The meme of the day is undoubtedly inequality. Here's just some of what's been written on the subject in the past few hours:

Larry Elliott is in Davos, seeing an "almighty backlash" if inequality isn't addressed, and using Robert Shiller and Stephen Roach to back him up:

Historically, high levels of inequality have proved incompatible with democracy: that's why since the start of the industrial revolution we've seen the introduction of measures that knock the rough edges off capitalism such as income tax, the growth of trade unions, welfare states and free education. If globalisation represents a turbo-charged form of capitalism it's hardly surprising that there are anxietes. What is surprising is that governments have been so slow to react. Shiller believes that if policy makers continue to bury their heads in the sand there is going to be an almighty backlash and he is absolutely right.

Meanwhile, Tyler Cowen takes the opposite view in the New York Times:

The broader philosophical question is why we should worry about inequality — of any kind — much at all...
What matters most is how well people are doing in absolute terms. We should continue to improve opportunities for lower-income people, but inequality as a major and chronic American problem has been overstated.

Cowen gets a lot of responses in the blogosphere. Don Bourdreaux is very positive:

Given that Bill Gates almost surely has a greater talent for contributing to the happiness of humankind than I have, it's especially important that he continue to confront keen incentives to continue contributing to that happiness. Precisely because an extra dollar in Gates's wallet means less to him the more dollars he earns, he needs to earn ever-more dollars per year in order to keep keen his incentives to innovate and produce and sweat the details of satisfying consumer demands.

But Mark Thoma is less sure:

If we start with one wealth distribution that is unequal, and then give even more wealth to the people at the very top (as has happened), they won't get any happier and happiness inequality will be unchanged.
But if the same wealth were given to the lower end of the distribution, would the happiness gap still remain unchanged? I don't see how a static happiness gap when wealth is flowing to the top of the distribution implies that inequality has not increased.

And Steven Kyle is negative:

Maybe in Cowen’s world people don’t care if they work just as hard but get less money than others but in the real world it makes people distrustful of the system and causes them to lose faith in the fairness of society. General belief in the social contract is a long term asset to us all and one we should be very worried about losing. Only a very narrow view of the world could conclude otherwise.

The New York Times marries Cowen's column on inequality with a Times blog entry by Bruce Bartlett:

I have long sought a study showing exactly what the cost of inequality is. If my real income does not fall, how am I hurt when Bill Gates makes another billion dollars? After all, the economic pie is not fixed. What he gets doesn’t come at my expense, so why should I or anyone else care?

And Cowen himself, not content with an NYT column alone, has penned a blog entry of his own on income inequality vs consumption inequality, where he concludes that "income and wealth data overstate poverty and inequality problems".

There's no doubt that inequality is increasing in America, although one of the interesting consequences of globalization in general and the rise of China in particular is that it might actually be going down at a global level. My feeling is that I would have more sympathy with the likes of Cowen if he seemed to care much about equality of opportunity. He says, for instance, that rising inequality is a function of rising levels of education, but, as Steven Kyle notes, the best education tends to go to the richest Americans – so in a sense, Cowen is just begging the question.

Income Inequality Revisited: Ask the Experts