The real answer

When Bill Clinton embarked on welfare reform and when George W. Bush talked up the "ownership society" and tax cuts, the national psyche was OK with them because the economy was on track. Incomes were growing, and higher home values made everyone feel wealthier.

Now, the pie isn't growing for most, so everyone is bitterly focused on dividing what's left. This year, it's the 47% vs. the 53%; last year, it was the 99% vs. the 1%.

We should be focused on creating more wealth, rather than worrying about how to redistribute it. A big part of the problem is that our economic policies over the past 30 years have been very focused on consumption over investment and borrowing over saving. We were willing to open the borders and let cheap imports and loans flow in from China. Buying power was bolstered by higher asset prices, driven by inflation, cheap loans and a weaker dollar.

Households were happy -- for a time. Yet the big winners have been corporations and shareholders still enjoying record profitability, thanks to the ability to manufacture cheaply overseas while demanding top dollar here at home. Apple's (AAPL) iPhone 5 is a perfect example of this dynamic. Apple may be considered "cool," but it's also a big contributor to our overall trade deficit.

But it can't go on this way. Despite the Federal Reserve's efforts, inflating the price of assets like homes and stocks won't help the economy, because younger generations can no longer keep up.

The OECD also warns that relying on "taxing more and spending more as a response to inequality can only be a temporary measure." So "soak the rich" isn't really an option, since it will further discourage the kind of capital spending and investment we desperately need, as I discussed in "Why CEOs need our love, too."

That's also the reason it makes sense to keep the capital gains tax rate applied to investment income low. In a report for the American Council for Capital Formation, economist Allen Sinai estimates that raising the capital gains rate to 28% from 15% now would cut U.S. employment by up to 602,000 jobs a year, accompanied by slower gross domestic product growth, a weaker stock market and a higher federal deficit.

The only way out, according to the OECD, is to do something about the growing gap between wages, as well as the swiftly rising income from capital, which goes mostly to the wealthiest Americans.

This requires "that people are capable of being in employment and earning wages that keep them and their families out of poverty." We should hope for more than poverty, of course, but the point is right: We need to find a way to make work pay again.

The only way to do that is to increase the demand for U.S. labor and/or reduce its supply. Labor market reforms, stiffer penalties for currency manipulators like China, government investment incentives and similar measures should be the focus, not debating whether the 47% are any less worthy than the 53%.

Is there a fix ahead?

The stakes couldn't be higher.

Unless something is done -- if the current path continues and families grow increasingly reliant upon government benefits funded by a narrowing base of taxpayers -- our union will suffer and innovation will be stifled. Ayn Rand's Atlas would shrug. The bonds of society would fray.

These are not new concerns. Plato warned in ancient Athens, birthplace of democracy, that majority rule risked devolving into a mob mentality if people started voting for leaders who deliver benefits and favors from the public purse and reacted angrily to anyone who jeopardizes the system.

Our founders worried about it, too. President James Madison wrote in Federalist No. 10 that, because of the nature of democracies, "measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority."

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He feared that the majority would "have a common motive to invade the rights of other citizens."

Unless the economy starts working for working families again, a very interested and overbearing majority will have the most powerful motive of them all: providing basic food, clothing, housing and medical care for their families. And Romney, with his aloofness and offshore tax shelters, personifies their eventual target.

Be sure to check out Anthony's new money management service, Mirhaydari Capital Management, and his investment newsletter, the Edge. A free, two-week trial subscription to the newsletter has been extended to MSN Money readers. Click here to sign up. Mirhaydari can be contacted at and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.