Sunday, August 06, 2006

Death Tax? Prevention of dynasty.

America is a plutocracy. By and large the country is ruled by the rich. Most of the elected officials and representatives are millionaires. There is nothing wrong to this system as long as the rich got their money by fair play and merit. Inherited huge wealth, contrary to the idea of meritocracy, is a threat to the freedom of ordinary people and the generation to come. Just study the effect of compound interest and you will know what I said is true. The return of capital is higher than the growth of productivity in the economy. If the capital will not reduce a bit, and the wealth disperse, when a tycoon dies, the effect of compound interest will guarantee the family claim an ever larger share of the total output of the entire economy. The people who produce the output will claim an ever smaller share. In the long run this will create a two tier society, one produces the products and service to be consumed (the working class), and the other owns the majority of the product (the dynasty class).
This is a threat to the freedom of most of the population, baring the privileged few. Yes, the Congress and the Senate is in favor of repealing the estate tax - an unjust death tax in their words. No surprise considering the fact that they are the privileged few. But the rest of us should remember that they are not having our best interest in mind. Nor do they have our children's best interest in mind.