America's Hereditary Ruling Class

Apparently, some Objectivists and Libertarians think that America has no hereditary ruling class. (See here) , However, I suggest that C. Wright Mills and G. William Domhoff have made a good case for the existence of a hereditary ruling class. Contrary to what some Objectivists or Libertarians apparently like to believe, most of the wealth in America is passed on via inheritance and is maintained via banking and real estate. The industrial inventor as capitalist is the exception to the rule. We all endorse that exception. (At least, I hope, you do, as I do.) Furthermore, I have no moral problems with that inherited and financially unrisky wealth. I assure you that I suffer greatly in my sociology classes defending the hereditary ruling class in America. Nonetheless, it exists.

Post 1

Sunday, July 8, 2007 - 11:11am

Marotta,

No doubt some people become wealthy by virtue of inheritance, but I'm not sure if those people should be considered a "class," at least not in the traditional sociological sense. I also don't know if they host "most of the wealth in America," but I am very curious about that assertion, and I'm open to it. Would you mind elaborating on the proposition, or at least providing source that support it?

Jordan

Post 2

Sunday, July 8, 2007 - 11:47am

There's the problem of how you determined that 'most of the wealth' is inherited. Taking the Forbes 400 and summing their wealth hardly equals the trillions that flow through the U.S. economy daily (and many of the Forbes 400 are not U.S. citizens, though they invest heavily here.) Those individuals certainly control a very small proportion of the foreign exchange market, for example.

But, beyond the factual issue of who has how much, it's highly dubious to suggest that 'the wealthy rule'. Most of the twits in Congress are not among the more wealthy members of society, nor are their positions inherited. Nor are those who exercise authority at medium to large companies among the wealthy (though they are more affluent than the average person). That eliminates two very large segments of what one might, at a stretch, regard as 'rulers'.

(Edited by Jeff Perren
on 7/08, 11:54am)

Post 3

Friday, July 13, 2007 - 10:44pm

Michael, I have seen two research studies (one old and one updated new study) that show that 80% of the wealthy in America are first generation rich, and that there is a constant churning of the population of people falling out of the ranks of the rich and people rising up into that level. I have not read Mills and Domhoff and the majority of my experiences do not indicate any truth in that direction but I will add them to my list. My own ancestors followed the rich in one generation, rags in three generations, pattern. ( and hopefully rich again in my generation :)) Just because alot of wealth is passed on via inheritance, doesn't mean the children will have any left to pass on to their children. The knowledge and skills to earn and maintain wealth are often not passed onto the children.

One problem I see with statements that we have a ruling class based on wealth, is that there are famous and very visible families, but they only make up a small portion of the rich - often a very loud and flashy portion. The studies state that 20% of the rich remain rich. Most of the very rich people I know are not famous and do not particularly look or act wealthy. Most of them are first generation rich. And most of them do not "rule" anything but their own businesses. They are influential yes, because of the respect they receive and because they have the ability to work with people and the skills to get things done. That still does not compare to the European aristocrats and their closed ruling class. In no way are our rich preventing me from joining their ranks.

As for money being held in banking or real estate, I can definitely believe in the latter. But anyone can make tons of money in real estate starting with an ordinary job and alot of study. They can also loose alot if they don't do their homework. I will try to sign on again after I have read the books and have tried to locate those two studies. I did not save the studies because I did not think they were particularly remarkable. But it may be awhile. I am too busy making my fortune in real estate at the moment. :))

Post 4

Friday, July 13, 2007 - 11:18pm

A Complaint in Search of a Problem

The premise itself is absurd. Define ruling. Define class. Neither applies in this country. Anyone who has spent a month in Britain or any other European country with a real class system knows that the US does not have one. You simply cannot be accepted by old money in Europe. In the US, no one keeps Bill Gates, Oprah Winfrey or Bill Cosby out of high society functions. Even Bill Clinton gets invited to those exclusive East Coast "renaissance" type important people conferences - and what's he worth?

And what does rule mean? The rich can certainly get away with things, and even buy elections with the current election laws. But they can't issue dictats, not even Bush can do that. Does anyone expect the Bush Twins and Chelsea to form our first triumvirate?

The only real bite that this argument has is that high income tax rates make it hard for wage earners to move up, while the rich can endow foundations and use all sorts of tax dodges.

A 15% federal sales tax excluding unprocessed food and clothing under $40 in valu will solve this supposed problem, and some actual real problems real quick.

Ted Keer

PS, Margie, can you cite or link those two studies?

(Edited by Ted Keer
on 7/14, 9:58am)

Post 5

Saturday, July 14, 2007 - 12:20am

post deleted.
(Edited by Jeff Perren
on 7/14, 12:34am)

Post 6

Saturday, July 14, 2007 - 9:03pm

Ted - I will post them as soon as I can locate them again. It was a couple of years ago and I did not archive them because I thought the results were expected (from my personal experience). Missed that one :(

One point I would like to make on the taxes is that real estate is such a good method for becoming wealthy precisely because it allows for alot of deductions and eases the tax burden along with the normal advantages of having a business. The only difficulty is learning enough of the tax loopholes and business skills to take advantage of it. I would hate to have this pathway closed because it is open to everyone at the moment. I am afraid that if we go to a flat sales tax, which makes sense from a transaction protection context, or a flat across the board tax which would be more fair from an individual burden point of view, that we will be locked even more firmly into our ancestral level of wealth. How can we make sure a move like that will be a true reduction in actual taxes paid ? I don't want to close our escape tunnel until I know it is safe to walk in the open. I would trade all the loopholes in a heartbeat if the trade truly involved a move by the government to stick to its legitimate job of protection against invasion and criminal activity.

Post 7

Monday, July 16, 2007 - 1:39am

Margie please answer Ted's question. What do you mean by "class" and what do you mean by "ruling"? Neither exist in this country.

As far as those who receive wealth through inheritance, they must still posses a minimal level of financial skill to hold on to that inheritance. There are so many examples of children who have squandered their inheritance that it should be obvious to you there is no guarantee an inheritor will always posses the wealth they haven't personally earned. Also I have rarely heard of those who can live solely off of an inheritance for the remainder of their lives. An inheritance is a fixed amount of wealth. Rarely is it the case that amount of inherited wealth can last for the rest of the inheritor's life unless the inheritor wisely invests the money, which means one is working to produce more wealth. A parent has every right to leave their wealth to their children or whomever they wish. Whatever tax structure we have doesn't change that basic fact. And any discussion of what would be a more equitable tax to inhibit inherited wealth is nothing more than a discussion for figuring out how to loot from ones inheritance. And as for me, I'm not interested in taking from other people's inheritance.

Post 8

Thursday, July 26, 2007 - 8:10pm

John -

I read Ted's article, as being one of several articles primarily addressed to Michael. I was addressed only in a P.S. (Ted's request from me was a reference to the two studies I mentioned in my first article confirming the idea that wealth is continually lost and earned in this country. In answer, I told him I would get back to him as soon as I could find those papers again, and I will.)

As far as "class" and "ruling", I think Ted and I agree. We were both addressing Michael's claim that there is a hereditary ruling class in the US - and we were both disagreeing with Michael.

In my first article in this thread, I mentioned my family as a perfect counterexample to Michael's idea. I stated "Just because alot of wealth is passed on via inheritance, doesn't mean the children will have any left to pass on to their children. The knowledge and skills to earn and maintain wealth are often not passed onto the children." It seems you and I also agree.

My reference to real estate was in response to Michaels statement that "most of the wealth in America is passed on via inheritance and is maintained via banking and real estate". I think it is correct that much of the wealth is maintained in real estate, but the idea that this is a way the wealthy restrict access to a wealthy lifestyle is completely opposite from everything I know. My position is that anyone at any level of wealth can make a great deal of money in real estate if they are willing to do their homework.

In my second article, I wanted to bring up a "chicken and the egg" dilemma. Ted mentioned a flat 15% federal sales tax to close loopholes. If we do this without making certain the overall tax burden and deliberate government influence in the market is greatly lessened, we will close a back door which people currently use to avoid alot of the tax drag placed on us by our government tax laws. This will make building wealth more difficult and the government grip on us even tighter.

Please consider re-reading the articles. It is bad enough to be attacked for Objectivist ideas which truly are a part of me, but even worse to be chastised for holding ideas which I actually fight on a daily basis. If on the other hand, there is a way to make my participation in the thread more clear, I am listening.

Post 9

Thursday, July 26, 2007 - 10:52pm

Margie please accept my sincerest apologies. I mischaracterized your position and I did not read your post closely enough. Certainly no excuse but I'll make a better effort not to do that again. My gripe seems to be with Marotta and not with you. Sorry :(

Post 10

Saturday, August 4, 2007 - 4:58pm

John -

Apology accepted. I can certainly understand being in a rush with too much to read and too little time to do it.

*****

Now if only someone would invent an auto-shrinking To Do list which would make routine minor neccessities take less time and transfer that time to the Interesting Pursuits list ....

Or just simply reduce government participation in our lives... That would give us lots of extra time! LOL.

Hmmm. Sounds like Capitalism.

So why is it taking so long for people to embrace it? Do they really have so much time and money to waste? Are we really so different? Is it really that hard to understand?

Margie

Post 11

Wednesday, August 22, 2007 - 1:10pm