On America's Middle-Class Divide

With both political parties having concluded their respective rah-rah-fests and each vehemntly proclaiming "The Other Side" [3] as failing miserably; it appears, as Raghuram Rajan points out in his latest article [4] that while America’s presidential election campaign is superficially a debate about health care and taxes; it is much more fundamentally about democracy and/or free enterprise. As he notes, democracy implies regarding individuals as equal and treating them as such, with every adult getting an equal vote, whereas free enterprise empowers individuals based on how much economic value they create and how much property they own.

What prevents the median voter in a democracy from voting to dispossess the rich and successful? And why do the latter not erode the political power of the former?

The answer relies upon the 'dream' (American or otherwise) of a level playing field and hard-work paying off; once that middle-class hope begins to fade then the self-reinforcing benefits of democracy and free-enterprise will become self-destructive (not helped by the current parties' actions to enrage the middle-class 'working rich' against those losing faith).

The United States needs to restore the possibility of achieving the American Dream for its middle class, even while it reaffirms the historically light regulation and relatively low tax burden that have allowed enterprise to flourish.

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