In Sickness and in WealthHow America's rising income inequality figures in to the debate over health care.
By Eliot SpitzerPosted Tuesday, July 28, 2009, at 1:15 PM ETThe 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.
More textured are the data showing the percentage of total income garnered by each quintile of the population over a particular time frame.
| Percentage of Total Income by Population Quintile |
| | Lowest Quintile | Middle Quintile | Highest Quintile |
| 1967 | 4.0 | 17.3 | 43.6 |
| 1977 | 4.2 | 16.9 | 44.0 |
| 1987 | 3.8 | 16.1 | 46.2 |
| 1997 | 3.6 | 15.0 | 49.4 |
| 2007 | 3.4 | 14.8 | 49.7 |
The top 1 percent of all income earners garnered 21.8 percent of all income in 2005, up from 8.9 percent in 1976.
Eliot Spitzer is the former governor of the state of New York. Is that really what we want . . . redistribution?
In every walk of life there are the more and the less ambitious. I don't want to be CEO . . . my young boss clearly does. I spend more time with my family -- he works longer hours and arrives bleary-eyed in the morning from night classes and studying.
His way most likey results in him exiting the middle class eventually, upwards. My way more than likely leaves me squarely in it. We each have looked at the tradeoffs and made our respective choices. That's the American way . . . isn't it?
All the government should be doing is clearing the barriers to opportunity, not trying to rig the results.
Health care reform, in a vacuum, is a Mom and applie pie kind of thing. Like more vacation, everybody wants it, in the abstract. It's going to be messy and expensive in practice. It may still be worth doing. But financing it with tax increases is a singularly bad idea.
-- kencleanairsystem
(To reply, click here)
Doesn't looking at it by quintile obscure the issue of the top 1% gaining more than all the rest? The top 20% gaining doesn't say much if most of those gains are by 5% or less of that group.
Well, all of this is pretty much moot, the real issue of redistribution of wealth is as much WITHIN corporations as it is within society as a whole (the other half of the story is energy and finance versus the rest of the economy). If we really, really want a change all we need to do is set in law a ratio of earnings so that the CEO can only get, say, 15x what the annual salary of the lowest paid worker is (of course other compensation would have to be included). Never going to happen, but I'll throw it out there, because the real truth and the real issue is that corporations are feudalistic entities unto themselves.
-- Adamatari
(To reply, click here)
Spitzer indicates the Middle class is suffering from stagnant earnings and the lower class is getting killed. He correctly states this has occurred at the same time our manufacturing base has eroded. No kidding.
Our economy has evolved. We are slowly but surely getting away from manufacturing. The days of someone graduating from high school and heading to the local factory for a lifetime job earning middle class wages are over. Yet, too many in this country believe they have a vested right to this type of arrangement.
I live in a town where GM closed its doors after some 90 years. I am amazed at how many of these displaced workers refuse to believe they need to build on their high school diploma to become more employable. We are building a new hospital that will employ hundreds. Yet you need at least some technical training to qualify for these jobs.
The key to raising middle class earnings is for the lower middle class to understand education is the key. Get training, learn technical skills at least. Make yourself more valuable in the job market.
Taxing the affluent to death is not the answer, but a job killer.
-- Hogie
(To reply, click here)
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Is that really what we want . . . redistribution?
In every walk of life there are the more and the less ambitious. I don't want to be CEO . . . my young boss clearly does. I spend more time with my family -- he works longer hours and arrives bleary-eyed in the morning from night classes and studying.
His way most likey results in him exiting the middle class eventually, upwards. My way more than likely leaves me squarely in it. We each have looked at the tradeoffs and made our respective choices. That's the American way . . . isn't it?
All the government should be doing is clearing the barriers to opportunity, not trying to rig the results.
Health care reform, in a vacuum, is a Mom and applie pie kind of thing. Like more vacation, everybody wants it, in the abstract. It's going to be messy and expensive in practice. It may still be worth doing. But financing it with tax increases is a singularly bad idea.
-- kencleanairsystem
(To reply, click here)
Doesn't looking at it by quintile obscure the issue of the top 1% gaining more than all the rest? The top 20% gaining doesn't say much if most of those gains are by 5% or less of that group.
Well, all of this is pretty much moot, the real issue of redistribution of wealth is as much WITHIN corporations as it is within society as a whole (the other half of the story is energy and finance versus the rest of the economy). If we really, really want a change all we need to do is set in law a ratio of earnings so that the CEO can only get, say, 15x what the annual salary of the lowest paid worker is (of course other compensation would have to be included). Never going to happen, but I'll throw it out there, because the real truth and the real issue is that corporations are feudalistic entities unto themselves.
-- Adamatari
(To reply, click here)
Spitzer indicates the Middle class is suffering from stagnant earnings and the lower class is getting killed. He correctly states this has occurred at the same time our manufacturing base has eroded. No kidding.
Our economy has evolved. We are slowly but surely getting away from manufacturing. The days of someone graduating from high school and heading to the local factory for a lifetime job earning middle class wages are over. Yet, too many in this country believe they have a vested right to this type of arrangement.
I live in a town where GM closed its doors after some 90 years. I am amazed at how many of these displaced workers refuse to believe they need to build on their high school diploma to become more employable. We are building a new hospital that will employ hundreds. Yet you need at least some technical training to qualify for these jobs.
The key to raising middle class earnings is for the lower middle class to understand education is the key. Get training, learn technical skills at least. Make yourself more valuable in the job market.
Taxing the affluent to death is not the answer, but a job killer.
-- Hogie
(To reply, click here)