The World of America’s Most

WealthyA 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

Of 195 nations in the world…

$57 Billion is greater than the GDP of 123 of them.

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 classesWho are the most

wealthy?Characteristics of

individuals in the upper and corporate classes

Is there an elite “ruling class” in the U.S.?

Gilbert-Kahl Model of Class Structure

(with modifications)*

Capitalist Class

Upper Middle Class

Middle Class

Working Class

Working Poor

Underclass

Upper Class

Corporate Class

Poverty Line

Median Income

Mean Income

12%

13%

30%

30%

14%

1%

Characteristics of the Upper Class (Domhoff)

1. A listing in one of the various blue books or the Social Register

2. Any male member of the family attending one of a limited number of exclusive prep schools.

3. Any male member of the family belonging to one of the exclusive social clubs.

4. Any female member of the family belonging to an exclusive club or attending an exclusive prep school or

5. If the “father was a millionaire entrepreneur or $100,000-a-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. Part of an interpersonal web of relations at the top of large corporations.

2. Influence is not found in personal wealth (though many are wealthy) but in control of corporate resources.

3. Members sit on boards of directors of large corporations.

4. Many have moved in and out of halls of government.

5. 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. Increased size and power of major corporations.

2. Concentrated control of stock in major corporations by other corporations

3. Network of interlocking directorates that ties top corporate personnel together.

Board of Directors for Shell Oil

Board of Directors for Exxon Oil

Interlocking Directorates

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 TheoryFunctional Elite TheoryCritical Elite Theory

Class TheoryPluralist 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.)

Source: “Personal Wealth, 2001,” (http://www.irs.gov/pub/irs-soi/01pwart.pdf)

Who Benefits?

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)

 

Returns Filed Net Income (less deficit) Total Assets

Number PercentAmount

(thousands)Percent

Amount (thousands)

Percent

 All Returns

5,135,591 100.00% $603,623,35

2 100% $49,154,424,20

2 100% Corporations with Asset

Size of$250 million

or more 10,989 0.21% $523,697,23

7 87% $44,244,445,82

6 90%

Corporations with Asset

Size of$2,500 million

or more 1,896 0.04% $417,202,23

1 69% $36,839,631,62

6 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.

Corporation Assets and Income: Relatively Few Corporations Have Most Income and

Assets

Cabinet Member Position Education Net Worth

Mel MartinezSecretary of Housing and Urban Development Florida State Univ. $1.3-$3.2 Million

Anthony PrincipiSecretary of Veteran Affairs

U.S. Naval AcademySeton Hall Univ. $1.3-$3.2 Million

Elaine Chao Secretary of LaborMount HolyokeHarvard $1.3-$3.2 Million

Norman MinetaSecretary of Transportation UC Berkeley

Spencer Abraham Secretary of EnergyMichigan StateHarvard $325,000-$675,000

Ann Veneman Secretary of Agriculture

UC DavisUC BerkeleyHastings College of Law $680,000-$2 Million

Don Evans Commerce Secretary Univ. of Texas $10-$47 Million

Roderick Paige Secretary of EducationJackson State Univ. (BA)Indiana Univ. (MA & PhD) $1.1-$2.9 Million

Colin Powell Secretary of State

City College of New York (BS)George Washington Univ. (MBA) $14-$66 Million

Donald Rumsfeld Secretary of Defense Princeton BA $62-$116 Million

Tommy ThompsonSecretary of Health and Human Services UW-Madison BS and JD $1.5-$3-6 Million

Gale Norton Secretary of the Interior University of Denver BA and JD

Paul O'Neill Secretary of the Treasury

Fresno State BAU of Indiana MAGeorge Washington University $67-$253 Million

John Ashcroft Attorney GeneralYale BAUniversity of Chicago JD $1.5-$3.3 Million

Bush Cabinet Appointees

Social Psychological Mechanisms

The 10 Private High Schools That Sent the Highest Percentage of Their Graduates to Harvard, Yale, or Princeton, 1998-2001

School Type Location HYP % Tuition Ave. Grad. Class Size

Roxbury Latin School boys West Roxbury, MA 21.1 $14,000 50Brearley School girls New York, NY 20.9 $22,850 44Collegiate School boys New York, NY 20 $22,300 53Groton School coed Groton, MA 17.9 $24,115 84Dalton School coed New York, NY 17.6 $23,200 110Spence School girls New York, NY 17.2 $20,700 42Horace Mann School coed Bronx, NY 16.8 $22,980 158Winsor School girls Boston, MA 16.7 $22,600 54Milton Academy coed Milton, MA 15.8 $22,950 172Phillips Andover coed Adover, MA 15.7 $22,160 266HYP 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

Source: Kerbo 2005.

Definition of Income

Lowest quintile

Second quintile

Third quintile

Fourth quintile

Highest quintile

Income before taxes 3.6 9 14.8 23 49.7

Less government money transfers, capital gains

1.1 7.1 13.9 22.8 55.1

Income after taxes 1.4 8.3 15.1 24 51.2

Who Wins? Shares of Aggregate Income by Income Definition (2000)

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?