Countries with a lot of inequality are unstable countries. Without economic stability and security for the populace, countries are prone to unrest and political extremism. Nothing good EVER comes from political extremism. Whether it is fascism in Hitler’s Germany or the communism in Stalin’s Russia, it sucks. Not only does it suck … it ALWAYS fails.
America has teetered on the brink of extremism before, and it is doing it again.
Look at the last 100 years of income inequality in America:
You notice those big spikes in inequality? Well, in the late 19th and early 20th century there was a massive upsurge in political extremism; on the right it was the KKK and the America Nazi Party while on the left it was the communist and socialist parties. People don’t seem to remember that the communist party was growing in leaps and bounds until Theodore Roosevelt slowed it’s growth by giving unions federal protections and smashing monopolies, making it easier for workers to make a living wage. But even with those advances the socio-communist leader Eugene V. Debs got almost a million votes in each of the presidential elections of 1912 and 1920. People also associate the KKK with racism, but it was fanatically nationalist and anti-immigration and anti-tax and anti-Big Government as well. The KKK was embedded in the federal government for decades and there is evidence that the KKK actually got a member into the Oval Office near the height of income inequality.
So extremism is undesirable to say the least … but you can’t just let Big Business run amok. That’s how you get the economic inequality and the oligarchy in the first place. What to do?
Well, history has shown that neither anti-federalism or communism works. You’ve got to get something more in the middle. Libertarians insist that if the government would just let everyone alone (soft anti-federalism) and then the strong would thrive and it would all be okay … but it doesn’t work in reality. That leaves democratic socialism, which reins in capitalism without attempting to destroy it.
With the coming of the Great Depression in the 1930s, a sharp increase in protest and anticapitalist sentiment threatened to undermine the existing political system and create new political parties. The findings of diverse opinion polls, as well as the electoral support given to local radical, progressive, and prolabor candidates, indicate that a large minority of Americans were ready to back social democratic proposals … The economic crisis of the 1930s was more severe in the United States than in any other large society except Germany. It presented American radicals with their greatest opportunity to build a third party since World War I, but the constitutional system and the brilliant way in which Franklin Delano Roosevelt co-opted the left prevented this. The Socialist and Communist Parties saw their support drop precipitously in the 1940 elections. America emerged from the Great Depression as the most antistatist country in the world.
In short, FDR taxed the living crap out of the uber-wealthy and conglomerates, took over control of banking and made it play by a set of rules to protect little investors, then pumped the tax money back into the economy via federal grants and endowments, public works, and flat-out welfare. It worked a treat, especially during the manufacturing boom of WWII and afterwards. FDR’s soft-socialism the reason you have that nice even flat-zone in inequality during the 1940s, 1950s, and 1960s. The US economy has never been better than when the the taxes were the highest on the wealthy. Yes, taxing the rich is best for the economy. That’s not a debatable opinion; it is a fact.
The right-wing wigged out about this, BTW. They actually plotted FDRs overthrow and the establishment of fascism … because that Hitler fella was doing such a bang up job in Europe.
Hopefully, the American Democrats will actually BE the part of the left again and overturn the right-wing ideological ‘reforms’ that have crippled the US. Likewise, I hope the UKKKip lies and fallout from Brexit will stop people from looking to the far-right demagogues for help and seek solace in the progressive camp, because semi-socialist policies are the UK’s best hope to recover from austerity.