Aristotle feared that democracy might become the rule of the mob, the demos. He saw their short-sighted, wilfulness as a threat to good order. Of course Aristotle did not know how big and powerful a state could become, nor how sophisticated the democratic process could be at refining the will of the people.
Today, at least when it comes to matters of money, the real threat to good order does not come from the rich or the poor but from the median voter. The rich, as always, can always buy themselves some power but it is the median voter – the swing voter – who holds the key to power. Typically the median voter is also the media income earner and so politicians have learnt how to bend the welfare and tax systems to ingratiate themselves with this group.
In the central distributionary matters of tax and benefit policy there are two competing tactics at play. The Right tries to find ways of making the median voter believe that they are one of the rich, but are being exploited by the poor; the Left tries to make them feel that they are one of the poor, and are being exploited by the rich. The reality is that it is the median man who is exploiting both rich and poor.
What justifies extra high tax rates for the rich? The rich must pay more in tax, of course they must, but it is more difficult to explain why they should pay at a higher rate of tax. What justifies the even higher marginal tax rates (or benefit reduction rates) faced by the poor? If high taxes create disincentives then the poor should face the lowest tax rates – not the highest.
Rationality supports neither policy. In fact both poor and rich groups are more likely to be subject to disincentive effects than are middle-earners; for they are not in the kind of steady and secure work that the typical middle-earner enjoys. It is not rationality or economics that explains the current system – but political pandering to the key voter group.
We currently live in a medianocracy and this distorts our tax, benefit and welfare systems. Constitutional government has always been justified on the basis that the rule of law must also be used to discipline the will of the people. It seems to me that we must begin to learn now what rules should discipline the welfare system. A fair welfare system would pay much more attention to ensuring that those who worst off were given the fundamental guarantees and securities that protected their active citizenship.