Much of the tension between equality and economic dynamism dissolves when we focus on inequality generated by public policies that distort market allocations of resources in favor of the wealthy — what we might call "upward-redistributing rents." These rents are large and growing, produced by inherent flaws in democratic governance that facilitate the use of the state to enrich the already advantaged. If high-end inequality is not diminished by removing the ways the wealthy use the state to extract resources from the rest of society, the inequalities that conservatives believe are just — those that flow from innovation and hard work — will be in danger. In short, inequality will become a threat to free exchange itself.Those are the essentials. Go, read, understand.
Any feasible attack on inequality must marry some degree of redistribution with an attack on the state's own role in producing inequality. The rich are getting richer because of some fundamental problems of democratic government, and these problems have been exacerbated by peculiar features of American political institutions and then super-charged by the recycling of high-end rents back into the political process.
A PRIMER ON RENT SEEKING.
Here's Steven M. Teles, explaining how politics distributes wealth upward.