A New Feudal Society
The Occupy Wall Street movement put the spotlight on the growing difference between the 1 percent and the rest of America. Is the United States becoming a more pronounced elite-driven culture, creating a society that resembles a new feudal system? We decided to investigate.
Most Americans have no idea how concentrated wealth and power are in America, reports William Domhoff, citing a 2010 study by Norton & Ariely. Domhoff, a professor of sociology at University of California, Santa Cruz, is well-credentialed. In 1967, he wrote the first edition of Who Rules America?, a study of the inner workings of U.S. power and politics.
The Norton & Ariely study (PDF) discovered that most Americans, whether high income or low income, female or male, young or old, Republican or Democrat, have no idea just how concentrated America’s wealth distribution actually is:
- Wealth concentration – In 2007, the top 1% of households owned 35% of all privately held wealth. The next 19% had 51%, which means that just 20% of Americans own 85%, leaving about 15% of wealth for the bottom 80% — the wage and salary workers.
- Wealth growth – Between 1979 and 2007, incomes grew by 275% for the wealthiest 1% of households, 37% for the middle 60% of households, and 18% for the poorest 20%, the Congressional Budget Office reported in “Trends in the Distribution of Household Income Between 1979 and 2007” (PDF).
We can say that just 10% of the people own the United States of America, notes UC Santa Cruz Sociology Professor William Domhoff.
- Stocks and securities – The top 1 percent own 38% of all privately held stock, 61% of financial securities, and 62% of business equity. The top 10% own 80-90% of stocks, bonds, trust funds and business equity, and more than 75% of non-home real estate. Since financial wealth controls income-producing assets, we can say that just 10% of the people own the United States of America, notes William Domhoff.
- Recession hit – The average American has been hit much harder than wealthy Americans by this recession. According to economist Edward Wolff, median household wealth, as measured by marketable assets, has declined 36% since the 2007 housing bubble. By contrast, the wealth of the top 1% of households dropped just 11%.
- Wage stagnation – The annual incomes of the bottom 90% of U.S. families have been essentially flat since 1973 — rising by only 10% in real terms over the past 37 years. Over the same period the incomes of the top 1% have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300, according to The Financial Times.
- Americans unaware – In 2010, Norton & Ariely (PDF) found that when Americans are shown three pie charts representing possible wealth distributions, 90% or more of 5,522 respondents, irrespective of gender, age, income level, or party affiliation, thought that the U.S. wealth distribution most resembled one in which the top 20% has about 60% of the wealth. True figure: the top 20% control about 85% of the wealth.
While the Occupy Wall Street movement is most often associated with the “1 Percent” term, it traces its current popularity to a 2006 documentary, The One Percent, which vividly portrayed the growing wealth gap between America’s wealthy elite compared to the overall citizenry, and which was produced by Jamie Johnson, a Johnson & Johnson heir, and Nick Kurzon.
Its rapidly escalating income has made the 1 Percent a powerful force, their formidable political clout magnified through the use of lobbies and influence peddling. Their unilateral control of American society is literally strangling the American Dream. As My Budget 360 puts it:
The culprits behind this trend? As The Washington Post noted this past October 27:
America’s tax and transfer system is designed to be progressive, meaning that higher-income households pay higher federal income taxes while transfers, such as social security benefits and medicare payments, tend to benefit those with lower incomes. But as Jared Bernstein observes in the Off the Charts blog:
The “Gini index” or ratio is a coefficient that measures income inequality. The Gini ratio trend shown below illustrates the redistribution of wealth that is taking place in America today:
A report from the Center for Economic and Policy Research in 2011 concluded that the decade from 2000 to 2010 was a “lost decade” for most Americans.
No wonder Occupy Wall Street resonated with Main Street. With trends like these sweeping America and history as a guide, it’s only a matter of time before the forces of equality begin pushing back against the emergence of this neo-feudal society that squarely belongs in the Middle Ages.