For their part, the new rich have willingly shouldered their vastly disproportionate, growing share of the nation's tax burden as long as their incomes continued to rise faster than everyone else's. The government's take of the nation's gross domestic product could quietly be pushed to postwar highs even as tax rates for all but the wealthiest citizens dramatically fell. This bargain between government and America's wealthiest helps explain some of the new economy's most perplexing politics. Government budgets and public-sector jobs are among the biggest beneficiaries of the nation's wealth disparities. Everything works fine as long as wealthy incomes and tax revenues rise rapidly and the rest of economy enjoys at least moderate health.
Difficult conflicts emerge when the balance is upset.
As share prices rose beyond all rational calculation, Wall Street developed an insatiable need for capital. Government, of course, is supposed to impartially administer the nation's laws. Suppose environmental or foreign instability drives up energy costs, which fortuitously remained stable, or even fell, throughout the stock-market boom. Global economics pose even tougher questions. In effect, we could buy more things with other people's money at much lower than normal prices, a trade and investment pattern without a historical parallel.