I don't think that inequality in itself is a problem - it really doesn't matter how rich the super-rich are, as long as the vast majority of the people can afford basic housing, food, and transportation with an entry level job. Currently, the standard of living for the poor in the US is still much higher than the vast majority of the world. If that changes in a significant way, we'll have to become more competitive with the rest of the world, and that's not something we should do until we absolutely have to: although the relatively regulation-free manufacturing environment that exists in places like China has worked wonders for creating jobs and increasing wages, Chinese cities are not pleasant places to be. I DO think there is room to relax a lot of regulations (across the board - environmental, employment, and financial ... sarbox comes to mind), and I do think that this would help to bring back jobs, I just don't think that we should go as far as allowing the kinds of things that folks in 3rd and 2nd world economies get away with.

As an anecdotal example, I live in the midwest and have a couple of friends who have bottom-of-the-barrel jobs, making maybe $10/hr (which is what you get at McD's around here). That's enough that with careful management of their funds they were able to buy a very small house, eat modestly, drive a car, and cover the expenses for their child (we don't have smog laws here, so you can get a serviceable car for < $1k). They're not particularly motivated people, and haven't put any effort into getting better jobs, but they're also OK with living in the bad part of town in a postage stamp house. Nonetheless, their standard of living is dramatically higher than that of the vast majority of the rest of the world, and even though they're by far on the bottom end of the income scale, they're doing just fine.

We have fairly permissive zoning laws and building codes here, and people pop up houses like it's going out of style, so housing is very cheap compared to other parts of the country (the downside being that we have huge neighborhoods of small, cheaply built houses). Even though I don't particularly enjoy the look of these neighborhoods, they do serve a purpose, and I'm glad that we let people build them because they enable people like my friends to live on a very tight budget (and quite honestly, what somebody wants to build on their private property isn't anybody else's business, unless it's dangerous to people outside of the property in some way). True story: I needed a hay barn and I needed it to be extremely cheap, so I bought the ass-end of a cube van and plopped it on the back of my property. No flak from the township :). The chassis of the cube van is now living a happy life as a septic pumping truck.