Why inequality matters

One thing the Wall Street chaos and bailout plan has made me revisit is the question Why does inequality matter? For years now research has shown the rich getting much, much richer and the rest of us standing still or falling behind. Some people are upset by this on principle; others say, So what? As long as all our standards of living are rising (and let’s for argument’s sake say they are), Why does it matter that some people are getting superrich?

Well, it turns out that it matters A LOT. Rich people don’t just sit around counting their money or buying personal jets to stimulate the economy. They invest their money to make even more, and the massive increase in investment money and a need for new and exciting places to put it led brokers and banks to create more and more ridiculous investment vehicles–such as bundling sub-prime mortgages. The house of cards now falling down around our heads is a result of too much money and not enough brains and ethics. If power corrupts and absolute power corrupts absolutely, it may also be true of money.

“This American Life” did a great show on the sub-prime market last year called “The Giant Pool of Money.” You can listen to at thislife.org.

I’m no economist, clearly, so feel free to set me straight or let me know how you see things.