Wealth

The World of America’s Most Wealthy A Magical Mystery Tour Who Are the Wealthiest Americans?           David Koch $19 Billion Charles Koch $19 Billion Michael Bloomberg $20 Billion Christy Walton and Family $23.2 Billion Alice Walton $23.2 Billion S. Robson Walton $23.3 Billion Jim Walton $23.4 Billion Lawrence Ellison $27 Billion Warren Buffet $50 Billion Bill Gates $57 Billion 114,000 Homes (at $500,000 apiece) Enough to purchase a home for every man, woman, and child in Eau Claire, Chippewa Falls, and Altoona… combined. 285,000 Harvard Educations (at $200,000 apiece) Enough to educate every single man, woman, and child from Eau Claire, Chippewa, Dunn, Pepin, and St. Croix…counties. 633,333 Porsche 911 Carrera’s (at $90,000 apiece) Enough to buy a Porsche for every man, woman, and child in the city of Milwaukee… and Eau Claire… and Chippewa Falls $57 Billion is greater than the GDP of 123 of them. Of 195 nations in the world… If you spent $1,000,000 a day…  It would take you more than 156 years to spend $57,000,000,000 The Classes  The upper and corporate classes Who are the most wealthy?  Characteristics of individuals in the upper and corporate classes  Is there an elite “ruling class” in the U.S.?  Upper Class 1% 14% Capitalist Class Upper Middle Class Middle Class Corporate Class 30% Mean Income Median Income Gilbert-Kahl Model of Class Structure (with modifications)* 30% 13% 12% Working Class Working Poor Underclass Poverty Line Characteristics of the Upper Class (Domhoff) 1. 2. 3. 4. 5. A listing in one of the various blue books or the Social Register Any male member of the family attending one of a limited number of exclusive prep schools. Any male member of the family belonging to one of the exclusive social clubs. Any female member of the family belonging to an exclusive club or attending an exclusive prep school or If the “father was a millionaire entrepreneur or $100,000a-year corporation executive or corporation lawyer” and the person attended an elite prep school or belonged to an exclusive club on an extended list of these schools and clubs. Characteristics of the Upper Class (Baltzell) Descended from a small pool of successful individuals  Very wealthy (old money).  Attend the same schools and clubs and tend to intermarry.  Maintain a “distinctive” style of life and a high degree of group solidarity.  Characteristics of the Corporate Class 1. 2. 3. 4. 5. Part of an interpersonal web of relations at the top of large corporations. Influence is not found in personal wealth (though many are wealthy) but in control of corporate resources. Members sit on boards of directors of large corporations. Many have moved in and out of halls of government. Personal interests lie not just with one corporation but with the structure of corporate concentration as a whole How Economic Power Became Concentrated (How is the Corporate Class Possible?) 1. 2. 3. Increased size and power of major corporations. Concentrated control of stock in major corporations by other corporations Network of interlocking directorates that ties top corporate personnel together. Interlocking Directorates Board of Directors for Shell Oil Board of Directors for Exxon Oil Direct Interlock Board of Directors for Shell Oil Board of Directors for Exxon Oil Board of Directors for Coca Cola Indirect Interlock Elite Power?  Elite Theory Functional Elite Theory  Critical Elite Theory  Class Theory  Pluralist Theory  Do We Have A Power Elite?  Domhoff on Elite Power (Do the wealthy have the power to control us?)    Who Benefits? (Those who own and control the most resources have the most power.) Who Governs? (Those who hold the most important positions in government and other important institutions have the most power.) Who Wins? (When class conflict occurs, the winning side has more power.)  Mills on Elite Cohesion (Do the wealthy have common interests that unify those at the top?)   Social Psychological Mechanisms (Similar backgrounds lead to common interests.) Structural Mechanisms (Institutional connections make it easy for the wealthy to move in and out of institutions.) Who Benefits? Source: “Personal Wealth, 2001,” (http://www.irs.gov/pub/irssoi/01pwart.pdf) Who Benefits? “In 2003 the top 1 percent of households owned 57.5 percent of corporate wealth, up from 53.4 percent the year before, according to a Congressional Budget Office analysis of the latest income tax data. The top group's share of corporate wealth has grown by half since 1991, when it was 38.7 percent.” New York Times (January 29, 2006) Corporation Assets and Income: Relatively Few Corporations Have Most Income and Assets Returns Filed Number Percent Net Income (less deficit) Amount (thousands) Percent Total Assets Amount (thousands) Percent All Returns Corporations with Asset Size of $250 million or more Corporations with Asset Size of $2,500 million or more 5,135,591 100.00% $603,623,352 100% $49,154,424,202 100% 10,989 0.21% $523,697,237 87% $44,244,445,826 90% 1,896 0.04% $417,202,231 69% $36,839,631,626 75% Source: Internal Revenue Service Statistics of Income, Returns of Active Corporations, September 2004. Latest available figures are for tax year 2001 based on returns with accounting periods ending July 2001 through June 2002 and posted to the Internal Revenue Service Business Master File from the beginning of July 2001 through the end of June 2003. Bush Cabinet Appointees C abine t Me mbe r Mel Martinez Position Secretary of Housing and Urban Development Education Florida State Univ. U.S. Naval Academy Seton Hall Univ. Mount Holyoke Harvard UC Berkeley Michigan State Harvard UC Davis UC Berkeley Hastings College of Law Univ. of T exas Jackson State Univ. (BA) Indiana Univ. (MA & PhD) City College of New York (BS) George Washington Univ. (MBA) Princeton BA UW-Madison BS and JD University of Denver BA and JD Ne t Worth $1.3-$3.2 Million $1.3-$3.2 Million $1.3-$3.2 Million Secretary of Veteran Anthony Principi Affairs Elaine Chao Norman Mineta Secretary of Labor Secretary of T ransportation Spencer Abraham Secretary of Energy $325,000-$675,000 Ann Veneman Don Evans Roderick Paige Secretary of Agriculture Commerce Secretary Secretary of Education $680,000-$2 Million $10-$47 Million $1.1-$2.9 Million Colin Powell Donald Rumsfeld Secretary of State $14-$66 Million $62-$116 Million $1.5-$3-6 Million Secretary of Defense Secretary of Health and T ommy T hompsonHuman Services Gale Norton Secretary of the Interior Paul O'Neill John Ashcroft Fresno State BA U of Indiana MA Secretary of the T reasury George Washington University Yale BA Attorney General University of Chicago JD $67-$253 Million $1.5-$3.3 Million Social Psychological Mechanisms The 10 Private High Schools That Sent the Highest Percentage of Their Graduates to Harvard, Yale, or Princeton, 1998-2001 School Roxbury Latin School Brearley School Collegiate School Groton School Dalton School Spence School Horace Mann School Winsor School Milton Academy Phillips Andover Type boys girls boys coed coed girls coed girls coed coed Location West Roxbury, MA New York, NY New York, NY Groton, MA New York, NY New York, NY Bronx, NY Boston, MA Milton, MA Adover, MA HYP % 21.1 20.9 20 17.9 17.6 17.2 16.8 16.7 15.8 15.7 Tuition $14,000 $22,850 $22,300 $24,115 $23,200 $20,700 $22,980 $22,600 $22,950 $22,160 Ave. Grad. Class Size 50 44 53 84 110 42 158 54 172 266 HYP percent is the percent of student who went to Harvard, Yale or Princeton. Source: Domhoff, G. William. 2006. Who Rules America, 5th Ed.p. 53 Who Wins? Shares of Aggregate Income by Income Definition (2000) Definition of Income Income before taxes Less government money transfers, capital gains Lowest quintile 3.6 1.1 Second quintile 9 7.1 Third quintile 14.8 13.9 Fourth quintile 23 22.8 Highest quintile 49.7 55.1 Income after taxes Source: Kerbo 2005. 1.4 8.3 15.1 24 51.2 Problems with Corporate Interlocks      Reduces competition between corporations Represents outside influences over the corporation Provides a means of sharing information about corporate plans and operations Helps provide unity among top corporate officials in the economy Helps provide unity in corporate dealings with the government Pluralist Model Potential power is widely scattered throughout society.  At least some resources are available to everyone.  At any time the amount of potential power exceeds the amount of actual power.  Characteristics of Pluralism       Power comes from many sources These groups are politically autonomous (independent) and can work for any desired outcome. There is much competition between groups that tends to cancel out the overall power of any one particular group. These political groups are open (not closed) and constantly evolving. Most groups rely on public opinion as a vital resource in fulfilling their agenda. There is widespread agreement with regards to the rules of the game (voting laws, rights to vote, majority rule, etc.) which holds the overall system together. Group Activity on Poverty and the Distribution of Resources        What do you consider a right as opposed to a privilege? What responsibility, if any does the government have to the poor; that is, should there be government programs to help the poor? Do the rich have a greater obligation to help/support the poor through things such as higher taxes, hiring the poor to work in their businesses, etc? What, if anything, will you do to solve the freerider problem? How much inequality of condition, if any, will be tolerated in your plan? Will you allow inheritance of resources? Will you distinguish between the worthy poor and the unworthy poor?