I did not know until I read Joseph Stigletz’s wonderful new book, The Price of Inequality, that economists have a word for making a lot of money without actually creating wealth or jobs: this is caled “rent seeking,” using a very old sense of the word “rent” that means something like “seeking concessions” rather than “deriving income from property.” Rent seeking refers to any economic activity that attempts to manipulate political or social conditions to capture a larger share of a society’s wealth. Such activities commonly include seeking no-bid government contracts, special tax incentives, sanctioned monopolies, or regulatory relief that shifts resources away from one sector of the economy and into another.

Rent seekers have been with us always. But Stiglitz sees rent-seeking activities as a primary cause of the most recent “great recession.” Those who profited from the real-estate bubble and from complicated financial derivatives were not, by any stretch of the imagination, creating wealth. They were reaping huge profits by transferring economic risk to the public sector while keeping nearly all of the profits in the private sector. As result, the people who have paid the highest economic costs of the recession (losing their jobs or their houses) are not the same people whose economic activities are the most to blame.

But what really interests Stiglitz (and me too) is what has happened since the crash of 2008. According to a certain narrative, the only way out of the recession is to cut taxes dramatically and put as much money as possible into the hands of job creators—business owners and innovators who have the intelligence and the inclination to use that extra money to create jobs and move the lagging economy forward. And, to a large extent, this is what we tried to do.

But it hasn’t worked very well. between 2009 and 2011, the top 1% of wage captured 93% of the income growth (compared to 65% between 2000 and 2007). If we look at averages, then, the American economy has completely recovered from the recession. If we look at medians, it has not. The great recovery of 2009-2011 simply shifted the wealth of the nation decisively towards those who were already very well off.

And this kind of social inequality has real consequences. Neither Stiglitz nor anybody else suggests that we can or should get rid of inequality. He is not a Marxist or even a particularly committed redistributionist. He believes that markets have tremendous power to create and distribute wealth. But unregulated markets will always flow towards deep inequalities of wealth and income. Like so many other good things (chocolate, oxygen, and close relatives to name a few), capitalism works best when it is diluted.

Inequality in America is worse now than it has been since the late 19th century, when factory workers were paid in company script and the most important industry in the Southern states was sharecropping. The distribution of wealth in the United States (as measured by the Gini coefficient) is about as unequal as it is in Iran and far less equal than it is in nearly every other country in the Industrialized West. In the long term, this will have serious consequences for America. High levels of income inequality are incompatible with political stability, public investment, and long-term expansion.

And yet, we are rapidly disinvesting in our educational infrastructure, contemplating a reversal of our commitment to our elderly citizens, and acting on multiple fronts to repeal most of the regulations that, for the last hundred years or so, have prevented capitalism from becoming nothing more than a tool for economic predation. In the process, we are coming perilously close to creating precisely the kind of self-perpetuating, multi-generational aristocracy that America was founded not to be.