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Reaping Rewards from Human Capital

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Here’s a letter that I sent yesterday to CBS newsman Charles Osgood (Fordham, ’54; Economics) after I listened to this broadcast [2] of The Osgood File:

Dear Mr. Osgood:

Today you insinuated that oil retailers who sell a particular inventory of gasoline at a price higher than they expected to receive when they first purchased that inventory are misbehaving.  You’re mistaken.

You attended Fordham University in the 1950s, investing in yourself in the hopes of earning a good living.  Surely your real income today is much higher than you, when you were in college, expected it to be.  Are you misbehaving by accepting from CBS a salary that is higher than you once anticipated?  Of course not.  But just as it is legitimate for you to reap benefits from increases in the market value of the asset that you invested in (namely, yourself), it is legitimate for oil companies to reap benefits from increases in the market value of whatever assets they invest in.

Sincerely,
Donald J. Boudreaux

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