This is a must read for today on Prosperity Economics:

In the wake of the financial crisis, an increasing number of thoughtful analysts are arguing that inequality threatens growth. Yet the biggest effects of rising inequality are probably not on growth itself, but on the ability of growth to translate into rising living standards, opportunity and security for the broad middle class.

And the most likely reason for these negative effects is that rising inequality distorts our politics — leading to weaker representation for the middle class and increased gridlock — so that sensible policy choices are more difficult.

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http://www.nytimes.com/roomfordebate/2012/10/18/shrink-inequality-to-grow-the-economy/all-will-benefit-if-more-are-made-secure