An extreme and growing concentration of privatized wealth and power divides the world between the profligate and the desperate, intensifies competition for Earth’s resources, undermines the legitimacy of our institutions, drives an unraveling of the social fabric of mutual trust and caring, and fuels the forces of terrorism, crime, and environmental destruction.
In 2005 Forbes Magazine counted 691 billionaires in the world. In 2008, only three years later, it counted 1,250 and estimated their combined wealth at $4.4 trillion. According to a United Nations study, the richest 2 percent of world’s people now own 51 percent of all the world’s assets. The poorest 50 percent own only 1 percent.
In recent years, nearly all the benefits of economic growth have gone to those at the top of the wealth pyramid, as those at the bottom have fallen further behind. This misallocation cannot be corrected by the internal dynamics of an economic system designed to maximize returns to money, i.e., to people with money. Resolution depends on the actions of democratically accountable governments to collect excess gains from those the market favors through fees and taxes and to apply them to investment in education, health care, infrastructure and other public goods that serve the public good, with a bias toward securing the wellbeing of those the market denies.
Crucial steps toward shared prosperity include :
Excess Income Tax: We are not all equal in our contribution to society and meritorious differences in income are fair and appropriate—within reasonable limits. In an environmentally stressed world, those limits are necessarily rather narrow. Concentrations of wealth carry major social and environmental costs properly offset by a highly progressive income tax on incomes above the national median. Think of such taxes as a service fee to society to cover ameliorative action, limit wasteful extravagance, and secure the right of every person to a voice and a means of livelihood. A properly designed progressive tax appropriately places a lower tax on income from productive work, entrepreneurship, and entrepreneurial investments than on income from financial speculation, interest, and passive rent collection—exactly the reverse of current policy.
Jubilee: An hereditary aristocracy created and maintained through the intergenerational transfer of private wealth is a threat to democracy, fair share, and earth balance. Biblical teaching called for a “Jubilee” once each 50 years to restore social balance. Slaves were to be freed, debts forgiven, and land returned to its original owner. It is a foundational moral principle that becomes all the more important in our environmentally and socially stressed world. The estate tax is our modern moral equivalent of the Jubilee, providing a mechanism to restore balance at the end of each life and thereby avoid the accumulation of dynastic wealth.
Economic Democracy: Ownership is power. A society divided between those who own and those do not own is inherently unequal. Economic democracy, the broad and equitable participation in ownership is an essential foundation of a free and democratic middle class society in which every person shares in the responsibilities, rights, and benefits of citizenship, ownership, and service. It is also an essential condition of efficient market allocation free of the distortions of monopoly power. Public policy properly supports universal participation in home ownership and business investment, even as it imposes a progressive service fee on individual assets above the societal median to limit distorting concentrations of wealth and offset their social costs.