America, we have an inequality problem.

Inequality is a tricky issue. When people bring it up, thoughts immediately go to redistribution of wealth, which many instinctively oppose. Economists like myself are probably to blame. Nobel Prize winner Robert Lucas famously labeled economic analysis of inequality as "poisonous and seductive" because it led people to focus on dividing up a fixed amount of income rather than on increasing the total.

This viewpoint has been dominant in economics and in American culture: If we increase the size of the pie everyone can win. Sadly, this optimistic viewpoint is no longer tenable.

The economic study of inequality has advanced rapidly, led by Thomas Piketty. He shows that in the 25 to 30 years after World War II the old consensus could be justified. Inequality decreased slightly in most rich countries without major redistributive efforts and alongside strong economic growth. But his work also demonstrates that since the 1970s inequality has steadily increased, and that such an increase is the normal trend for capitalist economies.

Piketty then argues that steadily increasing inequality inevitably becomes a political problem. As wealthy elites gain economic power, they find ways to turn it into political power and implement regressive policies. Such policies end up challenging the foundations of capitalism itself. The rich no longer earn their wealth through work, they simply inherit it. The lower classes, even those of great talent and ambition, will rarely be able to close the wealth gap, starting from a major disadvantage.

The end result is a highly stratified society, and one in which the wealthy use their power to maintain their unearned positions. Real problems are ignored if they do not threaten elites. Government becomes corrupt and ineffective, and progress slows or stops.

That brings us to the tax bill. It unambiguously benefits the very wealthy, particularly those who inherit wealth or have unearned income. The centerpiece is a corporate tax cut that will directly increase profits and stock prices. Reasonable economists and business people do not expect these benefits to be passed on to workers or to result in substantially more investment.

The bill offers a mixed bag to the rest of society with initial tax cuts for a majority. Many of those cuts are temporary, however, and there will be additional costs to society through increased deficits. The net economic impact? Growth will get a short-term boost, and inequality will increase.

Expect lots of crowing by Republicans about the strong economy over the next year or two. This boost comes at the cost of a substantially increased debt. It will also likely lead to faster interest rate increases that make that debt more expensive. That puts us in a worse position long-term.

Now consider this bill in perspective. First of all, we don't need it. Taxes are at a low point overall relative to historical rates. One estimate suggests that the bill will reduce government revenues to 17 percent of GDP; 20 is the historical average. Second, there are major problems that a responsible government should address. My top three would be inequality (which this bill worsens), climate change and financial instability.

A tax bill could have begun to address climate change with a carbon tax, which many economists agree would make fossil fuel markets more efficient by pricing in the impact of pollution. It is quite likely that taxpayers will pay much more in the future from impacts of climate change. The costs of a carbon tax today would save money in the long run, but this straightforward, responsible policy was not even on the table.

Since the early 1970s the global financial system has been structured with floating exchange rates and free movement of money across countries. While this flow of financial capital has many benefits, it has also become evident that it leads to high volatility. In the '70s, '80s and '90s massive financial flows went to developing countries and many of them experienced bubbles, currency crises and subsequent debt crises with large recessions. Starting in the early 2000s China reversed the net flow of financial capital by buying huge amounts of U.S. treasury bonds. The money flowed into the United States, and we had a housing bubble and crisis.

The fundamental instability in the global system has yet to be addressed. The tax bill is likely to lead to a further inflow of capital into the United States via budget deficits and higher corporate profits. We would be foolish and ignorant of history to not expect another bubble and crisis in the coming years, and the U.S. debt situation will likely be substantially worse when the next one hits.

In sum, we have a tax bill that provides short-term massive benefits to the extremely wealthy. This bill ignores the pressing issue of climate change and further exacerbates inequality. It increases the chance of another financial crisis and limits our ability to either respond to the next recession or fund long-term government obligations.

Yes, America, we have an inequality problem. It's not just that the system is unfair; it's that those at the top are making it even more unequal and are sacrificing responsible government and fiscal stability to do so.

Professor Alan Green is chair of the economics department at Stetson University.