In his excellent series on income inequality in the U.S., Slate's Timothy Noah says that in the early 1900s the richest 1 percent accounted for 18 percent of the nation's income. That was the era of vast wealth among a select few families - the Rockefellers, the Vanderbilts, the Carnegies. The divergence between rich and poor was so great that it spurred the creation of the modern income tax. Today, the richest 1 percent account for 24 percent of the nation's income. But why?

During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth--the "seven fat years" and the " long boom." Yet from 1980 to 2005, more than 80 percent of total increase in Americans' income went to the top 1 percent. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.

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All my life I've heard Latin America described as a failed society (or collection of failed societies) because of its grotesque maldistribution of wealth. Peasants in rags beg for food outside the high walls of opulent villas, and so on. But according to the Central Intelligence Agency (whose patriotism I hesitate to question), income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Income inequality is actually declining in Latin America even as it continues to increase in the United States. Economically speaking, the richest nation on earth is starting to resemble a banana republic. The main difference is that the United States is big enough to maintain geographic distance between the villa-dweller and the beggar.