One of the most urgent questions in economics today is the connection between inequality and growth. That is because one of the big economic facts of our time is the surge in income disparity, particularly between those at the very top and everyone else. The other big fact is the recession set off by the financial crisis and the consequent imperative to jump-start economic growth. Figuring out the relationship between these two tent-pole issues is therefore a good way for economists to spend their time.

There are two main and contradictory ideas about how that relationship might work. One is that inequality is the price of robust economic growth. If the private sector is thriving, the most successful capitalists will be getting very rich. Creating a system that allows – indeed, encourages – the best and the brightest to pull away from everyone else is how you shift your economy into its highest gear.

There is, however, another theory, and it has been winning adherents in the aftermath of the financial crisis. In this view, rising inequality is not a symptom of a fast-growing economy or an incentive that will help create one. Instead, too much income inequality crushes economic growth.

There are different arguments for why that might happen. One is that high income inequality creates an unstable system that is vulnerable to costly booms and busts. Another is that when too much of the income goes to the very top and not enough goes to the middle, spending slumps – how many yachts does a plutocrat need? – putting a brake on growth.

David Howell, a professor of economics at The New School in New York, has written a draft paper for the Center for American Progress, a progressive research group, that investigates the first argument. Howell argues that the United States and Britain have acted over the past three decades on what he calls the laissez-faire theory, that the equation of rising inequality and increasing gross domestic product is correct.

As Howell puts it, “the laissez-faire case for high inequality is grounded in the belief that growth in output and employment depends mainly on strong incentives to work and invest.”

Howell tested that view by comparing the United States and Britain to their peers. He asked whether “compared to other rich countries, U.S. income inequality has paid off in relatively high growth.” His answer: not particularly. He finds that “there is no simple correlation between our measures of growth and income inequality.”

That may come as a surprise to many Americans, who are accustomed to hearing, as Howell explained, “that the U.S. middle class is doing relatively well, at least compared to Europe, because of productivity growth and because we allow higher inequality.”

But the reality is that at least some of those allegedly sclerotic European economies, dragged down by their highly redistributive welfare states, have outperformed the United States.

“What we see is Sweden having really good productivity growth by all measures, despite much more modest increases in inequality and starting at a much lower level,” he said.

“The U.S. is anywhere from an O.K. to middling performer in the Age of Inequality,” Howell said, using his term for our era. But while his work suggests inequality is not needed to get growth, he does not show that inequality actually hurts growth either: “I don’t show a strong measurable inverse effect.”

Lars Osberg, an economist at Dalhousie University in Nova Scotia, takes on this second argument – the case that inequality, at least beyond a certain point, can stifle growth.

He, too, adopts a comparative lens, looking at Canada, the United States and Mexico.

Osberg argues that a growing chasm between those at the very top and everyone else imperils the overall economy. His worry is financial instability.

“The added savings of the increasingly affluent must be loaned to balance total current expenditure,” he writes, “but increasing indebtedness implies financial fragility, periodic financial crises, greater volatility of aggregate income and, as governments respond to mass unemployment with countercyclical fiscal policies, a compounding instability of public finances.”

This is a variation of an argument by Raghuram Rajan, a politically center-right professor at the University of Chicago, who has suggested that rising income inequality was one of the drivers of the financial crisis. As income inequality increased, and the incomes of the middle class stagnated, the U.S. government responded by increasing the consumer credit available to the middle class.

In the short term, that was a win-win solution: consumption, and therefore the economy, grew, and the middle class was quiescent because stagnating incomes were masked by increasing consumer debt. But in the medium term that Goldilocks scenario broke down – the middle class consumption bubble, and the Wall Street bubble it helped finance, popped with devastating consequences.

Both Howell and Osberg are skeptical, at best, of the value of rising income inequality as a driver of economic growth. When you put that conclusion together with the arithmetic of democracy – rising income inequality means a majority of voters are on the losing end of the deal – a political backlash seems inevitable.

“Go back to the 1920s or the 1870s and economists were worried about the stability of the capitalist system,” Osberg said. “One of the things the 1930s experience teaches us is there are some catastrophic outcomes which can happen.”

The investing class and the academic world are focused on those dangers. “Can capitalism survive?” is one of the trendiest conference topics among red-blooded capitalists and left-leaning professors alike. So far, at the ballot box and on the street, this question has not been as salient. That does not mean it will not be in the future – and in ways we cannot predict.

If you doubt that we live in a winner-take-all economy and that education is the trump card, consider the vast amounts the affluent spend to teach their offspring. We see it anecdotally in the soaring fees for private schools, private lessons and private tutors, many of them targeted at the pre-school set. And recent academic research has confirmed what many of us overhear at the school gates or read on mommy blogs.

In recent months, people and their politicians around the world have been astonished to learn that big companies and billionaires will go to extraordinary lengths to pay lower taxes.

Thanks to the work of the International Consortium of Investigative Journalists, based in Washington, we have discovered that some of the most prominent public figures in the world have banked their fortunes in international tax havens, beyond the scrutiny of their national treasuries.

Meanwhile, Tom Bergin, my Reuters colleague, has become the scourge of the top U.S. multinationals by revealing their low effective tax rate in Britain. Mr. Bergin has found that between 1998 and 2012, Starbucks paid less than 9 million pounds, or about $14 million, in British taxes while registering sales of more than 3 billion pounds. According to statutory filings, Google made $18 billion in revenue in Britain from 2006 to 2011, and paid just $16 million in taxes.

Open the door to the top executives’ suite and you will hear howls of rage over the backlash these revelations have provoked. There is, from the corporate point of view, something a little disingenuous happening here. After all, countries, states and cities have spent the past several decades openly competing to set the lowest corporate tax rates in an effort to attract business. The fact that multinationals would respond to these incentives and turbocharge them with some international tax arbitrage is about as shocking as the discovery of gambling in Casablanca.

After all, as Lord Clyde observed, in a 1929 British tax case: “No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores.”

This principle – that you should seek to make the most money you can, provided you do not break the law – is the operating software of modern capitalism. As Milton Friedman put it: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

In the hypercompetitive 21st century, where every Apple is only one algorithm away from becoming a BlackBerry, paying the lowest possible taxes is not the exceptional policy of one particularly greedy chief executive – it is what every executive seeks to do to keep his job. That was what Andrew Kassoy, a former private equity investor, explained at a recent panel discussion at the Stern School of Business at New York University (Disclosure alert: I was the moderator).

Kassoy, who now leads a nongovernmental organization working to transform corporate behavior, argued that current publicly traded U.S. companies were “actually obliged to maximize their externalities” – economist-speak for behavior that harms the wider community – if that would increase their bottom line. Kassoy does not think that is a good thing, and, increasingly, neither do a lot of other people – the grim title of the session was “Can American Capitalism be Saved?”

He’s not the only one who is worried. In a recent interview, I asked Mark Carney, the governor of the Bank of Canada, about the ability of rich people and big companies to avoid taxes in a world of global capital flows.

“It is demonstrably a problem,” said Carney, who will take over as the governor of the Bank of England on July 1. “If there’s an ability to fundamentally, whether on a personal or a corporate level, persistently avoid tax, the consequence of that is that the burden of fiscal adjustments that are happening in virtually every advanced economy falls more heavily on those who pay their fair share. And they end up paying more than their fair share as a consequence.”

Closing the tax loopholes or tightening the lax tax enforcement that have deprived European treasuries of so much multinational corporate tax revenue is politically difficult and technically complicated. But what is even harder is figuring out how to better align the behaviors of the business titans with the greater good of the community as a whole.

After all, the companies that have been minimizing their European tax bills are ones we are accustomed to thinking of as the good guys. These are not the bailed-out fat cats of Wall Street or the crony capitalists of the emerging markets. These are the inventive entrepreneurs of the West Coast, who brought cappuccinos and search capabilities to the global masses. Starbucks energetically associates its brand with all manner of ethical causes, and Google’s motto is “Don’t be evil.”

In a new book, a University of Michigan business professor, Mark S. Mizruchi, contends that the forsaking of responsibility for the wider community is a big shift in the behavior of U.S. business and a central reason for the country’s political and economic malaise.

“The current American corporate elite seems to be leading us toward the fate of the earlier Roman, Dutch and Hapsburg Spanish empires, starving the treasury and accumulating vast resources for itself,” Mizruchi writes. He concludes his book with the hope that the corporate elite will rediscover “enlightened self-interest” and reform themselves.

Speaking at the New York University conference, Clay Christensen, one of the leading thinkers about the disruptive impact of the technology revolution, suggested that belief in a God who holds us accountable in the afterlife would make captains of industry more civically responsible today.

Christensen is right that to change behaviors we need to change incentives. Hellfire and damnation is one option; another is rewriting the rules of engagement between companies, countries and shareholders.

It’s evening in America. That is the worrying news from the latest Heartland Monitor Poll, conducted quarterly and sponsored by the insurer Allstate and National Journal.

The researchers made a striking finding: The U.S. middle class, long the world’s embodiment of optimism and upward mobility, today is telling a very different story. The chief preoccupation of middle-class Americans is not the dream of getting ahead, it is the fear of falling behind.

The poll found that 59 percent of its respondents – a group of 1,000 people selected to be demographically representative of the United States as a whole – were afraid of falling out of their economic class over the next few years. Those who described themselves as lower middle class were even more scared than the overall group – 68 percent feared they could slip even lower down the economic ladder.

This wary vision of the future went hand-in-hand with a diminished idea of what it meant to belong to the middle class. More than half of the people polled – 54 percent – said that being middle class meant having a job and being able to pay your bills. Fewer than half – just 43 percent – took the more expansive view that membership in the middle class was a passport to financial and professional growth, buying a house and saving for the future.

“The key finding is that the middle class in America is more anxious than it is aspirational,” Jeremy Ruch, a senior director at the strategic communications practice of FTI Consulting and one of the people who led the polling, told me. “Some of the traditional characteristics of middle classness are not seen as realistic. They have been replaced by an anxiety about the possibility of falling out of their economic class.”

Even more arresting was the extent to which things that used to be the unquestioned trappings of middle-class life have come to be seen as upper-class luxuries. Nearly half – 46 percent – of the respondents who described themselves as middle class said that being able to pay for children’s college education was possible only for the upper class. Forty-three percent thought that only the upper class had enough savings to deal with a job loss, and 40 percent believed only the upper class could save enough to retire comfortably.

For the land of opportunity, this is a seismic shift. America was created as a country where the middle class could prosper - Thomas Jefferson crowed that America had no paupers and few who were rich enough to live without labor.

This was supposed to be the place where, as Bill Clinton liked to put it, if you worked hard and played by the rules, you could get ahead. And Yanks gloried in the fact that the world’s huddled masses regularly demonstrated their belief in the American dream by voting with their feet.

The respondents to the Heartland poll know the world has changed. Nearly two-thirds of those who described themselves as middle class said their generation had less job and financial security than their parents. More than half said they had less opportunity to advance.

The academy can be sniffy about the economic instincts of ordinary folk, but in this case Joe Public seems to have gotten it right. The respondents were on target when asked to estimate the income of the typical American middle-class family: They said between $60,000 and $65,000 per year. According to U.S. Census data from the Current Population Survey, median income for a family of four is $68,274.

And most economists think the anxiety articulated in this poll is a reaction to a real and new peril.

“I don’t blame them,” Erik Brynjolfsson, a professor at the Sloan School of Management at the MassachusettsInstitute of Technology, told me. “They are falling behind, so it is not surprising that they are feeling anxious.

“The disappointment and the anger of the middle class is not just whining, it is based on real economics,” Brynjolfsson said. “The job security and the income of the middle class is declining, and so is social mobility.”

The saddest paradox revealed in the poll is that ordinary Americans agree with the elites about what it takes to get ahead, or at least to stay afloat, in the 21st-century United States. Half of the respondents said that college was the best way to earn and maintain membership in the middle class. But almost half – 49 percent – thought that only the upper class could afford to pay for their children’s higher education.

Humans have always been good at focusing on the immediate threat, and the nonstop media cycle has only exacerbated that trait: One week it is Hurricane Sandy, the next it is Cyprus, and then it is the Boston Marathon explosions.

For the Western industrialized countries, however, the really big story is the slow, inexorable decline of the middle class. Watching it happen is about as exciting as studying paint as it dries or a frog as it boils. But the pain is now being felt even in perennially optimistic America. There are still a few hours left before midnight – let’s hope we can act in time.

PHOTO: The setting sun casts an orange glow on passing clouds over the U.S. Capitol Building in Washington September 19, 2006.    REUTERS/Jason Reed

In other ages, we have called on shamans or saints in times of crisis when the usual remedies have not worked.

In the stagnant world economy today, we have designated central bankers as our superheroes, and we are relying on their magical monetary powers to restart global growth.

As the European Central Bank president, Mario Draghi, whom some have nicknamed Super Mario, said this month: “There was a time, not too long ago, when central banking was considered to be a rather boring and unexciting occupation.”

Not anymore. No one embodies this new glamour more than Mark Carney, the 48-year-old governor of the Bank of Canada, who has been tapped to lead the Bank of England, making him the first foreign governor in the institution’s 319-year history.

The bar for Carney could not be higher. A cartoon in the British papers made the point. It showed a Bethlehem inn with Joseph leading Mary on a donkey. The caption above the innkeeper’s head declares: “Unless you’re Mark Carney, you’ll have to make do with the stable.”

Carney’s star power was reflected in the packed house that turned out in Washington on Thursday to hear him at a Thomson Reuters Newsmaker interview. Carney, who told legislators he hoped his departure from Britain would be “less newsworthy” than his arrival, continued his effort to play down heroic expectations.

He deftly dodged questions about the British economy, saying it was not his job to comment on Britain yet. And he pointed out that fiscal policy — the domain of the elected authorities — and the private sector were the true engines of economic liftoff.

“If we want to talk about ultimate sources of growth, sustainable fiscal policy is a necessary condition. Sustainable growth comes from the private sector, not from the (International Monetary Fund), the Bank of Canada or anyone else,” he said.

He also took care to delineate the proper lines of authority between the central bank and the Ministry of Finance, and steadfastly declined repeated invitations to overstep them. “Central bankers take fiscal policy as given,” Carney said. “Treasuries take monetary policy as given. That’s the separation, and I’m not going to wade in positively, negatively, neutrally.”

Within those constraints, though, Carney offered a cautiously optimistic view of the world economy.

“The important development in our opinion over the course of the last 12 months or so, is that the quality of private-sector growth in the United States has picked up,” he said. “The U.S. is moving towards that class of advanced economies that have well-functioning financial systems where private credit is growing and where there is reasonably solid investment growth.”

That is good news for Canada, as Carney said, and it is also good news for the rest of the world.

Carney believes that a crucial element in restoring sustainable global growth is finishing the job of repairing global finance and the regulatory framework in which it operates. As the head of the Financial Stability Board, set up by the Group of 20 major economies in the aftermath of the financial crisis, he is one of the leaders in that effort.

A major focus is repairing the gap that was revealed in the emergency response to 2008 — the existence of “too big to fail” banks, whose owners and executives pocket profits in the good times but get a state bailout when things go awry. Over the next few days in Washington, during the spring meetings of the IMF and the World Bank, Carney and other central bankers and finance ministers will continue to hammer out a way to let banks die without requiring taxpayers to foot the bill.

The recent crisis in Cyprus gave a messy preview of how that sort of resolution might work.

Carney hopes that global guidelines — and they need to be simple enough, he said, to be usable in the time frame in which the authorities in the real world must often operate — will make future resolutions cleaner and more predictable.

That game plan, he believes, should include bail-ins, or making stakeholders in the banks pay most of the costs.

“Bail-in broadly speaking — not bail-in as it was performed a couple of weeks ago in Cyprus — but bail-in as a component of addressing systemic risk,” Carney said, “is an absolutely necessary element. It doesn’t solve everything, but it’s absolutely necessary.”

Having lost our faith in the private sector and the bankers who dominated so many Western economies before 2008, some are looking to government bankers like Carney.

One of the analytical mistakes before the financial crisis was believing that efficient markets were perfect and that private bankers could police themselves.

Refreshingly, Carney is not making the same error in reverse. He is a believer in regulation and has embraced it at its most complex, global scale. But he said regulators need to be watchful of the unintended consequences of their rules and mindful of the feedback loops between their actions and private markets. The relationship between markets and governments is a complicated process that requires eternal vigilance and constant tweaks.

If the central bankers can pull that off, they will deserve that room in the inn after all.

How should countries navigate the twin challenges of our time – globalization and the technology revolution? If that seems to be an abstract question, consider the people of Cyprus whose futures have been devastated by their country’s failure to surf those international waves, or the threat posed by North Korea and its refusal to participate in these two transformations.

Most of the conversation about how geopolitics is changing in the 21st century focuses on the shift from west to east, and on how we’re moving from the bipolar power equation of the Cold War to a new bipolar relationship, that of the U.S. and China, that determines the mood music for everyone else.

That’s true. But what if you aren’t in Beijing or Washington? How has the world changed for the middle powers, and what should we do about it?

The biggest shift is that business has gone global. Companies and capital operate internationally, often beyond the economic reach of any particular nation-state. People are pretty global, too, living lives that freely cross national borders.

But while the world is becoming borderless, it isn’t becoming flat. It’s spiky, and the economic forces of our age are making the peaks higher. We live in a winner-take-all economy, and the winning people, companies and ideas are increasingly concentrated in a handful of global cities – in fact, in a handful of global neighborhoods and sometimes, in the case of the plutocratic palaces at 157 West 57th St. in Manhattan or One Hyde Park in Knightsbridge, in a handful of buildings.

If you don’t happen to control one of these global mountaintops, figuring out your country’s place in the world is the challenge of 21st-century statesmanship. Here are three starting points:

First, don’t fight the tide. Swedish Foreign Affairs Minister Carl Bildt believes it’s essential to embrace globalization. “I want to have more of the world in Sweden and more of Sweden in the world,” he told me. Sweden isn’t afraid of brain drain, he said. Instead, “we encourage our young people to study abroad and to work abroad.” Many return, but even those who don’t help to connect Sweden to what Mr. Bildt calls “the global flow of ideas.”

Second, find your strategic national niche. Technology leaders such as Google chairman Eric Schmidt think a lot about power laws, the phenomenon whereby you see concentration at the center of networks. His own company is an example of power laws. So are Facebook and Apple. This winner-take-all dynamic means businesses need to think strategically when it comes to picking the fields on which they play. The same applies to countries.

But Roger Martin, dean of the University of Toronto’s Rotman School of Management, warns of one paradoxical danger: If your niche becomes too important, it can be a struggle for smaller players to remain dominant. The Keystone pipeline is an example. “As long as Keystone was a niche issue, Canada was okay. But this is not just about a pipeline any more. This has become about one of the top five global issues – energy and sustainability – and Canada having a voice in that discussion is very tough sledding.”

The third point is the hardest. Sometimes, the global current of ideas Mr. Bildt is keen to plug into flows in the wrong direction. Wise national statesmen need to be connected enough to hear the world’s conversation and influential enough to shape it. But they also need the self-confidence to swim against the tide when the global conventional wisdom is wrong.

Canada has a pretty good track record on this score – with hindsight, contrarian decisions such as not deregulating our banks and not fighting in Iraq look better and better. Lester Pearson, who invented so much of the postwar international architecture and secured Canada’s place in it, was sworn in as prime minister 50 years ago, on April 22, 1963. His successors need to devise a new strategy in the world where it’s even harder to thrive if you aren’t No. 1.

Pity Barack Obama. Everything in his life experience prepared him to be the president who would take on the big challenge of the 21st century: rising income inequality and the hollowing out of the middle class.

His peripatetic youth taught him about the price of plutocracy. In an interview unearthed by Zachary A. Goldfarb of the Washington Post, in 1995 Barack Obama, plugging his autobiography, “Dreams From My Father,” recalled that experience for the Hyde Park Citizen, his neighborhood edition of a newspaper that bills itself as the “Premiere African American Weekly” in Chicago.

“My travels made me sensitive to the plight of those without power and the issues of class and inequalities as it relates to wealth and power,” he said.

“Anytime you have been overseas in these so-called Third World countries, one thing you see is a vast disparity of wealth of those who are part of the power structure and those outside of it.”

As an adult, he didn’t take the obvious and lucrative path for an editor of the Harvard Law Review: a high-flying Wall Street career. Instead, Obama returned to Chicago and continued to focus on the issues of the underclass he had first addressed there as a community organizer.

Obama’s swift political ascent soon propelled him back into the world of the plutocrats, but even as he was pocketing their donations, he worried about coming to share their worldview.

In “The Audacity of Hope,” his second book, Obama writes that the financiers and lawyers who backed his 2004 run for the Senate were “smart, interesting people” who weren’t looking for a quid pro quo for backing him.

Even so, Obama feared that hanging out too much with the super-rich would skew his perspective. He was concerned, he wrote, about losing sight of the “frequent hardship of the other 99 percent of the population — that is, the people that I’d entered public life to serve.”

It is worth noting that Obama was writing about the 99 percent in 2006 — well before the Occupy Wall Street movement introduced that term into our collective discussion and before Obama’s presidential campaign introduced him into the national debate.

All of which meant that when Obama got to the most powerful political office in the world, he arrived intellectually and psychically equipped to take on the issue that America’s leading economists — and, being a wonk, Obama consulted many of them — were, at that moment, identifying as the big new economic fact of our time.

As things turned out, Obama didn’t start his presidency by addressing income inequality head-on: The small matter of a global financial crisis had to be taken care of first. But even in the face of the gravest economic meltdown since the Great Depression, Obama pressed on with one of his key initiatives to level America’s playing field: healthcare reform.

That drive, which cost so much political capital and yielded such a complex, emotionally unsatisfying result, is critical evidence of Obama’s commitment to the 99 percent: Healthcare had been the big missing piece in America’s social safety net, a gap that became more dangerous as incomes and job security deteriorated for the middle class.

To understand the significance of Obama’s healthcare drive, it is worth remembering that there was another huge item still left on the liberal to-do list that a different president might have focused on: climate change. Among the president’s affluent backers, the green agenda trumped everything else, but for Americans experiencing “frequent hardship” the financial devastation of medical bills was the more urgent problem, hence Obama’s choice.

In 2012, Obama campaigned on his willingness to name inequality as the problem, and won on his promise to fix it: “What drags down our entire economy,” he said last spring, “is when there is an ultrawide chasm between the ultrawealthy and everyone else.”

With this week’s budget plan, Obama made good on that pledge. In the apt summary of Derek Thompson of The Atlantic, the haiku version of the president’s proposal is “tax the rich, spare the poor, remember the young.”

He wants to raise taxes at the top, including closing some of the loopholes that have enriched the plutocrats; help the poor, with measures like increasing the minimum wage; and increase opportunity for the young, with early childhood education.

Put these measures together with healthcare reform, recall the current American aversion to taxes and the country’s sorry fiscal state, and this amounts to a rather muscular attack on income inequality.

That’s where the pity comes in. Within the constraints of American politics and the American economy, Obama is addressing the issue he cares about most with a lot of energy. The tragedy is that the problem is still getting worse.

Wall Street has surged to pre-crisis highs, even as median incomes stagnate. At the very, very top, incomes are higher, and wealth is greater, than ever before. But for the 99 percent, unemployment remains crippling, and perhaps even more worryingly, the jobs that are coming back aren’t as good as the jobs they are replacing.

As Annie Lowrey of the New York Times has pointed out, the National Employment Law Project did a study last year that showed lower-wage occupations were 21 percent of recession losses, but 58 percent of recovery growth. Meanwhile, mid-wage jobs were 60 percent of recession losses – but only 22 percent of recovery growth.

The problem is not, as the left sometimes complains, that Obama doesn’t care or that he isn’t trying hard enough. It is that the issue he has long been focused on has become more deeply entrenched and harder to fix over the past three decades. A diagnosis isn’t enough; doing something about it requires transformational leadership and a transformational agenda. Liberals need their own Margaret Thatcher, and they haven’t found her yet.

If you read just one book this spring to understand how the world is changing, it should be Mohsin Hamid’s new novel, “How to Get Filthy Rich in Rising Asia.” The central theme of this funny and vivid work is familiar: the great shift in the global economy’s center of gravity from West to East.

What makes Hamid’s tale so revealing is that he gets beneath the human skin of that tectonic lurch. Asia’s rise is a story of the eastward tilt of global gross domestic product, but behind those numbers are billions of individual lives that are being radically transformed. In particular, Hamid, who lives in Lahore, Pakistan, focuses on the rapid urbanization that is both a driver and a consequence of economic growth in the emerging markets.

Hamid reminds us how epic that transition is for the people swept up in it. As he writes in his novel: “You witness a passage of time that outstrips its chronological equivalent. Just as when headed into the mountains a quick shift in altitude can vault one from subtropical jungle to semi-arctic tundra, so too can a few hours on a bus from rural remoteness to urban centrality appear to span millennia.”

“There is a massive movement to the cities,” Hamid told me by telephone this week from Dublin. His novel chronicles a central result of this migration: the breakdown of the social and economic structures of the village and the frantic individual search to replace them with something else.

“We are seeing a growing understanding that people need to be individual entrepreneurs because the old rural networks won’t take care of them anymore,” Hamid told me. “In most countries across Asia, the state is still pretty weak; it can’t offer you much health care or security in your old age. So people have to fend for themselves.”

The result isn’t filthy riches for everyone – Hamid described the invisible hand of the “ferocious” market economy as operating “with a carrot, but also a pretty big stick.” The individual response to both the peril and the promise is a surge of entrepreneurship.

“People are out there as individual actors in this economy,” Hamid said. “They are all little individual businesses. Most people would say, ‘I work for me.”‘

The world’s smartest investors have already figured this out. “The whole nature of entrepreneurship has gone global,” Bill Ford, chief executive of General Atlantic, a growth equity company that invests heavily in young companies in the emerging markets, told me. “That is a function of capital going global and of people knowing about entrepreneurship globally.”

Ford, who describes the founders of the companies in his portfolio with palpable affection and admiration, said one of the distinguishing characteristics of emerging-market entrepreneurs is that they, like Hamid’s protagonist, are pioneers.

“In the emerging markets, these are the first-timers,” Ford told me. “These are first-generation entrepreneurs. They are people who want to change the world.”

Global corporations are surfing this wave, too. The chief executive of Starwood Hotels, Frits van Paasschen, who was born in the Netherlands and is based in the United States, spoke to me this week from Dubai, where he has relocated his executive team for the past five weeks. Van Paasschen, who moved his corporate headquarters to Shanghai in the summer of 2011, told me that 80 percent of the hotels Starwood plans to open in the future are outside Europe, Japan and North America, so that’s where his team needs to be, too.

“As urbanization takes place, hotels are part of that infrastructure,” he said. “The growth is just phenomenal.”

Elmira Bayrasli, a project leader at the World Policy Institute in New York, is another student of these emerging-market entrepreneurs. She is writing a book whose title says it all: “Steve Jobs Lives in Pakistan.”

Like Ford, Bayrasli believes that entrepreneurship has become a global phenomenon. “Entrepreneurship once meant Silicon Valley; it meant America,” Bayrasli, the New York-born daughter of Turkish immigrants to the United States, told me. “What I am trying to show is that the greatest dynamism of entrepreneurship now is global. That Steve Jobs’s spirit really has gone global. It exists everywhere – in places like Pakistan, Turkey and Nigeria.”

The novelist, the scholar and the investor all see this entrepreneurial energy emerging in the space left empty by government, not in a space created by it. “I hope the role of government remains benign neglect,” Ford said.

Bayrasli argues that entrepreneurship in poor countries meets needs that we once thought would be satisfied by outside aid. “You have a real pessimism about traditional development and foreign aid,” she said. “But there are still a lot of poor people in the world who need help. So now the blue pill is entrepreneurship: Pull yourself up by your bootstraps.”

For investors like Ford and corporate leaders like van Paasschen, the rising tide of emerging-market entrepreneurs is already yielding rich returns. Bayrasli thinks they are on the verge of having a direct impact on everyone.

“They are on track to become globally competitive, rivaling the Apples and the Facebooks and the Googles ,” Bayrasli said. “They are coming up with innovations that a lot of people here in the United States can benefit from.”

One of the most important political and economic facts of this young century is that capital has been slipping the traces of the nation-state. Business is global; government is national. That mismatch is one of the big sources of tension in the world today: Whether it comes to taxes, bank regulation or immigration, the fact that money and politics no longer live in the same neighborhood makes consensus harder to achieve.

For Exhibit A, you could point to the flood of Russian rubles into Cypriot banks- and the dramatic consequences.

Global businesses have profited handsomely. Multinationals have legally lowered their tax bills by shifting their profits to low-tax countries: As a scandalized British public recently learned, for example, Starbucks paid 8.6 million pounds, or $13 million, in corporate taxes in Britain over the past 14 years.

For individual plutocrats, taking advantage of globalization is even easier: Move your legal residence – and your money – as the actor Gerard Depardieu or the Facebook co-founder Eduardo Saverin did.

But these lower tax bills come at a cost. As I was told by Kemal Dervis, former minister of economic affairs in Turkey and now vice president of the Brookings Institution, “Capital is seeking to avoid the burden-sharing which makes modern society possible.”

“If every country tries to race towards the lowest rate, then in the end nobody gains,” Dervis said. “If you believe there should be no government at all, then fine. But if you believe some government is good, then you cannot have a system that erodes the tax base in all major countries.”

The big losers, in Dervis’s view, are those who do not have the option of exiting the nation-state: the middle-class citizen and the medium-size business.

The Cypriot economy was an extreme product of the age of global business and a weakening nation-state. Cyprus used to live off a banking sector whose coffers were bloated chiefly by Russian money.

Part of the country’s appeal was the seduction of low taxes and light regulation. But for the Russians, whose home tax rates are low enough to attract Depardieu, that was not Cyprus’s only advantage.

Equally important was the fact that Cyprus allowed affluent Russians to escape the corruption of their home country and to trade it for the rule of law of the European Union. That was a shift with important political consequences.

One of the mysteries of modern Russia is why a country that is relatively rich and well educated is so tolerant of its authoritarian rulers and weak legal system. The political quiescence of the Russian middle class flies in the face of the theory that as the bourgeoisie gains economic power, it will demand a corresponding increase in political rights – a view that implicitly underpinned much of the West’s policy toward post-Soviet Russia.

But, partly thanks to globalization and the mass offshorizatsiya, as the Russians call it, that it has facilitated, that is not how things have turned out. In contrast to the rising middle classes of North America or Western Europe in earlier eras, rich Russians have not needed to fight for the rule of law at home to protect their capital. They have chosen the much simpler option of exporting their money and taking advantage of the rule of law in the West.

As Ivan Krastev, a Bulgarian political scientist, has argued, part of Vladimir V. Putin’s political genius is that he has not blocked the flight of his richest and smartest citizens. Unlike both the czars and the commissars, Putin has realized that letting these people and their rubles go actually makes his regime more stable, by exporting a potentially powerful source of dissent.

But the Cyprus crisis has shown that the Russian elite’s strategy of offshoring the rule of law, rather than building it at home, has its risks, too. When the wolf was at the door, Cypriot citizens had the political muscle in Nicosia and Brussels to defend their interests; Russian bank depositors did not.

The rule of law and a stable financial system are both part of the expensive infrastructure of modern society that Dervis worries is underfinanced. Russian elites found it easier and cheaper to buy these collective goods abroad. But even in this global age, citizenship has its perks, and one of them is that in a moment of crisis, your government might put you first in line.

Plutocrats worldwide have readily understood the advantages of evading the burdens of the nation-state. Cyprus is a reminder that government has benefits as well as costs and that if you opt out of paying the bill, you may find that you get what you pay for.

The one thing pretty much all of us agree on is the importance of equal opportunity. Opinion is divided about the significance of rising income inequality per se. Some see it as a problem in and of itself. But for others, a growing economic divide, so long as it is meritocratic, is a healthy characteristic of a growing, entrepreneurial society.

Nowadays, though, no one is in favor of a caste-based society. Income inequality is one thing, but a permanent division into the haves and have-nots is an entirely different thing – and much less acceptable.

That is why new economic research, released at a conference this week at the Brookings Institution in Washington, is so important. The comprehensive study is by five economists, including two who work at the Federal Reserve Board, Vasia Panousi and Ivan Vidangos, and one, Shanthi Ramnath, of the U.S. Treasury Department. It draws on a powerful new data set: a one-in-5,000, random and confidential sample of the population of U.S. taxpayers.

Its conclusions are sobering: Rising inequality in the United States is “permanent.” It isn’t the function of a bad year, a temporary economic downturn, or personal decisions to move to new jobs or new places, with consequent dips in income. Instead, rising income inequality is the statistical reflection of an increasingly calcified society – the rich are staying rich, and the poor are staying poor, even as the gap between them grows.

This result is the most stark when it comes to male earnings. The “entire increase” in the inequality in male wages over the period the paper investigates, 1987 to 2009, was “permanent.”

The researchers thought that household income might cushion the blow. After all, this is how many traditional societies function. When the main bread-winner’s earnings falter, other sources of income – the work of other family members, cashing in family savings, income from family businesses – kick in.

In the United States, over the past 2-1/2 decades, the household provided a little bit of this type of insurance, but not much. “For total household income,” the study concludes, “the large increase in inequality over our sample period was predominantly, though not entirely, permanent.”

Another institution that could temper the consequences of the growing, structural inequality the authors document is the state. As it happens, like the family, the state softens the impact of permanent inequality a little, but not enough to change the broader trend of a growing and lasting divide.

“We find that the tax system helped mitigate somewhat the increase in household income inequality over the sample period, but this attenuating effect was insufficient to significantly alter the broad trend toward rising inequality,” the researchers conclude. They put a number on the cushioning effect of the American state: 15 percent.

This study is powerful partly because the data that supports it is so robust and because the researchers investigating that data are so deeply rooted in the American establishment. This is no Occupy Wall Street critique – it is a sober analysis done by economists at the Fed and the Treasury.

Their conclusion that rising income inequality is overwhelmingly permanent is also striking because this stratification is so strongly at odds with the increasing political openness of those same 2-1/2 decades. Even as class divisions have hardened, other forms of structural inequality have been eroded.

Full rights, including marriage, for gays and lesbians are swiftly becoming the status quo. Ethnic minorities have increasing demographic power, as reflected in their growing political strength on issues like immigration, or indeed in the fact that the president of the United States is black. The earning power of women is growing, and women are increasingly likely to be the breadwinners in their families.

This is the great paradox of our age – political inclusion of groups that were once beyond the pale is steadily increasing. But at the same time, the economic divide between the top and the bottom is becoming both wider and deeper.

This contradiction is the key to so much of the stress and polarization in today’s society. The widening political inclusion is real, and it makes an implicit promise – that equality of opportunity is rising, that the world is everyone’s oyster.

But the tax data the Brookings study draws upon is real, too, and it sends the opposite message. The gap between the rich and the poor is growing, and membership in each group is increasingly fixed.

Politics tells a story of increasing inclusion; economics tells a story of a widening and permanent class divide. You don’t need a PhD in economics to feel cheated by these clashing messages. Our public political ideology is promising – and delivering – ever-greater openness and inclusion. Our paychecks are cementing the class divide. No wonder people are so confused and American politics is so scrambled.