Last week, I wrote about why investing knowledge should be a part of everyone’s basic education for purely practical reasons. But there’s another benefit to being an investor – how it teaches you about the world.

Here’s an example of what I’m talking about. In his article “The United States of Toyota”, Peter M. De Lorenzo writes, “But after all is said and done, there is one simple reason why Toyota never has been and never will be an ‘American’ car company. Well, 13.2 billion reasons, actually. Toyota earned a $13.2 billion profit in 2006. And where, exactly, did those profits go? It seems there’s one very big thing that isn’t American about Toyota, and that is where those profits go at the end of the day.”

No reasonably educated investor should be able to read that paragraph without cringing at the silly economic nationalism all tied up in it, not to mention the blatant misunderstanding of how a corporation works. Mr. Lorenzo rhetorically asks where did those profits go, but the manner in which he’s using the question indicates that he doesn’t actually know the answer. He’s implying that this money came from people in the US and went to some vague entity in Japan. No investor who has learned to do the most basic financial analysis of a corporation would make this mistake.

First of all, that number is Toyota’s worldwide net income – not just from the US. That money came from all over the world. Where does he think this money goes? To the government of Japan? Well, some of Toyota’s income does. Toyota paid $7.7 billion in taxes. However, that includes taxes to the US government, and that’s deducted before the net income number, so the number he’s using isn’t going to a government. Does he think it went to some employee high on the food chain, like maybe the CEO? Sorry, his pay was already accounted for in the expenses.

Ultimately, the only thing a corporation can do with profits is either distribute the money to shareholders or put it back into the business. Toyota paid $2.9 billion in dividends for FY2007, and much of that surely went to shareholders in the US. As far as putting it back into the business, I doubt even Mr. Lorenzo would argue that Toyota isn’t doing a good job of that. He actually mentions their US investments in factories and such in his own article. The FY2007 income statement shows they spent $164 billion on raw materials, factories, and labor (COGS). And what about the $19 billion they spent on marketing, sales staff, human resources, etc (SG&A on the income statement). Those numbers dwarf the net income, and how much of that do you think went to the US?

When it comes to a big multinational corporation like Toyota, it’s absurd to try and call it a Japanese company or an American company. Even if Toyota didn’t have a single factory in the US, corporations like this have shareholders all over the world, and ultimately they are the ones who get the profits. If you’re complaining about corporate profits, you’re effectively arguing that the ordinary citizens of any country should not be able to grow their wealth through investing. Even a parking lot attendant can buy a small piece of a corporation and watch his money grow to half a million dollars, and that only happens because of companies like Toyota who create shareholder value.

Once you start investing in stocks, it’s hard to maintain this kind of us-versus-them, nationalistic view of the world. If you think corporations in Japan or anywhere else are generating a lot of profit, you just buy a piece and reap the rewards yourself. There are thousands of corporations out there willing to put your money to work. In the age of the Internet, there’s nothing preventing you from taking a piece of the global economic pie except your own inaction. You can hardly blame anyone in Japan for that.