Thursday, May 12, 2005

McDonalds Resolution Passed by Hypocrites

The senate passed a resolution on 5/11/2005 to condemn the McDonald’s lease on the basis, according to Senator Lolo Moliga, that the Governor approved it “without regard to the people’s concern.” I am guessing that the senator got that impression from the very opinionated letters to the editor on the issue since this debate began. If this is true, then why hasn’t the Fono passed a similar resolution condemning the raise in Fono allowances when all letters to the editor unanimously disapproved of that course of action? Hypocrisy indeed.

If Senator Lolo Moliga is truly interested in whether McDonald’s in Utulei is in the best interest of the public, then he should allow the enterprise to have an up or down vote in the market. In the market, the people can express their feelings by either spending or withholding their dollars. More importantly, the people do not have to wait every 2 or 4 years to cast a vote; they can do so right away every day at their own convenience.

And McDonald’s is really going to need “the people’s vote” if it’s ever going to recoup its initial investment (what it pays for labor, construction, electricity, equipment and landscaping). On top of the recoupment, the company will need to collect a profit.

In economics, we’re taught that an enterprise’s initial investment is like a loan. Entrepreneurs loan their money in the form of payment to their employees, construction workers and everyone else who provide the things these risk-takers need to start up their businesses. In return for foregoing the use of their money today, entrepreneurs expect an interest rate. They expect their businesses to generate revenues above costs in order to pay for that interest rate. In everyday language, we call that interest rate the company’s profit.

It seems rather obvious that the Senate tried to score some cheap political points with its resolution. If it wants the public to believe that its approach is even-handed, then the Fono should pass a resolution condemning its own raise in allowances. Unfortunately, the Fono, unlike McDonalds, can get away with forcing the people to pay its bills.

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