Class Warfare in America

Michael Kinsley has an excellent article this morning: The Return of Class War: Bush and the new tyranny of the rich. It starts by pointing out the essential tension between the two pillars of democratic capitalism:

Democracy presumes and enshrines equality. Capitalism not only presumes but requires and produces inequality.

Western societies resolve this tension with a truce. We set a balance between the two, where we limit both the inequality the market can produce and the ability of the majority to redistribute wealth to create equality, thus allowing us to benefit from both. Kinsley describes this as

...an unspoken deal, a nonaggression pact, between democracy's political majority and capitalism's affluent minority. The majority acknowledge that capitalism benefits all of us, even if some benefit a lot more than others. The majority also take comfort in the belief that everyone has at least a shot at scoring big. The affluent minority, meanwhile, acknowledge that their good fortune is at least in part the luck of the draw. They recognize that domestic tranquility, protection from foreign enemies, and other government functions are worth more to people with more at stake. And they retain a tiny yet prudent fear of what beast might be awakened if the fortunate folks get too greedy about protecting and enlarging their good fortune.

He then goes on to point out that, in America, this truce is breaking down. The affluent have long used their wealth to leverage political power, but now they are using that power to grant themselves greater and greater tax cuts, undermine social programs, and shift the burden of paying for society onto the less affluent. In other words, the rich are waging class warfare on the poor.

The application to New Zealand? Down here we've traditionally favoured democracy over capitalism, and our truce has included a progressive tax system and a strong welfare state. In the 80's and 90's, Douglas, Richardson and friends shifted the balance in the other direction, and there is still a faction of the affluent (currently being courted by National) who advocate an even more extreme shift towards inequality. The American example shows what this actually means, and IMHO gives us good reason to resist such changes.