Occasional Reason contributor Will Wilkinson has some sharp and interesting thoughts on income inequality (a week or so ago, but unfortunately an eternally relevant topic of debate) over on his blog. His main point: what's the big deal? Some excerpts:

Nominal [income] inequality is confused with material inequality–differences in material living conditions. But while nominal inequality is increasing, material inequality continues to decrease. As market competition pushes prices down, goods at the bottom of the price range more and more closely approximate goods at the top of the price range….Food is probably the most striking example of material equalization. If you compare the diets of the top and bottom quintiles 100 years ago with the diets of the top and bottom quintiles now, you'll see that we have become immensely more equal, not less. My favorite pair of jeans, which I bought at Wal-Mart for $16, is a close substitute for jeans that cost 5 times more.
If you think money translates into political power, and that inequalities in political power are objectionable, then you're right! Inequalities in political power are objectionable. People with political power can oppress people in a way that people with just money can't. Libertarianism (used to be called "liberalism") is, by the way, the egalitarian political philosophy that says that inequalities in political power should be minimized. And libertarianism tells you how to get money out of politics: take political power off the auction block by restricting political power to narrow limits.

There's a lot more interesting stuff in that post (and on the Wilkinblog in general, always a fascinating, though rarely light, read), including thoughts on why public education should be the real bugbear of those who worry about inequality in modern America, and why the wealthier are seeking more and more differentiation in aesthetic and inherently scarce status-marking goods "in an egalitarian world where even the modestly remunerated can have most everything."