The Times – The pay gap is putting democracy in danger, by Anatole Kaletsky

Mr Cameron asked Mr Hutton, a lifelong Labour supporter and passionate campaigner for social equality, to chair a Fair Pay Review. Mr Hutton suggests that extreme inequality, as well as being morally repugnant, imposes huge economic losses on society. Far from encouraging wealth creation and innovation, he argues that it undermines entrepreneurship by offering enormous rewards for zero-sum games that simply shuffle existing assets. When finance is as absurdly lucrative as it is in modern America and Britain, enterprise and talent are inevitably diverted from the creation of genuine new wealth.

And:

When the burgeoning wealth of the rich is the main cause of inequality, the impact is felt not by the poor, but by the middle classes. They are priced out of desirable neighbourhoods and cannot enjoy the comforts their parents took for granted, from good schools to eating at the best restaurants.

This type of inequality leads to resentment of redistributive policies that mainly favour the poor at the expense of the middle class. This is the situation today in Britain and the US. Popular opposition to redistributive policies in Britain is likely to intensify as the coalition Government’s reforms — abolishing child benefit, trebling university fees, pay and pension cuts in the public sector — start to hit middle-class living standards hard.

But if Britain’s middle class become ever more resentful of redistribution, what is the answer to the ever-widening inequality in British society? I can do no better than return to Mr Portillo’s comments in Spain: “This inequality is an unfolding disaster; but we don’t always have an answer to unfolding disasters.”

Emphasis mine, and post titled because this is something Peter’s been feeling very strongly about for years. He doesn’t get what went wrong that our parents and grandparents could afford so much with so little, and we just can’t get there (last night my uncle was telling me about 2-acre lots on Atherton Ave going for $8,000 in 1954; now they’d be worth $8 million).

Anyway I thought it an interesting article. Paywall.