75-11-B6
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"Business, Profits, Myths and Realities"
TranscriptAccording to the latest poll higher education should invite representatives of the business world to the campus for a spell. I'll be right back. Another poll has revealed that among college and university students, the approval rate for business and industry is almost as high as it is for pickpockets and child molesters. In fact the only group with a lower opinion of business than students is the faculty and that makes it pretty difficult to be tactful about what I'm going to say next, namely that the poll also reveals this low opinion is based on a considerable lack of knowledge about business and industry. Just as an example, the great majority of students and a greater majority of faculty estimate business profits are generally at 45%. Now it isn't hard to find the truth about that one and the truth is business profits in America average five percent, just one ninth of higher education's estimate. Some may go 10 or 11 but others go to zero. In fact each year four out of ten businesses show no profit or even a loss. At any rate, the average as I said is five percent. Frankly we can't afford this lack of understanding, particularly in the halls of academia. We're talking about a system which determines the way of life for all of us and that very much includes those in higher education, but let me have at you with some facts and figures. And just so you won't think I'm hand picking a setup I'll use the industry that is presently public enemy number one in the anti-business world, oil. The Halls of Congress ring with cries of windfall profits and proposals to curb them with taxes, of course. Here are some figures from a study of about 30 representative oil companies including some of the biggest names on the public enemies list. Last year their gross revenue was up 77% over the previous year. So was their operating cost. Their net rate of profit was just seven percent; 93 cents out of each revenue dollar went for cost of operations and taxes. Oh yes, taxes went up 89%, almost double what they were the year before. Incidentally that doesn't include another 32 billion dollars they collect for government in sales taxes, excise taxes and lease bonuses, making government a 72 billion dollar winner in the oil business. It's interesting to note that in all the inflation that took place between 1952 and 1972, crude oil only went up 21% in just the last half of those 20 years. The cost of oil field machinery, casing and pipelines went up 33% last year. These thirty companies invested six billion dollars more than they earned in trying to find new oil and expanding and modernizing refineries, 60% of that was spent here in America. When Congress gets around to really looking at the energy problem which right now they're pretending will go away if they don't look. They'll have to recognize how much exploring it takes to find oil. We're using the oil industry as an example of the lack of understanding that prevails about business and how that can lead to government policies aimed at business which will have a shotgun effect on all of us. The truth is business profits in the United States, while showing an overall increase for the year, were beginning to go down as the year went on and will very likely show a drop for 1975. That means a lack of capital for expansion to provide jobs and to keep us competitive in the world markets. The whole subject might be an interesting research project for higher education. This is Ronald Reagan. Thanks for listening. |
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