Forbe's reports on the top ten most profitable industries. While Forbe's is good at counting beans, they are lacking at reasons why the industries are so profitable. by Gene DeNardo
(libertarian)
Friday, July 9, 2010
While Forbes is good at comparing the bank vaults of its favorite corporate profiteers, it is extremely inept at reporting why these particular industries are so profitable. It really doesn't take much brain power to figure it out. The reasons are right on the surface and extremely obvious and no surprise. All ten industries have the same "partner" when it comes to profit.
Let's go through the Forbe's list of the ten most profitable industries [link edited for length] and see if we can unearth some reasons for their profitability ourselves. We'll use the 2008 list for the "good" old times sake!
1. Network and Communication Equipment.
This one is a no brainer. Does it seem a bit interesting to you that technologies that were primarily developed by the state are now controlled by private industry? Years of taxpayer funded research now bulks up the profit sheets of companies like Motorola. Does it feel funny that satellite systems that the taxpayer was instrumental in putting in place now reap fifty to hundred dollar monthly rents from the same taxpayer while selected corporations reel in the payments? That it requires technology to "keep" you from picking up a signal, rather than enabling the signal?
Throw in IP laws and profits are guaranteed for these companies far into the future, many times on copyrights even filed by the government.
2.Mining, Crude Oil Production.
Another no brainer. Again much of the technology [like deep water cameras] was developed by the government and handed to industry. But, the primary two profit enforcers here are the access to monstrous amounts of capital and the discounted prices at which the state sells its [read taxpayer's] resources.
Rent is so low on government {again read taxpayer} resource lands that corporations rent simply to add assets to their balance sheet and allow greater leverage, completely the circle that allows greater acquisition of resource land. Throw in the fact that resource development is depleted rather than depreciated, at a rate that would make a mafia accountant blush and profits are sure to follow.
3. Pharmaceuticals.
Do we even have to go here? Pills that cost a half a penny selling for a hundred dollars? Again, government barriers to entry {FDA etc.} and IP laws allow ridiculous markups and elimination of competition.
What are often forgotten though are the profits of black market pharmaceuticals. This is also due to government intervention. Legalize all drugs and black market profits will take a nosedive {is the Mafia still running moonshine?}. Legitimate business folks can then produce drugs cheaply and efficiently and the crooks will be out of luck.
4. Medical Products and Equipment.
Part of the same racquet as pharmaceuticals. Government barriers to entry because of their special status as "medical" equipment allow elimination of competitive firms. Demand for high dollar items due to the socialized health insurance industry which enables big time expenditures. Of course, patent enforcement institutes the manufacture's right to name their price, regardless of actual costs.
5. Oil and Gas Equipment, Services.
Make hay while the sun shines! See number 2.
6. Commercial Banks.
Oh, My God, how surprising!
Where to start? The entire system is built on the "cartel" model. From the Federal Reserve down, the money market is probably the most controlled and corrupt facet of the entire economy. Banks probably are not number one simply because of the so called "housing crises".
Commercial banks are the predominate members of that exclusive club known as the "selected traders" of the Federal Reserve. Volumes have been written on the subject, it would be in your interest to read a couple.
7. Railroads.
This is the oldest cartel in the group. Lincoln entrenched the railroads as the first state corporation. They own the book on state welfare and state elimination of competition. They continue to reap profits that were established one hundred and fifty years ago. But, they also "bank" on the nostalgia factor. They get billions in handouts from the government simply because they have been around so long.
8. Entertainment.
Put simply, IP copyright. Coercive state laws that substitute for consensual contracts that restrict the use of personal property without the consent of the owner, after the property was legally and entirely purchased. Take that state intrusion away and a lot of people would have to get real jobs!
9. Insurance, Life, Health.
The Insurance companies have been whining for years that they are not part of the health care scam. Well, if that is the case, they must be getting their profits in some way they are not revealing, because according to Forbes, they are doing just fine.
Laws, regulations, government barriers to entry, same old story.
As far as life insurance, coverage is part of the tax exempt employee benefits that include health insurance, a strong incentive for corporations to purchase insurance instead of paying wages. Why anyone would consensually take part in a bet that is determined by when and how they die is beyond me!
10. Household and Personal Products.
Not to be redundant, but patent protection rules supreme in the bath and kitchen areas. Simply cleaners that can be made for pennies on the barrel turn huge profits due to patent protection. The FDA also has a big part in "filtering" many of the products and hence the firms that are allowed to participate in the market.
What have we found in our little expose? All of Forbes hard working, top ten industries have direct links and protection from the market by our benevolent government. Gee, I would have never guessed it! It seems like all the big money gets back to where you are in the state pecking order. Hmm..sounds a bit socialist to me!
So, get back to work. Don't be late! Work hard! Someday, if you keep at it, you may gain the blessing of the State and strike it rich!
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Reminds me of how the MSM will report on the improving post-stimulus conditions for banking or real estate (e.g.), as some sign that the economy, overall, is improving — yet, fail to touch on the dubious source of said "improvement." Then, the same news sources act surprised to find that conditions soon deteriorate (a.k.a., the "sluggish recovery"). All the while, they never interview the folks who were correctly predicting that very economic cycle — instead, sticking to their trusty sources of state-worshiping blather on the greatness of public works and stimulus. The hidden hand is hidden for good reason, I s'pose; but I don't expect Forbes or the NYT to say so.
