Who Rules America?

UCSC Sociologist William Domhoff analyzes Power in America. Some definitions:

For purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (Wolff, 2004, p. 4, for a full discussion of these issues). Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person's net worth.

He describes a distinct pyramid shaped class structure in America that has proven fairly stable over time. Historically (since the 1920s) the top one percent of American households have controlled between 30% and 40% of the national wealth (with the exception of a few years in the 1970s when that proportion dropped into and below the 20s).

He describes the class structure as of 2001:

In the United States, wealth is highly concentrated in a relatively few hands. As of 2001, the top 1% of households (the upper class) owned 33.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 51%, which means that just 20% of the people owned a remarkable 84%, leaving only 16% of the wealth for the bottom 80% (wage and salary workers).

On inheritance:

Figures on inheritance tell much the same story. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000).

On taxation (no longer on Domhoff's site) Obama is proposing raising income taxes on the top income bracket from 36% to 39%. This is a very modest increase on what is already a historically low level. This graph (http://www.truthandpolitics.org/top-rates.php) puts it in perspective: 

Historical rates (married couples, filing jointly)

 Table

Tax year	Top marginal tax rate (%)	Top marginal tax rate (%) on earned income, if different<1>	Taxable income over--
1913	7		500,000
1914	7		500,000
1915	7		500,000
1916	15		2,000,000
1917	67		2,000,000
1918	77		1,000,000
1919	73		1,000,000
1920	73		1,000,000
1921	73		1,000,000
1922	58		200,000
1923	43.5		200,000
1924	46		500,000
1925	25		100,000
1926	25		100,000
1927	25		100,000
1928	25		100,000
1929	24		100,000
1930	25		100,000
1931	25		100,000
1932	63		1,000,000
1933	63		1,000,000
1934	63		1,000,000
1935	63		1,000,000
1936	79		5,000,000
1937	79		5,000,000
1938	79		5,000,000
1939	79		5,000,000
1940	81.1		5,000,000
1941	81		5,000,000
1942	88		200,000
1943	88		200,000
1944	94 <2>		200,000
1945	94 <2>		200,000
1946	86.45 <3>		200,000
1947	86.45 <3>		200,000
1948	82.13 <4>		400,000
1949	82.13 <4>		400,000
1950	84.36		400,000
1951	91 <5>		400,000
1952	92 <6>		400,000
1953	92 <6>		400,000
1954	91 <7>		400,000
1955	91 <7>		400,000
1956	91 <7>		400,000
1957	91 <7>		400,000
1958	91 <7>		400,000
1959	91 <7>		400,000
1960	91 <7>		400,000
1961	91 <7>		400,000
1962	91 <7>		400,000
1963	91 <7>		400,000
1964	77		400,000
1965	70		200,000
1966	70		200,000
1967	70		200,000
1968	75.25		200,000
1969	77		200,000
1970	71.75		200,000
1971	70	60	200,000
1972	70	50	200,000
1973	70	50	200,000
1974	70	50	200,000
1975	70	50	200,000
1976	70	50	200,000
1977	70	50	203,200
1978	70	50	203,200
1979	70	50	215,400
1980	70	50	215,400
1981	69.125	50	215,400
1982	50		85,600
1983	50		109,400
1984	50		162,400
1985	50		169,020
1986	50		175,250
1987	38.5		90,000
1988	28 <8>		29,750 <8>
1989	28 <8>		30,950 <8>
1990	28 <8>		32,450 <8>
1991	31		82,150
1992	31		86,500
1993	39.6		89,150
1994	39.6		250,000
1995	39.6		256,500
1996	39.6		263,750
1997	39.6		271,050
1998	39.6		278,450
1999	39.6		283,150
2000	39.6		288,350
2001	39.1		297,350
2002	38.6		307,050
2003	35		311,950

As the graph makes clear rates increased to nearly 80% in the 1910s. In the 1920s, they fell to around 25%. FDR raised them to about 60% to fight the Great Depression, then to over 90% to fight WWII. They remained in the in the 80-90% range until JFK/ LBJ lowered them to about 70%, where they sat until Reagan lowered back to 1920s levels (28%). Bush 41 and Clinton pushed them back up to 40%, and Bush 43 brought them back to 35%.

Sociologist Walden Bello ask key questions of the new administration:

The question isn't whether there is space for innovation, but whether Obama will go farther and make transformative moves in the ownership and control of the economy. Will we simply have a return to old-fashioned Keynesianism or will we finally move decisively toward a social democratic regime that truly subordinates the market to society? That he is said to have surrounded himself with Democratic neoliberals like Larry Summers, Robert Rubin, and Paul Volcker is cause for concern but hardly alarm at this point. Obama knows that the vote was a referendum against neoliberalism, whether of the doctrinal Reagan variety or the more pragmatic Clinton kind.