Facts vs. Opinion: Americans think average business profit margins are 36%

Energy, rent, labor, inventories, shipping, and a host of variables. Suffice to say, businesses – large and small – face an enormous amount of costs that eat away at their revenues and overall bottom line.

Profit margins are thin. For instance, if you own and operate a restaurant, your profit margins are anywhere between one and five percent – any slight increase in the cost of doing business, then you can say goodbye to black ink.

But that’s not what Americans think, though.

The American Enterprise Institute (AEI) produced a chart that included the results of a 2013 Reason-Rupe poll and hard data. It highlighted that Americans believe the average profit margin for U.S. businesses is 36 percent, which is historically in line with the public opinion in the 1970s and 1980s, when they cited 28 percent to 37 percent.

However, the average profit margin is 7.9 percent for all companies and 6.9 percent for more than 6,000 companies excluding financials. Walmart, despite being one of the richest companies in the world today, grapples with a profit margin of just 2.1 percent.

Here is the chart:

This is one of the many problems with opinion polls and public policy. Since the public argues about corporate profits and how high they are, politicians will react by declaring to rein in these profits (i.e. Senators Bernie Sanders and Elizabeth Warren). They may have the data, but the voting public, which places them into power, and their opinions are far more important than facts.

Unfortunately, public officials will resort to theft to satisfy the population’s envy and greed.

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