Good and bad inequality?

The lead story of the current (March-April 2007) issue of the Boston Review is a piece by Nancy Birdsall, the founding president of the Center for Global Development in Washington DC, on why inequality matters. Birdsall distinguishes between constructive and destructive inequality. In her view the former creates positive incentives at a micro level while the latter reflects the privileges of the rich and can block development. Her solution is essentially institutional reform to complement the impact of the global market. More of her writings on the topic can be read here.