From David Leonhardt's 11/26 New York Times column on Lawrence Summers, the former president of Harvard, Treasury secretary under Clinton, and now economic adviser to Obama:
Fascinating-- you could reverse this and say that the effect of the past 30 years was equal to the bottom 80% of the country each writing a check for $10,000 and contributing it to a big fund that then was drawn on by the top 1 percent. And just to be clear, the effect of such redistribution would not be to create equality, it would just be the lesser degree of inequality we had 30 years ago.
INEQUALITY Mr. Summers has spent much of his career tweaking fellow liberals with arguments he considers unpleasant truths — on the dangers of budget deficits, the benefits of capitalism and other subjects. But he seems to have decided that conservative orthodoxies have become a vastly bigger threat to good economic policy than liberal ones. His favorite argument today is one that instead drives some conservatives nuts.
It goes like this: To undo the rise in income inequality since the late ’70s, every household in the top 1 percent of the distribution, which makes $1.7 million on average, would need to write a check for $800,000. This money could then be pooled and used to send out a $10,000 check to every household in the bottom 80 percent of the distribution, those making less than $120,000. Only then would the country be as economically equal as it was three decades ago.The lack of middle-class income growth during that span is “the defining issue of our time,” Mr. Summers has said, in a tacit admission that liberals were ahead of him on this issue. He is likely to be front and center in Mr. Obama’s push to reduce taxes on the middle class and create good jobs. Mr. Summers may also push the administration to work with foreign governments to crack down on tax shelters.
Of course there will always be inequality-- it's just how things work, and how they should work to some extent. But how much inequality is the right amount?