“Inequality is also an engine of protest. A classic 1994 paper by Alberto Alesina of Harvard University and Roberto Perotti of Bocconi University studied 71 countries between 1960 and 1985 and found that higher levels of income inequality were associated with increased social instability. Their explanation was that unrest often erupts when a wealthy middle class is weakened. That idea resonates strongly now. By one estimate, 58% of the real economic growth in America of the past 30 years was captured by the top 1% of earners: the Occupy Wall Street demonstrators are embracing a motto of “We are the 99%”. The rise in American income inequality reflected a dramatic “polarisation” of the labour force into high- and low-skill segments at the expense of middle-skill (and middle-wage) positions, according to research by David Autor of the Massachusetts Institute of Technology (MIT). Just as the apparently benign macroeconomic environment of the past two decades masked a build-up of financial instability, it may also have been storing up the elements of prolonged social discontent.”