Inequality is running amok. The richest one percent of Americans pull more than a fifth of the nation’s income. The top 10 percent take half, more than during the Roaring Twenties. President Obama seems to believe this is “the defining issue of our time.” Is it?

“Income inequality” consists of at least three separate issues: 1) the top one percent is earning more; 2) the relative return to education is rising; and 3) economic growth is slow, and thus many lower- and middle-income groups are not seeing their incomes rise very much over time. The third of these is arguably the defining issue of our time. Grouping these issues all together under the broad heading of “income inequality” I view as a big intellectual mistake.

So should we worry at all about the chasm opening up between the income of the rich and the rest?

I worry about stagnation in the middle and towards the bottom, not the income gap per se. A lot of the income growth at the top has come from globalization; for instance, Apple now sells a lot of iPhones to China. That’s not something we should be worried about. Rather, we should celebrate it.

But aren’t soaring incomes at the top and stagnant wages in the middle connected, driven by the same forces?

Those two problems are not always the same. If today we had a rate of technological innovation comparable to say 1890-1930, the middle class and the poor would benefit tremendously from those new goods and services. Income inequality might go up or down but we could stop worrying so much about it.