Engine of Inequality

Chapter 4Why Does Economic Inequality Matter So Much?

[D]angerous and growing inequality and lack of upward mobility has jeopardized middle-class America's basic bargain – that if you work hard, you have a chance to get ahead. I believe this is the defining challenge of our time: Making sure our economy works for every working American.

– President Barack Obama*

Not everyone, including President Obama's successor, agrees with this statement. However, Mr. Obama has at least one prominent backer. Aristotle said, “It is manifest that the best political community is formed by citizens of the middle class, and that those states are likely to be well-administered in which the middle class is large, and stronger if possible than both the other classes, or at any rate than either singly; for the addition of the middle class turns the scale, and prevents either of the extremes from being dominant.”¹

With the extremes increasingly dominant in the US, this chapter will show that Aristotle is being proved right all over again about the importance of economic equality. Even worse than the Greek philosopher prophesied, inequality also exacerbates personal misery and stunningly but irrefutably even hastens early death and vulnerability to the novel coronavirus. This chapter will also describe a less well-understood but insidious inequality effect: its destructive impact on the ability of economic policy-makers to craft post-crisis recoveries and ensure long-term, sustainable growth.