History proves that to maintain a civil society it is wise to keep the wealth gap between rich and poor to a reasonable level. Every culture has a different optimum wealth gap. For example, Japan’s optimum wealth gap is lower than Europe’s.
The wealth gap has been increasing around the world and is at dangerous levels due to the financialization of our economies and the low interest rate policies we are using to try to maintain business as usual. The wealth gap has been increasing not due to the skill of the rich or fault of the poor, but rather is a predictable outcome of our monetary policies.
Traditional socialist policies maintain the wealth gap by redistributing wealth from the rich to the poor, but in today’s world this policy will make things worse.
Much of the wealth of the rich sits idle. If this wealth is redistributed it will be immediately spent which will increase inflation, resource depletion rates, and CO2 emissions.
We need a Socialism 2.0 that understands limits to growth and the relationship between energy and wealth.
To maintain the wealth gap in our growth constrained world the correct policy is to tax excess wealth from the rich and pay down public debt while not permitting governments to re-borrow the funds, or to convert the excess wealth into cash and bury it.