What should be a higher priority: reducing inequality or alleviating poverty? It is, of course, tempting to answer that they are equally important. Or, that the question is moot because reducing poverty will automatically shrink income disparities; or that policies that lower inequality will inevitably reduce poverty.

These answers may be tempting, but they are also wrong. Although China and India’s economic booms have lifted millions out of poverty, they have also led to markedly greater disparities in income. Cuba’s economic inequality is perhaps less severe now than when Fidel Castro took power 47 years ago, but the average Cuban is far poorer today. In the United States, poverty has not risen substantially, but the gulf between haves and have-nots is much wider.

For most of the past 50 years, global poverty was a chief concern for politicians, academics, and the media. Today, it is global inequality. The gap between rich and poor is constantly in the spotlight. And for good reason: The wealthy seem to be leaving the impoverished further and further behind. Twenty years ago, Forbes, in its first ranking of wealth, found 140 billionaires worldwide. Today, the total is 793, with an increase of 102 from just last year. The number of millionaires in Asia grew by some 700,000 between 2000 and 2004. In the same period, North America’s population of millionaires shot up 500,000, and Europe’s increased by 100,000. According to Merrill Lynch, China could become the world’s leading source of luxury shoppers by 2009.

The world has always suffered from acute economic inequality. But, despite all the conspicuous consumption, global inequality has not changed significantly. According to some measures, it may have even declined. The World Bank recently announced that “since the [Second World]...