Mark, it’s notable that a careful reading of the piece you cite indicates that Schiller doesn’t say that growing inequality is a “myth” (as per the WSJ headline). In fact, he says that:
While there is some substance to these fears of widening inequality and middle-class stagnation, the situation is not nearly as clear-cut.
He goes on to explain that changes in family composition and other complexities “mute” the impression created by looking at the unadjusted numbers. This analysis is correct.
Nonetheless, even the “muted” growth in inequality, and the underlying disruption in settled economic arrangements of which it is a symptom, creates a political demand for greater economic stability. In my view, the statist (i.e., “progressive”, “liberal” or whatever) solution of reregulation of the economy would be disastrous. You can’t beat a horse with no horse though, so if conservatives do not develop a political response to this problem, we will simply create a massive opening for the statist solution.
I go into a lot more detail about this in NRODT.