An Excellent Speech by Raghuram Rajan Captures the Subtleties
of Achieving Sustained Economic Growth in a Democratic System. One Key
Observation made by Rajan:
“What preserves that
balance across the world? One reason that the median voter rationally agrees to
protect the property of the rich may be that she sees the rich as more
efficient managers of that property. So, to the extent that the rich are
self-made, and have come out winners in a competitive, fair, and transparent
market, society may be better off allowing them to own and manage wealth, while
taking a reasonable share as taxes.
The more, however,
that the rich are seen as idle, incompetent, or crooked, the more the median
voter should be willing to vote for tough regulations and punitive taxes on
them.”