Eliot Spitzer: In Sickness and in Wealth

The debate about bank bailouts and health care is missing a critical piece of context: The American economy hasn't been working for the working- and middle class for decades. It is impossible to determine who should pay for what or whether it is"fair" to ask the wealthy to contribute more to the health care of those who are uninsured, without better understanding the winners and losers in the U.S. economy over the past several decades.

One of the great accomplishments of the American economy, or at least the mythology so claims, is the creation of an enormous middle class after World War II. Americans all shared in the wealth generated by the most dynamic economy the world had ever seen. At one end of the economic spectrum, we reduced the number of people living in poverty, while at the other end, we applauded those whose work benefited the entire economy.

Between 1947 and 1967, this was a somewhat accurate image, as the distribution of income made the population look more and more like a bell curve with each passing year. Yet since 1967, this story has reversed course. For more than 40 years, income has been distributed less equitably. As we consider the policy remedies to crises that are of immediate impact—such as the crisis in health care or in our financial system—it is critical to understand the larger arc of this socioeconomic narrative. How we think of distributing the costs of reform should be informed by this larger story.

Presenting income data is fraught with risks, as there are so many ways to look at any arrangement of numbers. So I will use three sets of data to shed light on the road we have traveled. The single most frequently used measure to gauge income distribution is the Gini coefficient, which ranges from zero to one, with zero representing perfect equality (that is, everyone has the same level of income) and one representing perfect inequality (that is, one person has all the income).

U.S. Gini Coefficient
1967 0.397
1977 0.402
1987 0.426
1997 0.459
2007 0.463
As a point of reference, the Gini coefficient for Canada is 0.326, for the United Kingdom it is 0.36, for Norway it is 0.258, and for Germany it is 0.283. In fact, the U.S. Gini coefficient is significantly higher than that for any Western European nation....