Thank God for Rich Oil Executives: Why We Should Not Be Afraid of Failing OR Growing Businesses

This may be the hardest economic pill for people to swallow. There are a couple, actually.

The first is that if a product or service is of a high demand (i.e., it is highly desired and people have the means to pay for it), then the price must rise, and the producer must obtain more profit for it, and this is good for the economy. How so?

One argument that appears true on the surface is that people should not have to pay more for necessities, such as food, gasoline, housing, etc. This is a natural belief, because everyone would like to get something for nothing: producers and consumers alike. And it does seem unfair to pay high gas prices: you feel pinched, barely being able to buy enough gasoline to get to work to earn your meager salary to pay for your crummy housing, while the oil exec is rolling in the dough, buying his fourth yacht. This seems unfair to you, so you wish to increase your own wages through legislation while limiting the profits of the oil companies. You may not believe this, but that is a huge mistake.

I know you will call me a greedy capitalist, etc. etc. But as Hazlitt repeatedly states, we must look at the whole economic picture. Let’s say that an oil company is making huge profits. What are his profits doing for him? They have no value to him unless he gives them to someone else, who then gives them to someone else, etc. So he is not sitting on this money: he is helping out the luxury housing industry, the real estate industry: industries that would be dead without his gigantic profits (which means none of these jobs would exist).

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