Wednesday, March 26, 2008


Civilization as we know it probably began in the Middle East and probably in Mesopotamia or Egypt. These societies were agrarian with each family farming for itself – essentially a subsistence life. However, very quickly these societies divided into farmers and craftsmen and not long after that came military and governors. Of course the governments and the military were consumers not producers so the society had to support them in the form of taxes. Naturally as the society continued to evolve it began to stratify into classes with the military and officials becoming the upper class, the nobility, and the rich. The point of this obvious historical review is to point out that mankind has always been divided into the rich and the poor and that wealth has never been equally distributed. In fact the very idea of equality much less egalitarianism is a relatively modern concept.

Nevertheless this idea that business, businessmen, and capitalists are evil and that the primary purpose of government is to distribute the wealth of society equally. The underlying principle seems to be that the capitalist has no right to the profits because those profits are earned by the workers he employs, therefore, the revenues generated by the business rightfully belong to the workers. Because these capitalists are reluctant to return the profits to the workers who earned them it is the responsibility of government to seize those profits and redistribute them to the workers. The fact that this has never worked in practice is ignored by these social activists who generally have never actually had to earn a profit or been accountable for the results of their decisions. Currently we see this philosophy being employed by Hugo Chavez in Venezuela. He has seized the assets of foreign investors, fixed prices, over employed people, and then blames the US and others for the failure of his policies. The standard of living is declining, goods are disappearing, and while prices are fixed the items are only available on the black market. This result was first observed under the Emperor Diocletian. Lessons from history don’t seem to be learned by social activists.

Of course the most famous of these social reformers was Lenin, who corrected the abuses of the aristocracy by slaughtering all who disagreed with him, seizing all methods of production, confiscating all revenues in the name of the state, and eliminating private property. Theoretically this was supposed to take the revenues generated by the workers and return the wealth to the workers equitably. Of course as George Orwell observed in his famous satire “Animal Farm” some animals are more equal than others. In practice the wealth was not distributed equally but along selective party lines and the result was the stratification of society into the rich and the poor – a fact either ignored or denied by the social activists who even today believe Marx was right and Lenin failed to implement Communism correctly. Hugo Chavez seems to be one of those who think Lenin was wrong and Marxism is right. His failures to make Marxism work he attributes to interference by the US.

But these are the obvious actions of these social reformers whose failures are highly visible. However, there are social activists among us today who still believe in the tenets of Marxism but don’t use such inflammatory names; instead they call for social reforms through legislation. This began with the infamous book “Silent Spring” by Rachel Carson. This book was later determined to be a hoax but the damage was done, industries ruined, and DDT was banned. Of course the damage to public health was ignored in favor of the animals which were alleged to be endangered by DDT. This was followed up by various other efforts at social reform and perhaps the most famous was the ban on smoking. Any empirical ties between smoking and cancer remain statistical even though the incidence of lung cancer has remained steady even as the number of smokers declines. But these were just warm-ups for the social reformers because they really are after business and the rich. These are their real targets because they truly believe that the rich have no right to what they earn as long as there are people living in poverty.

They are attacking capitalism as evil and as allowing the wealth to be concentrated into fewer and fewer hands. They believe that the profits earned by a corporation should be shared with the workers through profit sharing and not distributed to the shareholders – who of course capitalized the business to start with. The idea that it was the capitalists who created and grew the business is ignored. The workers wouldn’t have jobs and there would be no revenues much less profits to share without the capitalists who funded the enterprise initially. These social reformers rarely have actually run a business or have held positions where they were required to earn a profit. Instead, they are opposed to layoffs as a cost cutting measure because in their eyes that is immoral. For them the socialist ideal of employment over efficiency and profit is what should drive industry, not return on investment.

These are the people who are horrified at the “obscene” profits being generated by the oil companies. What is being ignored is the difference between gross revenues and net profits, but this subtlety is ignored in their drive for wealth distribution which is and always has been their objective. This is the whole purpose of the graduated income tax – it is a legislated method to strip the wealth from those who earn it and redistribute it in the form of handouts to those who did not. These are the people who feel that there is something morally wrong with some people being rich while others are poor. They never make the connection between decisions, lifestyle, responsibility and wealth. Those who work hard and make responsible decisions prosper and those who do not suffer the consequences of their bad decisions and efforts to redistribute the wealth to the poor has historically only resulted in increasing the number of poor and lowering the quality of life for everyone. The reality is there are poor and there are rich and there has always been this dichotomy and every effort to form an egalitarian society has failed.

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