Bloomberg, December 24, 2020, For Corrosive Inequality, Look to the Upper Middle Class
The U.S. seems to finally have decided that inequality is a problem. The reassurance that a rising tide would lift all boats rings hollow after a series of recessions left so many stuck in the mud. Economists are realizing that allowing greater inequality often doesn’t boost growth. And the moral case for inequality — the notion that rich people are fairly compensated for creating huge amounts of economic value — also seems to have largely collapsed. Even some Republicans are now talking about the problem.
But the difficult and interrelated questions of why inequality has increased, and what to do about it, remain largely unanswered. The loudest voices on the issue tend to emphasize the upper tail of the distribution — the vast fortunes of Jeff Bezos, Mark Zuckerberg or Elon Musk. Even before the recent surge in stock valuations, a small sliver of Americans was controlling a noticeably larger share of the nation’s wealth.
But while upper-tail wealth inequality has certainly increased a lot, there’s another, subtler kind of inequality that gets far less attention. In the 1980s, the middle class diverged, with the upper middle pulling away from the lower middle.