The problem with societies that have massive income inequality isn’t just a matter of fairness. It’s a matter of functionality. In the 18th Century, French peasants really had no hope of improving their lives or the lives of their children. That’s unfair, but it’s also dangerous. Whenever food became scarce, riots were the result. The bourgeoisie could aspire to greater wealth, but they couldn’t protect their interests through the acquisition of political representation. That made for an inefficient economy and the introduction of the guillotine. Perhaps the worst problem, however, was with the privileged classes of the aristocracy and the clergy. Neither group were exposed to a healthy amount of accountability, and particularly in the case of the aristocracy, they lost any semblance of work ethic because they didn’t have to strive and work for their wealth. A nation run by unaccountable priests and trust-fund babies is not going to be prosperous and stable in the long run.
A healthier system has a kind of convection, with people at the bottom constantly rising, while people at the top come back down. Maybe it would be better to say “families” than people. This type of system provides hope to those at the bottom and limits complacency from those at the top. It keeps things dynamic and works against stagnation.
This is why I think it’s important to have a progressive tax code, an Estate Tax, and to make investments that help people to afford an education or gain access to loans. It’s the American Way. When I see a proposal from Louisiana Governor Bobby Jindal to eliminate all income and corporate taxes and replace them with a higher sales tax, I think that it is counter to the whole spirit of America. Jindal doesn’t understand why our country has been so successful.
