Carlos Bravo Regidor in The Ideas Letter:
Carlos Bravo Regidor: Let me start with a deliberately general question: Why does inequality matter?
Branko Milanović: High inequality matters because it deprives many people of equal access to various activities: school, health services, good jobs, and so on. It wastes human potential and reduces social mobility; it is inefficient and unfair.
I emphasize “high” inequality because not every kind of inequality has the same consequences. Inequality-versus-equality is not a binary proposition, with equality being good and inequality, bad. Inequality is like temperature; it is a gradual thing. Temperature is zero degrees and it is 100 degrees, as well as all the degrees in between. Likewise with inequality. On the one hand, very low inequality is problematic because then people have little incentive to study or work hard, or to take risks. On the other hand, very high inequality has all sorts of negative impacts: social instability, lack of investment, distrust in government, lower economic growth. So, again, the problem is high inequality, not inequality per se.
What is the “ideal” level of inequality? We can’t put an exact number on it, but somewhere between low inequality and high inequality there is inequality that delivers the right incentives without breaking society into two.
More here.