Plenty of time and space has been and will be devoted to figuring out why the income gap between the rich and poor has gotten so big in the US, writes Steven Pearlstein. Today, though, he focuses on the very real consequences: "Runaway inequality," he writes, "undermines the unity of purpose necessary for any firm, or any nation, to thrive. People don't work hard, take risks, and make sacrifices if they think the rewards will all flow to others."
When the gap is as big as ours is today, it "appears to reduce global competitiveness and long-term growth," he writes in the Washington Post. Just think of all that money that got squandered in recent years on all the wrong things: artwork, fancy cars, tony colleges, celebrity hairdressers, not to mention doomed hedge funds. "Without a sense of shared prosperity, there can be no prosperity," writes Pearlstein. "And given the realities of global capitalism, with its booms and busts and winner-take-all dynamic, that will require more government involvement in the economy, not less."