Mobility and Equality
households over $80,000 [Bresler, 1982]. These Although absolute equality is impractical proposed changes were based upon the belief in a modem society, existing inequalities could that more of the national income should go be reduced by an expanded program of in to the affluent in order to increase savings come redistribution. There are two difficulties and investment and thus restore prosperity. here: political and economic. The political Before the proposals could be fully difficulty is in persuading middle-class people men ted, further changes were made which to accept the sacrifice involved. Since the top reduced the impact of the Reagan policy ‘. 5 percent of the country receive only 15 changes. The entire episode shows how the percent of the national income [Statistical distribution of income is not purely a result of income could not be financed simply by higher taxes upon the rich. It would need to reach deeply into the middle class, who are already in revolt against high taxes. There is also the politically important fact that such income redistribution would benefit the poor, most of whom do not vote regularly, at the expense of the, most of who do vote regularly. Thus, income transfers to the poor seem more likely to be cut than . to be expanded. The economic difficulty is that most of the investment capital which finances economic growth comes from the savings of the affluent. Many economists argue that heavy taxes on the larger incomes create capital shortages, inhibit economic growth, and promote unemployment [Okun, 1975, p. 5;Feldstein, 1977]. It is uncertain how much income redistribution a capitalist economy can support without drying up capital formation so much that the economy stagnates. To Marxists, this simply reveals the failures of a capitalist system. Capital formation is necessary for any modern economy. ‘Communist states set wages .and prices to’ provide profits which can be used as capital. Regardless of the system, capital is money with held nom consumption. Which mode of capital formation is most efficient and just is a matter of continuing” debate.