Daniel Little post (via Mark Thoma) about John Rawls’s idea of a Property Owning Democracy (as opposed to a welfare state). I believe this gives the theoretical underpinning to what I’ve been trying to say: Once economic inequality undermines political equality, you’ve got a problem as a democracy.
To achieve levels of economic inequality that are compatible with democracy, Little says:
How would the wide dispersal of wealth be achieved and maintained? Evidently this can only be achieved through taxation, including heavy estate taxes designed to prevent the “large-scale private concentrations of capital from coming to have a dominant role in economic and political life”
But I don’t believe that our current problem is caused by the economic and political power of dynasties. Jaime Dimon and Vikram Pandit (and the Koch brothers) have “earned” all of their money during their lifetimes. While I certainly support a substantial progressive estate tax, we really shouldn’t wait until these guys are dead.
Instead, we need to have a steep progressive income tax to help avoid the severe economic inequality in the first place.
That, and we need to get private money out of politics.