fee revisions see clients pay ever increasing user fees for ever decreasing levels of customer service. Finance Minister says lower rip-off ATM fees? Banks respond by saying that they will reduce service levels. As if $50 million dollars in a multi-billion dollar industry means anything to the bottom line.
Make customers happy? Humbug. Screw the customers - our shareholders demand record profits quarter after quarter. If the shareholders become unhappy, compensation packages for bank and oil company executives could shrink... jobs could be lost. Wouldn't want that to happen, CEO? No problem. Jack up the prices... people won't stop driving - they can't. People won't stop banking - they can't.
These two industries have us by the proverbial you knows. They don't care what the client thinks... because the client has no choice but to continue buying product or using the service. Is the year where we see banks and oil companies settling for no less than $10 billion in annual - or quarterly profits all that far away?
Today, I doubt it.
Why is that day perhaps not all that far away? Because if the banks and oil companies decide as a collective that that is what they want, they'll get it. Why? Because they can.
And that's why I sit here today, wondering if capitalism is going a bit too far. I hope not... but I can't help wondering.
posted by Michael Mason @ 7:31 AM
2 comments
2 Comments:
Thought I'd check your blog out Bulldog. On this subject I have some disagreement. This is an example of the market working. Obviously we haven't reached a gasoline price point that forces people to change their behaviours. Perhaps we are close as higher efficiency vehicles are gaining in popularity, but as SUVs continue to roll off the line I cannot believe that their purchasers are thinking about gas prices. I don't like these prices any more than the next person but as a single Jetta household, bus pass wielding commuter, I have adapted my behaviour and transportation costs have gone down for us in the last couple of years. When enough people do that we'll see more efficient cars. I don't think we'll see gas prices go down but until people change behaviours I see them just rising onward.
As for ATM fees, there are options out there. Think back to when people went to their branches to get money. Now we can get cash anywhere, anytime and expect that convenience for free. Take out more at one time, use cheques or credit cards, change to a Credit Union and work to influence their fee policies. Options are there but for the most part people will just pay the fees and not worry because they have not approached what the market will bear.
I think the old saw is capitalism stinks, but it sure beats the alternatives.
Keep up the good work.
I am not sure if this the Ridzie I know but if so it is Danipoo and I am looking for you!! email me at danisoames at yahoo dot com
I agree with your posting by the way- sometimes complaining about convienances seems easier than facing the reality of changing the fees associated to the gains. Miss yoU!!!!!
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