What Actually Works — How Real Democracies Reduced Inequality
“You don’t need a strongman to fix inequality—you need strong policy and the political will to act.”
The first three posts in this series showed how economic inequality can fuel the rise of authoritarianism—and how authoritarian regimes consistently fail to solve it. But what if we flipped the script?
Today, we look at what has worked: how countries have successfully tackled inequality through policy, planning, and—most importantly—democratic institutions.
Because it’s not just that authoritarianism fails to fix inequality. It’s that democracy, when it works, succeeds.
Postwar Japan — Land Reform and Broad-Based Recovery
After World War II, Japan faced the twin challenges of rebuilding a shattered economy and dismantling a semi-feudal hierarchy. Under U.S. occupation, sweeping land reform was implemented:
Large landowners were required to sell land to the government,
Which then sold it to tenant farmers at low cost,
Turning millions of renters into owners.
This radically reshaped the rural economy:
Agricultural productivity rose,
Rural inequality plummeted,
And a stable middle class emerged.
Combined with investment in education and infrastructure, land reform set the foundation for Japan’s “economic miracle” in the 1960s and ’70s.
Lesson: Redistributing access to productive resources—land, capital, education—builds durable prosperity.
South Korea — Authoritarian Beginnings, Democratic Gains
In the 1950s, South Korea was one of the poorest countries on Earth. But with U.S. support and postwar urgency, it launched a land-to-the-tiller reform similar to Japan’s:
Tenant farmers gained ownership of land,
While elites were compensated and political resistance was minimized.
This reform:
Boosted rural stability and economic output,
Eroded the traditional landowning class’s dominance,
And laid the groundwork for industrialization and democratization.
Later, democratic reforms expanded education, worker protections, and a vibrant export economy.
Lesson: Early redistribution built a base of equity that made democracy and growth sustainable.
Taiwan — Land Reform + Economic Planning
Taiwan’s postwar development followed a similar arc:
U.S.-backed land reform redistributed property from Japanese-era landlords,
The government invested heavily in rural education and infrastructure,
And a focus on small- and medium-sized enterprises distributed industrial gains more evenly.
By the 1980s, Taiwan had lifted millions out of poverty and was transitioning to democracy.
Lesson: Fairness and freedom aren’t at odds—they reinforce each other when inequality is addressed early.
The United States and Western Europe (1945–1975) — The Great Compression
After WWII, the U.S. and much of Western Europe implemented a mix of policies that reduced inequality and powered widespread prosperity:
Progressive taxation (top U.S. marginal tax rates above 90%),
Strong labor unions that bargained for better wages,
Massive public investment in education, housing, and infrastructure (e.g. GI Bill, interstate highways),
Robust safety nets, including Social Security, Medicare, and unemployment insurance.
The result?
Rising wages,
Expanding homeownership,
Shrinking income gaps,
And rising living standards across classes.
This period, often called the “Great Compression,” wasn’t perfect—it left out many, especially Black Americans and women—but it showed what’s possible when democratic governments prioritize equity.
Lesson: Inequality can shrink when the rules are written to support the working and middle classes—not just the wealthy.
The Nordic Model — Democracy with Teeth
Countries like Sweden, Norway, and Denmark pursued a different—but equally successful—model:
High taxes on wealth and income,
Universal public services (healthcare, education, childcare),
Robust union power and worker representation,
Strong regulation of capital.
Today, they consistently rank among the world’s happiest and most prosperous societies—with some of the lowest inequality and highest levels of trust in government.
Lesson: It’s not about ideology—it’s about building institutions that protect human dignity.
Key Ingredients of Successful Reform
Across all these cases, the policies varied—but the principles didn’t:
Redistribute ownership (land, capital, education),
Invest in public goods to create shared opportunity,
Empower labor to demand fair wages and conditions,
Tax wealth to fund redistribution and prevent hoarding,
Build inclusive systems that reward participation, not privilege.
And all of this—all of it—was done through policy, not personality cults.
Tomorrow: The American Path Forward (Part 1)
Tomorrow, we’ll bring these lessons home. What could work in the U.S. today?
We’ll start with the highest-impact solutions to close the wealth gap—those that go directly to the heart of capital concentration, dynastic wealth, and economic fairness.
Because if inequality is a policy choice, so is justice.