October 15, 2012

The Persecution of Capital

Over a hundred years ago Gustave Le Bon wrote, “A leader is seldom in advance of public opinion; almost always he follows and espouses all its errors.” Today, our democratic leaders increasingly follow polls instead of principles. To some extent they are not so much leaders as they are the first to follow. It was the Danish writer, Søren Kierkegaard who objected to “the public” as a concept. He called it a phantom, “an abstraction….” In reality, politics is the business of minorities who pretend to speak for “the people.” And some of these minorities predicate themselves on the persecution of capital.

As Le Bon once explained, “Capital is work, either material or intellectual, accumulated.” He further stated: “It is capital that has freed man from the slavery of the Middle Ages, and above all from the slavery of Nature, and which constitutes today the fundamental basis of all civilization.” And by all means it is the intellectual capital of modernity that deserves the lion’s share of credit. Yet capital and capitalists have been loaded down with blame for all that has gone awry. We are told that capital does not pay its fair share. We should ask, however, whether there would be any share at all if not for capital.

The attack on capital, on civilization itself, now develops through the good offices of “democracy.” Since free market principles are difficult for the average man to grasp, how will an electorate composed of average men avoid the siren call to lynch the capitalists and plunder their capital? One might have a hundred elections in favor of capital. For disaster to materialize, you only need one election against capital. In addition, we must not forget the possibility of “death by a thousand cuts.”
The real danger of democracy, wrote Le Bon, lies in its inevitable budgetary excesses. Therefore, Le Bon explained in his Psychology of Socialism, “…democracy is destined to become the most costly of all systems of government.” The prodigality of democratic government is now famous and beyond question. According to Le Bon, universal suffrage always tends to result in: “pledges of ruinous bounties; the creation of superfluous employments, the unconsidered development of public works and services…. In Parliament they dispense the promised largess, occupying themselves by benefitting their electorate at the expense of the budget….”

Perhaps the most egregious example of this may be found in California, the largest economy among the 50 states. According to a Breitbart.com piece, “Exodus: California Tax Revenue Plunges by 22%,” the Golden State is killing the goose that laid the golden egg. The mediocre minds that govern California are now proposing tax increases to make up for falling tax collections (see Jerry Brown’s California Tax Increase Initiative for details). They do not understand that high tax rates can kill off thousands of businesses. And that’s precisely what is happening in California.

As noted by the California Taxpayers Association, “California is a high-tax state, with some of the steepest sales tax, personal income tax and corporate tax rates in the nation.” California has the highest general sales and use tax in the fifty states (7.25 percent); the second-highest gasoline tax in the nation (48.6 cents per gallon); the second-highest personal income tax with a top rate of 10.3 percent; the highest corporate income tax in the West; and despite Proposition 13, California’s property taxes are ranked 14th in the nation.

As a consequence of these taxes and other regulations, California lost 4,600 businesses last year and is the worst job creator among the 50 states. After Bing Energy left Chino CA for Florida the Mayor of Chino was quoted in the 24 Aug. Los Angeles Times as saying, “I understand completely why they left, with a Democratic governor elected, plus all the environmental restrictions, workers’ comp, sales tax and licensing fees on vehicles…. Companies are leaving in droves….” As for investment in California, consider Wendell Cox’s piece in the Wall Street Journal Online, California Declares War on Suburbia. Wendell explains why California is going over a fiscal cliff. The politicians of California have “declared war” on the single-family, detached home “all in the name of saving the planet.”

The cost of environmental regulation represents a hidden tax of incalculable destructive power. Environmentalism is a weapon with which to batter businesses into pulp. Consider, for example, the Global Warming Solutions Act signed by former California Governor Arnold Schwarzenegger. Here is a war against the consumer, against corporations and industries, against cheap energy and sound economy. And all of this is made inevitable – even unstoppable – by an electorate that has been persuaded to suicide by a bogus theory.

With the degradation of higher education, and the profound activism of environmentalists, the future could not be more readily delineated. An already staggered economy, fragile and shy of recovery, is tasked with solving social and environmental problems which either do not exist or cannot be solved by government. What is denied throughout is the service rendered by the capitalist who reduces the cost of production and benefits humanity in the process. “To persecute capital,” wrote Le Bon, “would be to oblige it to vanish or to conceal itself, and at the same blow to kill industry, which it would no longer be able to support, and also to suppress wages.”

Today we find that industry is being killed, wages are being suppressed, and capital is vanishing or hiding. If we want to reverse the trend, we must oppose the persecution of capital. We must, on the contrary, defend capital – and the freedom required to accumulate it.