Democracy and free enterprise are usually found together. It is hard to think of any flourishing democracy that is not a market economy and, while several autocratic economies have embraced free enterprise (or “socialism with Chinese characteristics”, as the Chinese Communist party would say), it seems to be only a matter of time before they are forced to become more democratic.

Yet it is not clear why democracy and free enterprise should be mutually supportive. After all, democracy treats individuals as equal, with every adult having an equal vote, whereas free enterprise empowers individuals based on how much economic value they create and how much property they own. What prevents the median voter in a democracy from voting to dispossess the rich and successful? And why do the latter not try to erode the political rights of the former?

One reason that median voters rationally agree to protect the property of the rich may be that they see the rich as more efficient managers of that property. So to the extent that the rich are self-made, and have won out in a competitive, fair and transparent market, society may be better off allowing them to own and manage their wealth, and taking a reasonable share as taxes. However, the more the rich are seen as idle or crooked – as having gained their wealth by inheritance or, worse, nefariously – the more the median voter should wish to impose tough regulations and punitive taxes.