Meritocracy in Democracy
As congress departs for its summer recess, one of the most prominent bills left on the table is the permanent change to the "estate tax". Why is this such a contentious bill, and, more importantly, why are Republicans so wrong on this one?
Estate tax has evolved greatly since its inception in 1916. However, right now it still retains its initial purpose: reducing the income divide between America's younger generations to prevent the emergence of entrenched socioeconomic classes that Europe has been plagued with for millenia. To this end, the tax has been reasonably effective: America has the highest rate of transitions between socioeconomic classes of all developed nations.
On the other hand, as we have seen with the Rockefellers, Carnegies, Kennedys, Bushs, and the like, there is a growing entrenchment of an American upper class. The Republicans current efforts to reduce and repeal the estate tax serve simply to increase this entrenchment - not to help the economy or any other purpose (look at Europe's stagnation!)
What's the difference? By taxing estates valued at over one million dollars (fluctuating wildly over the next five years), we reduce the amount of money that upper middle and upper classes can inherit without negatively impacting the transfer of monies between generations of the lower, lower middle, and middle classes - as in, protecting the American Dream. That means that we promote a meritocracy because each generation has to work anew to reach high socioeconomic stratum.
That's not to say that those children whose parents are already in high socioeconomic stratum will be even with those whose parents are not. Quite the contrary, they have access to the education and networks critical to rapid success. However, what it does mean is that these children must still work extremely hard to enjoy the same success as their parents because they are thrown into competition with more of their peers from other socioeconomic backgrounds. This competition is particularly evident in schools - the profusion of scholarships in elite private high schools and universities, as well as the judicious use of standardized tests and the notorious "tell us how poor and disadvantaged you are" essay questions means that the students accepted to these institutions are rated on their merit as well as their parents' wealth.
What do merit and competition mean for society? EVERYTHING! Economies grow through competition, hard work, and the pursuit of riches. While everyone laments the overinvestment in dot-com companies, the fallout is not as bad as everyone believes - in less than a decade, more well more than a decade's research and development was achieved and the productivity gains resulting from it will continue to propel the global economy for decades.
The evidence is all around us. The 40 hour work week exists only for a very small portion of the population. For example, I'm penning this essay on Sunday. With many companies establishing offices across the globe, it is not uncommon for people to come into the office at odd hours of the morning or night to participate in teleconferences. Work on most projects runs around the clock as offices pass off projects to each other based on their timezones. The proliferation of modern communications tools means that people bring their work home, and continue it on the road as well.
This means that Americans must work both harder and smarter in order to maintain our preeminence in the global workplace. In the face of more competition abroad, we must also make efforts to step up competition at home. Thomas Jefferson is famous for saying "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." The truth of this saying has never faltered. However, another, parallel, statement has emerged to be just as truthful: The tree of economic growth must be refreshed from time to time with the blood of the meritorious and the wealthy.
So what's the fallout from all of this? Well, as part of a broader effort this alteration to the tax code risks killing something all (or almost all) Americans believe in: The American Dream.