Equities can melt up in real terms for a very long period of time, there doesn’t have to be a return to normalcy within in our lifetimes, though I do predict there will be an economic calamity within my lifetime.
The main issue is how will asset prices be maintained when civil unrest makes securing physical assets so expensive that they can no longer yield positive returns. Until then the system is stable as the people with power are able to retain power, the increasing inequality helps intrench the power further.
People see a wealth tax as a way out, but if that happens the state is entirely dependent on the growing the wealth of the mega rich and will act in their interest in effect cementing their power even further.
> but if that happens the state is entirely dependent on the growing the wealth of the mega rich and will act in their interest in effect cementing their power even further.
This is a laughable premise.
A huge amount of government revenue has always come from the wealthy, yet there is consistent pressure to reduce their taxes in the US government. Why? Because the IRS doesn't run the US government, politicians do. Why would a wealth tax based government be any less likely to try and reduce their tax burden?
A rich person's power comes from being rich: From controlling significant resources, things like communication channels, important industry, bribes/kickbacks/whatever you call them
I didn’t suggest that the wealthy would want their taxes increased, but that it would increase inequality that would benefit the wealthy.
That said there are many billionaires who advocate for greater taxes, Patriotic Millionaires and Proud to Pay more. Including but not limited to Warren Buffet, Bill Gates, George Soros, and Abigale Disney. Bill Gates, as an example, goes to incredible lengths and uses shady Caribbean methods to minimize the tax he pays.
It’s important to make a distinction of weighting the wealthy by numbers vs wealthy by wealth, the higher the inequality the bigger the difference. The wealth is dominated by an increasingly small minority.
I’m making a prediction of what I strongly believe will happen, not what has happened. There are examples in history where there were unexpected emergent behaviors created out of perverse incentives. One of my favorite is the selling of indulgences by the Catholic Church to pay for St Paul’s cathedral, meant the Catholic Church made more money if people sinned more, which created some problems.
The main issue is how will asset prices be maintained when civil unrest makes securing physical assets so expensive that they can no longer yield positive returns. Until then the system is stable as the people with power are able to retain power, the increasing inequality helps intrench the power further.
People see a wealth tax as a way out, but if that happens the state is entirely dependent on the growing the wealth of the mega rich and will act in their interest in effect cementing their power even further.