Christopher Smith

Industries to Avoid, Industries to Buy

While the author's prescriptions are eyebrow-raising in themselves, it seems that they're based on some fundamental misunderstandings of what underlies the situations he sees.

For example, cities don't regulate or manage water for consumer protection; they do it because a water utility is one of the special cases (almost all in infrastructure) where competition is impractical.

Additionally, he begs the question on ExxonMobil profits. In fact, most of the recent upward trend in earnings has been due to increased consumption. Despite the author's ex cathedra assertion to the contrary, businesses can make more money without necessarily improving profit margins--by increasing the volume of sales. In fact, XOM's profit margin is below the average profit margin of most banks and (pre-collapse) investment firms, and it's about half that of pharmaceutical companies.

Finally, it seems that those who call for a "windfall" tax or the even more confounding "regulation of profit margins" seem to studiously ignore two major points: Not only is the big, bad corporation owned (directly or indirectly) by pretty much everybody with a retirement plan, but XOM also paid the highest income tax ever last quarter.