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(Part 2 of 2 - see first part below) What impact do the incredible salaries of superstars have on the rest of us? What has changed, technologically and socially, to precipitate these inequities? This article also offers a brief look at the relationship between income inequality and economic growth, comparing the US throughout its history and the US vis a vis several European countries.

What impact do the incredible salaries of superstars have on the rest of us? What has changed, technologically and socially, to precipitate these inequities? This article also offers a brief look at the relationship between income inequality and economic growth, comparing the US throughout its history and the US vis a vis several European countries. (Part 1 of 2)

Apologists for rising inequality often argue that since most Americans' income has risen despite rising inequality, there's no reason to complain about inequality other than envy. So it's worth remembering that we used to expect economic growth to deliver large increases in real income, not just a bit of a rise that's accomplished in large part through longer working hours; and that a major reason so many have seen such small gains is that a large part of growth has been siphoned off to the very high end.

New global research on equality, inequality, and the happiness of nations. It's an American issue.

I've written before about the crisis of inequality in the United States and about the quasi-religious abhorrence of "wealth redistribution" that causes many Americans to oppose tax increases, even on the ultra rich. The conviction that taxation is intrinsically evil has achieved a sadomasochistic fervor in conservative circles-producing the Tea Party, their Republican zombies, and increasingly terrifying failures of governance. Happily, not all billionaires are content to hoard their money in silence. Earlier this week, Warren Buffett published an op-ed in the New York Times in which he criticized our current approach to raising revenue. As he has lamented many times before, he is taxed at a lower rate than his secretary is. Many conservatives pretend not to find this embarrassing. Conservatives view taxation as a species of theft-and to raise taxes, on anyone for any reason, is simply to steal more. Conservatives also believe that people become rich by creating value for others. Once rich, they cannot help but create more value by investing their wealth and spawning new jobs in the process. We should not punish our best and brightest for their success, and stealing their money is a form of punishment. Of course, this is just an economic cartoon. We don't have perfectly efficient markets, and many wealthy people don't create much in the way of value for others. In fact, as our recent financial crisis has shown, it is possible for a few people to become extraordinarily rich by wrecking the global economy. Nevertheless, the basic argument often holds: Many people have amassed fortunes because they (or their parent's, parent's, parents) created value. Steve Jobs resurrected Apple Computer and has since produced one gorgeous product after another. It isn't an accident that millions of us are happy to give him our money. But even in the ideal case, where obvious value has been created, how much wealth can one person be allowed to keep? A trillion doll

Complete Premium video at: http://fora.tv/conference/new_yorker_festival_2010 Best-selling author Malcolm Gladwell discusses America's dramatically changing notions of wealth and income inequality since the mid-20th century. Gladwell notes that top-earning Americans faced a 91% income tax rate during most of the 1950s. "What's amazing is that, if you even bring this up now, people don't believe you," he says. ----- This excerpt was taken from a program titled "The Magical Year 1975," featuring Malcolm Gladwell. It was recorded in collaboration with the New Yorker Festival, on October 3, 2010. Malcolm Gladwell has been a staff writer at The New Yorker since 1996. He is the author of, most recently, "What the Dog Saw: And Other Adventures," and the Times best-selling books "The Tipping Point: How Little Things Can Make a Big Difference," "Blink: The Power of Thinking Without Thinking," and "Outliers: The Story of Success."

I'm genuinely excited today to announce the release of my new book, With Liberty and Justice for Some: How the Law is Used to Destroy Equality and Protect the Powerful. As of this morning, it is available in bookstores as well as for shipping online. The book focuses on what I began realizing several years ago is the crucial theme tying together most of the topics I write about: America's two-tiered justice system - specifically, the way political and financial elites are now vested with virtually absolute immunity from the rule of law even when they are caught committing egregious crimes, while ordinary Americans are subjected to the world's largest and one of its harshest and most merciless penal states even for trivial offenses. As a result, law has been completely perverted from what it was intended to be - the guarantor of an equal playing field which would legitimize outcome inequalities - into its precise antithesis: a weapon used by the most powerful to protect their ill-gotten gains, strengthen their unearned prerogatives, and ensure ever-expanding opportunity inequality. This is how I described that development in the book:

As intense protests spawned by Occupy Wall Street continue to grow, it is worth asking: Why now? The answer is not obvious. After all, severe income and wealth inequality have long plagued the United States. In fact, it could reasonably be claimed that this form of inequality is part of the design of the American founding -- indeed, an integral part of it.

The Great Recession could have spawned another era of fundamental reform, just as the Great Depression did. But the financial rescue reduced immediate demands for broader reform. Obama might still have succeeded had he framed the challenge accurately. Yet in reassuring the public that the economy would return to normal, he missed a key opportunity to expose the longer-term scourge of widening inequality and its dangers. Containing the immediate financial crisis and then claiming the economy was on the mend left the public with a diffuse set of economic problems that seemed unrelated and inexplicable, as if a town's fire chief dealt with a conflagration by protecting the biggest office buildings but leaving smaller fires simmering all over town: housing foreclosures, job losses, lower earnings, less economic security, soaring pay on Wall Street and in executive suites.

"In June, an analysis from the Center on Budget and Policy Priorities confirmed that gap between rich and poor in the United States reached levels not seen since 1929. Between 1979 and 2007, the yawning chasm separating the after-tax income of the richest 1 percent of Americans from the middle and poorest fifths of the country more than tripled. But while the Bush recession which began in December 2007 temporarily halted the stratospheric advance of the wealthy, the rich - and the rich alone - have largely recovered their losses. Which means that the record level of income inequality in America is growing once again."

Eleven charts that explain everything that's wrong with America.

Why this absence of political ambition? What explains the rioters' genuflection at the altar of "crude materialist, market-driven hedonism"? To zone in on the answer, we need to step back and remind ourselves how strikingly unequal distributions of income and wealth impact how we interact with "things." In relatively equal nations, societies where minor differences in income and wealth separate social classes, people typically do not obsess over "things," the baubles of modern life. The reason? If nearly everyone can afford much the same things, things overall tend to lose their significance. People in more equal societies will be more likely to judge you by who you are than what you own. The reverse, obviously, also holds true. "As inequality worsens," as Boston College economist Juliet Schor has explained, "the status game tends to intensify." The wider that gaps in income and wealth go, the greater the differences in the things that different classes can afford. In markedly unequal societies, things take on ever greater significance. They signal who has succeeded and who has not. In London, the developed world's most unequal city, these signals may dominate daily life as ferociously as anywhere else on Earth. Their incessant repetition drowns out the socially cohesive signals that people see and hear and feel in more equal societies, the sense that "we're all in this together." "Let this week be a wake up call," London's Compass think tank observed right after the heaviest rioting. "There is more to clean up than broken shop windows."

The March, 2011, Harper's Index expressed the point this way: "Number of American civilians who died worldwide in terrorist attacks last year: 8 - Minimum number who died after being struck by lightning: 29."  That's the threat in the name of which a vast domestic Security State is constructed, wars and other attacks are and continue to be launched, and trillions of dollars are transferred to the private security and defense contracting industry at exactly the time that Americans - even as they face massive wealth inequality - are told that they must sacrifice basic economic security because of budgetary constraints. 

David Cay Johnston is a Pulitzer Prize-winning journalist and author. A 13-year veteran of The New York Times, David won the Pulitzer in 2001 for enterprise reporting that uncovered loopholes and inequities in the U.S. tax code. He has written several best-selling books, including Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill). His latest, The Fine Print: How Big Companies Abuse "Plain English" and Other Tricks to Rob You Blind, will be published in September.

Sometimes inequality is bad for almost everyone, and sometimes only for certain people; sometimes it is worst for the people at the bottom, and sometimes it is just as bad for the people at the top. Different societies are equal or unequal for different reasons, sometimes by necessity, sometimes by choice. More equality is a good thing and it's an idea that's worth defending. It would be nice if there were more politicians willing to stand up and defend it, however they saw fit.

To fix the U.S. economy, we must finally deal with wage inequality.