The following appeared in the editorial section of a local newspaper:
“The profitability of Croesus Company, recently restored to private ownership, is a clear indication that businesses fare better under private ownership than under public ownership.”
Discuss how well reasoned you find this argument. In your discussion be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionable assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthen or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion.
Later in the article, the author states, ‘Since 1978, when the government took the company over, the corporation’s profits have plummeted from $1 billion to $30 million.’ Immediately, the reader recognizes this as a classic case of faulty reasoning within an argument. The author does not present any supporting data or facts to bolster his claim, nor does he provide any rationale for the statement. Without such evidence, the reader is left to rely on his intuition and presumptions. He might assume that under public ownership, the company’s profits were higher simply because the government owned them in the first place. But this assumption is questionable at best. Under public ownership, the government might simply have demanded higher profits than a private company could deliver. Another possible explanation is that the company may have been inefficient, and thus less profitable, under public ownership. Thus, without data to support his claim, the argument fails
The author offers a second reason for his conclusion, which is that ‘The company has weathered bad times well, but in 2009 it entered a recession that saw it lose $15 million in profits.’ Again, the author does not present any facts or data. However, if we assume for the sake of argument that the decline in profits was due solely to the recession, then this argument fails, too. The recession began nearly four years before Croesus was returned to private ownership. The profits might have fallen as Croesus adjusted to the new order, but the company certainly did not enter a recession until long after the government had taken it over
Another reason the author’s statement fails is that the author does not offer any evidence that Croesus is more profitable now than when the government owned it. He simply asserts that the profits are higher. The newspaper article offers no data to support this assertion, nor does it suggest that he has any other information to support it. If we assume that the author is correct, then the company did in fact rebound from a recession, and that part of its profitability can be attributed to its new ownership. However, the data offered in the article do not offer any proof for this supposition
Another problem with the article is that the author does not account for the fact that, when the government took over Croesus, the company’s management was incompetent. When the government took over Croesus, it did so in an effort to save the company, not to make it more profitable. The management and leadership of the company were not capable of turning the company around, but the government’s intervention was, in fact, the underlying cause of the problems the company was experiencing. Thus, the company’s profitability cannot alone be attributed to the change in ownership. Without proper management, the company would never have made a profit in the first place. Therefore, the article’s argument also fails.