The only reason Ronnie Reagan was able to sell the American people on his trickle down snake oil was because the middle class sees itself as temporarily-not-rich. So they believed his bullshit not because it would benefit them in (what they saw as) the short term, but because they believed they would soon be rich.
There are advantages to the fact that the American middle class sees itself as temporarily embarrassed millionaires, namely that it encourages the sort of risk taking that has put American companies at the top of the global economic charts. However, for every Gates and Zuckerberg, there are hundreds and thousands of people who actually end up struggling to make ends meet. Unable to accept their failure, they continue to believe in low taxes for the wealthy, thinking they'll be in that group as well one day soon.
And that's not necessarily a bad thing. If individuals are willing to accept tradeoffs where they have a certain probability of winding up less well off, versus a certain probability of becoming very wealthy, who is to tell them which choice they should make? I mean, if a given person is quite fine with a boom or bust scenario, and says "I'll either be rich and successful or die a broke, poor, bitter, broken down old man," then so be it.
Income equality would be nice in many ways, but if the inequality is a reflection of the underlying values of the culture, maybe we should quit trying to fight the culture.
> If individuals are willing to accept tradeoffs where they have a certain probability of winding up less well off, versus a certain probability of becoming very wealthy, who is to tell them which choice they should make?
The problem is that most individuals have grossly incorrect beliefs when it comes to the probability of them becoming successful.
It's really steady cracks in the underpinning ideas in the efficient market hypothesis. We've made a LOT of assumptions in our economic and tax policy around ideas that haven't necessarily proven to be true.
It works when the people getting the money are motivated to invest it in businesses and people "downstream". But if the richer people just hold on to the money, nothing happens.
The ones who get obscenely rich are the ones who invest -- that is, they create or sustain productive businesses. Those who merely hoard don't make it nearly as far up the ladder.
