in the log run - it leads to a two class system - the very wealthy, those with access to capital or "protected" jobs (lawyers, CEO and the executive suite, etc) - and workers, for whom the only thing they have to trade to obtain money is their labor - only to find the worth of their labor is diminshed. government workers, or those who obtain compenstation through government programs (health care workers, education, etc), comprise the middle class.
you can forget about sustaining a republican party in that environment - once the private sector middle class is withered away, the Dems will have a permanent majority in the US.
I don't believe in zero-sum economics but do acknowledge that the middle class is being increasingly squeezed by globalization. Attempts to stabilize and enlarge the middle class by creating new and expanding existing labor monopolies (i.e. unions) is not wise. The last 50 years should have taught us this. A common sense solution is stock participation by employees.
Tax laws need to be changed so that dividends are not double taxed. This would allow a company to declare profits and pay dividends which would enrich the employee/stockholder. Every employee's appetite for more compensation, from the CEO to the lowest paid, would be disciplined by the fact that the company must make a profit FIRST!