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A simple principles explains how democracy really works to benefit one group at the expense of several others — and why a Capital Gains Tax would be harder that it looks. The principle is something called Director's Law.
"Director's Law states that the bulk of public programmes are designed primarily to benefit the middle classes, but are financed by taxes paid primarily by the upper and lower classes. The empirically derived law was first proposed by economist Aaron Director.”Director’s Law is so-called after the delightfully named Chicago economist Aaron Director. Director’s Law states that
“Government has coercive power, which allows it to engage in acts (above all, the taking of resources) which could not be performed by voluntary agreement of the members of a society. Any portion of the society which can secure control of the state's machinery will employ the machinery to improve its own position. Under a set of conditions to be discussed below, this dominant group will be the middle income classes.”
Milton Friedman calls it the Robin Hood Myth: “the myth that government has benefited the poor at the expense of the rich.” They key essentially is to fuck the poor and the fairly rich (we’ve never enjoyed a “very rich” here) in order to benefit the middle class.
As Michael Cullen was to confirm for us when he designed the middle-class subsidy scheme Welfare for Working Families, this is still the logic of local democracy.
“On The Logical level you have a political system under which laws are passed by 51% of the people voting One Way against 49% of the people. Now the way to get a law passed therefore is to form a coalition covering 51% of the people.
“You might think that you would take the bottom 51% versus the top 49% but the more you think about it the more you realise that's not a very effective way to form a coalition. Why? Because those people who are at the bottom tend to be much less skilful in political activity for the very reasons that leave them at the bottom in the economic scale. …
“The most effective people in political activity those of us in the middle classes. Where are the people who are literate; where are the people who write for the newspapers; where are the people who mount the hustings; where are the people who provide the candidates.
“Well you might say why doesn't the Coalition come from the top 51% all the way down. The answer is that those people at the top [are]a place we can get a lot of money from! And it's worth sacrificing a few votes to get a large fraction of a tax base.
“And therefore the logically most reasonable Coalition is sort of 51% of the people running from the lower-middle class through the upper-middle class, and leaving out both the very rich at the top and the very poor at the bottom.”
English (US) ·