Customers Pay for Everything

A Misunderstood Truth

When I was six years old, my Dad’s business needed a new warehouse. While the workers built the building, I wondered how my Dad got the money to pay them so I asked. He said: “Son, our customers pay for everything.” That’s one of  the most valuable things my Dad ever taught me. I can only assume from listening to many business commentators that you can graduate from business school without fully understanding this profound truth.

 

Don’t be fooled

Advertising often strives to make you think that a company is paying part of the price of a product and that customers are benefiting from the company’s benevolence. Take 0% interest auto loans for example. Do you really think that the bank lends the dealership money at 0% interest? Who pays for the interest then? Take a guess.

Last night I heard a commentator on public radio ranting about the the desirability of an energy tax and the need to prevent the energy companies from passing on the tax’s cost to the customers. Hello commentator, the best case for an energy tax is that the increased cost will decrease energy waste. Vilifying the energy companies or suggesting that they be forced to act against there own best interests is unrealistic.

 

Heed the signal

Corporations rule the roost here in the USA. If we want to reduce corporate dominance, it will take decades and require totally overhauling our political system. Corporations can and should be more socially responsible. Their biggest sin is buying politicians to create an unfair market advantage for themselves, such as the oil companies have created against their competition from other energy alternatives. Congress just might  remove this unfair advantage, including the oil depletion allowance and other tax advantages, within a few years through legislation.

Whatever happens, the customers will continue to pay for everything. The energy companies transfer their increasing costs to produce most types of energy to customers. Hopefully we the customers heed the “economic signal” that the companies are sending us to stop wasting so much energy.

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