It’s The Economy, Stupid! (Part II)

John Schnatter began working in pizza parlors as soon as he was old enough to work. He went to college and worked at getting a good education. At age 22, he sold his 1972 Camaro Z28 to buy out the partner at his father’s pub, Mick’s Lounge, and turn it into the first-ever Papa John’s Pizza place. Today, he commands a chain of some four thousand franchisees and has a net worth of $600 million.

Schnatter worked hard for everything he has. Now the government is requiring him to add nearly $10 million a year to his operating costs, taking another 10% bite out of his profits. You see, while the company brought in $1.218 billion last year, it shelled out $1.131 billion in operating costs – a gross profit of $87 million. That’s before taxes. Schnatter himself has spoken out against the Obamacare mandate. Now that Obama has been re-elected, he’s said that he’ll have to cut some employee hours to avoid losing profits.

Liberals are calling for a boycott of Papa John’s now. Their beef? “He’s worth $600 million! He can afford it!” When he said he’d have to raise the price of his pizzas by 10-14 cents a pie, the left mocked him. “Oh, ten cents a pizza! That’ll really drive business away!”

And the left wonders why I’m so derisive when I talk about economic issues.

A large business that makes tens of millions of dollars can’t necessarily afford to lose more of their profits; $87 million wouldn’t even keep the company afloat for two months if things went bad. Schnatter’s own fortune wouldn’t even keep the company afloat for six months – a fair-sized portion of his net worth resides completely in the 6.1 million shares he owns in his own company. If they were to go under, his net worth would all but evaporate. Not to mention the losses he’d incur just trying to salvage what was left. The price of his pizzas would go up by about 10-14 cents per pizza on average; that doesn’t break down the rise in price for everything on the menu, because the price of some items would rise more than others. While Forbes talks about the cost only rising by a certain amount based purely on the health insurance costs, what their writer didn’t take into account are the other companies that Papa John’s buys from – particularly food and packaging companies, all of which must also offer health insurance to employees who weren’t eligible or didn’t sign up before. That adds to his cost because those companies raise their prices as well. They, like all other companies, have to find a way to recoup lost profits. Too much of a hit and the company is no longer as profitable for investors – they start selling off and take their business elsewhere.

You see, there’s more to this than simply a guy who is supposed to be worth $600 million. If any of the liberals who are boycotting Papa John’s (among other restaurants) right now had taken at least one economics class to supplement their studies in underwater basket weaving, they might have been able to deduce that there’s more to it than what they see on the surface.

In the last post, I talked about the higher cost that I, as an individual, am paying for my health insurance. I have a deductible that I didn’t have before. I pay more than twice per paycheck what I was paying five years ago. Liberals say that their goal with Obamacare is to provide preventative healthcare to those who supposedly wait until they have a medical emergency so that their costs don’t get passed on to us – the cost, however, is still getting passed on to us, and it’s more expensive than it was before.

Their way of doing this is to force employers to pay for health insurance for employees who don’t actually work full-time. Remember, for decades now full-time has been considered 40 hours per week. Anything over 40, and companies are required by labor laws to pay overtime. In one fell swoop, the Democrat supermajority in Congress and the White House managed to raise the federal minimum wage by two dollars an hour (from $5.25/hr to $7.25/hr) and require all companies to offer healthcare to all employees who work 30 hours a week or more along with the same law that requires every single person to buy health insurance and hamstrings a private industry by taking away their ability to determine who they want to risk covering. (Oh, and let’s not forget – part of the law requires 80-85 cents of every premium dollar to be spent on coverage itself, because the liberals can’t handle the idea of anything in healthcare turning a profit.)

What could possibly go wrong?

It all comes down to personal rights. The government made an incredible power grab when Obamacare was passed. They took power they did not have to force something radically unpopular on everyone. Our rights as a society took a massive hit when this legislation passed, and the consequences are becoming more clear as some of the deadlines in the bill race towards us. It’s all done in the name of altruism, the idea that everyone should sacrifice something to help and those who have more should sacrifice more. This kind of high-level socialism can only be very detrimental to a free-market economy. The Robin Hood mindset among liberals is doing damage that we may never recover from, and it’s all because the have-nots are angry with the haves.

Basing laws on what one side considers fair has never been a good idea.

Next up: the estate tax, and what it will really do if left unchecked.

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Comments

One Comment so far. Leave a comment below.
  1. Margaret,

    I boycott Papa John’s because they make horrible pizza. The same goes for Pizza Hut and Domino’s (though I will admit on a RARE occasion we have ordered from Domino’s). I’d much rather order from a local place any day of the week.

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