Between 1980 and 2005 the share of after-tax income received by the top 1 percent of households in the United States doubled, increasing from 18.1 percent from 9.1 percent. In the meantime the lowest income earners – the bottom one-fifth of households – saw their share of the nation’s income decrease from 5.7 percent to 4.0 percent.

These data make clear what everyone already knows. Income inequality, already large twenty-five years ago, has increased dramatically.

Growing inequality is not unique to the United States. Almost all the countries of Europe have experienced increased income concentration among the wealthy, as have Australia and Canada. This widespread pattern suggests that a common cause is at work; that all these developed countries have been exposed to the same cause.

And the fact is that there are two such causal mechanisms: the effects of modern technology and the consequences of increased international trade with poor but growing countries. Both have undermined the bargaining position of workers with limited education and sophisticated technical skills, while at the same time strengthening the ability of those at the top of the occupational hierarchy. A strong, nearly universal tendency towards inequality has resulted.

However, with the exception of the United Kingdom, inequality has grown more in this country than in any other nation. Though income polarization has occurred elsewhere, its extent has been much less than in the United States. The reason for this is that United States government policies do less than others in offsetting inequality. As a percentage of the gross domestic product, the United States ranks at or near the bottom compared to other developed countries in measures of worker training, subsidized employment, unemployment compensation and support for early retirement. What sets the United States apart is not the economic forces generating inequality but rather the extent to which our politics generates programs to counter those forces.

The weakness of corrective policies in offsetting income inequality in the United States is not due to public hostility to such efforts. Polling data since the 1970's have consistently revealed that the American people support government programs to reduce income differences. The weakness of such government efforts represents a failure of our political system, both because it reveals that our politics is not responsive to public opinion and because it has failed to address the corrosive impact of income polarization. Indeed, the subject of inequality is rarely part of our national political dialogue.

The inadequacy of the American political response to inequality is at least partially explained by the fact that our legislators are entirely dependent upon private campaign contributions. Office seekers and parties in Europe receive public subsidies. What that means is that politicians in the United States are forced to be more responsive to the conservative political preferences of the wealthy donor class. Their careers depend upon their satisfying their patrons. The consequence of this is the neglect of the programs that are needed to address the negative consequences of technological change and globalization.

A system of public financing of electoral campaigns would go far to open the political system to a consideration of the policies needed to correct income inequality. With such a system, a wider array of candidates and perspectives would be presented to the electorate than is the case now. Under those circumstances there is a strong likelihood that more effective programs to deal with globalization and technological change will be adopted. Greater income inequality, in short, is dependent upon greater political equality. The most effective route to both requires the adoption of clean and fair elections.