Economic Realities: An awareness for us all

[Chuckie]

Power in America

Sub-Topics

• An Investment Manager's View on the Top 1% (with link to 2014 update)

• The Class-Domination Theory of Power: An explanation of why the wealth and income distributions are so unequal in the U.S., and how the political system works.

• The Left and the Right in Thinking, Personality, and Politics: An exploration of the personality differences and psychology behind the liberal/conservative divide.

• Social Movements and Social Change: Perspectives based on social science research.

Wealth, Income, and Power
by G. William Domhoff

This document presents details on the wealth and income distributions in the United States, and explains how we use these two distributions as power indicators. The most striking numbers on income inequality will come last, showing the dramatic change in the ratio of the average CEO's paycheck to that of the average factory worker over the past 40 years.

First, though, some definitions. Generally speaking, wealth is the value of everything a person or family owns, minus any debts. However, 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 (see 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. In addition, economists use the concept of financial wealth -- also referred to in this document as "non-home wealth" -- which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, "Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments."

We also need to distinguish wealth from income. Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income. (But it's important to note that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)

This document focuses on the "Top 1%" as a whole because that's been the traditional cut-off point for "the top" in academic studies, and because it's easy for us to keep in mind that we are talking about one in a hundred. But it is also important to realize that the lower half of that top 1% has far less than those in the top half; in fact, both wealth and income are super-concentrated in the top 0.1%, which is just one in a thousand. (To get an idea of the differences, take a look at an insider account by a long-time investment manager who works for the well-to-do and very rich. It nicely explains what the different levels have -- and how they got it. Also, David Cay Johnston (2011) has written a column about the differences among the top 1%, based on 2009 IRS information.)

As you read through the facts and figures that follow, please keep in mind that they are usually two or three years out of date because it takes time for one set of experts to collect the basic information and make sure it is accurate, and then still more time for another set of experts to analyze it and write their reports. It's also the case that the infamous housing bubble of the first eight years of the 21st century inflated some of the wealth numbers.

There's also some general information available on median income and percentage of people below the poverty line in 2010. As might be expected, most of the new information shows declines; in fact, a report from the Center for Economic and Policy Research (2011) concludes that the decade from 2000 to 2010 was a "lost decade" for most Americans.

One final general point before turning to the specifics. People who have looked at this document in the past often asked whether progressive taxation reduces some of the income inequality that exists before taxes are paid. The answer: not by much, if we count all of the taxes that people pay, from sales taxes to property taxes to payroll taxes (in other words, not just income taxes). And the top 1% of income earners actually pay a smaller percentage of their incomes to taxes than the 9% just below them. These findings are discussed in detail near the end of this document.

Exactly how rich are the Top 1%?
People often wonder exactly how much income and/or wealth someone needs to have to be included in the Top 1% or the Top 20%; Table 1 below lists some absolute dollar amounts associated with various income and wealth classes in 2013, but the important point to keep in mind is that for the most part, it's the relative positions of wealth holders and income earners that we are trying to comprehend in this document.



The Wealth Distribution
In the United States, wealth is highly concentrated in relatively few hands. As of 2013, the top 1% of households (the upper class) owned 36.7% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 52.2%, which means that just 20% of the people owned a remarkable 89%, leaving only 11% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.8%. Table 2 and Figure 1 present further details, drawn from the careful work of economist Edward N. Wolff at New York University (2017).





In terms of types of financial wealth, in 2013 the top one percent of households had 49.8% of all privately held stock, 54.7% of financial securities, and 62.8% of business equity. The top ten percent had 84% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America; see Table 3 and Figure 2 for the details. The only category which is not skewed severely toward the upper class is debt.




There is a perception that a large number of Americans own stock -- through mutual funds, trusts, pensions, or direct purchase of shares. This is true to some extent: 46% of American households have direct or indirect investments in the stock market. But the top 10% of households own 81% of the total value of those investments (Wolff, 2014); the vast majority have relatively meager holdings.

Inheritance and estate taxes
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). Thus, the attempt by ultra-conservatives to eliminate inheritance taxes -- which they always call "death taxes" for P.R. reasons -- would take a huge bite out of government revenues (an estimated $253 billion between 2012 and 2022) for the benefit of the heirs of the mere 0.6% of Americans whose death would lead to the payment of any estate taxes whatsoever (Citizens for Tax Justice, 2010b).

It is noteworthy that some of the richest people in the country oppose this ultra-conservative initiative, suggesting that this effort is driven by anti-government ideology. In other words, few of the ultra-conservative and libertarian activists behind the effort will benefit from it in any material way. However, a study (Kenny et al., 2006) of the financial support for eliminating inheritance taxes discovered that 18 super-rich families (mostly Republican financial donors, but a few who support Democrats) provide the anti-government activists with most of the money for this effort. (For more infomation, including the names of the major donors, download the article from United For a Fair Economy's Web site.)

Actually, ultra-conservatives and their wealthy financial backers may not have to bother to eliminate what remains of inheritance taxes at the federal level. The rich already have a new way to avoid inheritance taxes forever -- for generations and generations -- thanks to bankers. After Congress passed a reform in 1986 making it impossible for a "trust" to skip a generation before paying inheritance taxes, bankers convinced legislatures in many states to eliminate their "rules against perpetuities," which means that trust funds set up in those states can exist in perpetuity, thereby allowing the trust funds to own new businesses, houses, and much else for descendants of rich people, and even to allow the beneficiaries to avoid payments to creditors when in personal debt or sued for causing accidents and injuries. About $100 billion in trust funds has flowed into those states so far. You can read the details on these "dynasty trusts" (which could be the basis for an even more solidified "American aristocracy") in a New York Times opinion piece published in July 2010 by Boston College law professor Ray Madoff, who also has a book on this and other new tricks: Immortality and the Law: The Rising Power of the American Dead (Yale University Press, 2010).

Home ownership & wealth
For the vast majority of Americans, their homes are by far the most significant wealth they possess. Figure 3 comes from the Federal Reserve Board's Survey of Consumer Finances (via Wolff, 2017) and compares the median income, total wealth (net worth, which is marketable assets minus debt), and non-home wealth (which earlier we called financial wealth) of White, Black, and Hispanic households in the U.S.



Besides illustrating the significance of home ownership as a source of wealth, the graph also shows that Black and Latino households are faring significantly worse overall, whether we are talking about income or net worth. In 2013, the average white household had more than 15 times as much total wealth as the average African-American or Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are more than 200:1. Extrapolating from these figures, we see that 65% of white families' wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are close to 90%.

And for all Americans, things got worse during the "Great Recession": comparing the 2007 numbers to the 2013 numbers, we can see a huge loss in wealth -- both housing and financial -- for most families, making the gap between the rich and the rest of America even greater, and increasing the number of households with no marketable assets from 18.6% to 21.8% (Wolff, 2012 & 2014).

Do Americans know their country's wealth distribution?
An interesting study (Norton & Ariely, 2010) reveals that Americans have no idea that the wealth distribution (defined for them in terms of "net worth") is as concentrated as it is. When shown three pie charts representing possible wealth distributions, 90% or more of the 5,522 respondents -- whatever their gender, age, income level, or party affiliation -- thought that the American wealth distribution most resembled one in which the top 20% has about 60% of the wealth. In fact, of course, the top 20% control 85% of the wealth. (Table 2 and Figure 1 in this document show the Top 20% owning 89% of the net worth, rather than 85%; the discrepancy is mostly due to Ariely & Norton's data being about 10 years older.)

Even more striking, they did not come close on the amount of wealth held by the bottom 40% of the population. It's a number I haven't even mentioned so far, and it's shocking: the lowest two quintiles hold just 0.3% of the wealth in the United States. Most people in the survey guessed the figure to be between 8% and 10%, and two dozen academic economists got it wrong too, by guessing about 2% -- seven times too high. Those surveyed did have it about right for what the 20% in the middle have; it's at the top and the bottom that they don't have any idea of what's going on.

Americans from all walks of life were also united in their vision of what the "ideal" wealth distribution would be, which may come as an even bigger surprise than their shared misinformation on the actual wealth distribution. They said that the ideal wealth distribution would be one in which the top 20% owned between 30 and 40 percent of the privately held wealth, which is a far cry from the 85 percent that the top 20% actually own. They also said that the bottom 40% -- that's 120 million Americans -- should have between 25% and 30%, not the mere 8% to 10% they thought this group had, and far above the 0.3% they actually had. In fact, there's no country in the world that has a wealth distribution close to what Americans think is ideal when it comes to fairness. So maybe Americans are much more egalitarian than most of them realize about each other, at least in principle and before the rat race begins.

Figure 4, reproduced with permission from Norton & Ariely's article in Perspectives on Psychological Science, shows the actual wealth distribution, along with the survey respondents' estimated and ideal distributions, in graphic form.


NOTE: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%.

David Cay Johnston, a retired tax reporter for the New York Times, published an excellent summary of Norton & Ariely's findings (Johnston, 2010b; you can download the article from Johnston's Web site).

Historical context
Numerous studies show that the wealth distribution has been concentrated throughout American history, with the top 1% already owning 40-50% in large port cities like Boston, New York, and Charleston in the 1800s. (But it wasn't as bad in the 18th and 19th centuries as it is now, as summarized in a 2012 article in The Atlantic.) The wealth distribution was fairly stable over the course of the 20th century, although there were small declines in the aftermath of the New Deal and World II, when most people were working and could save a little money. There were progressive income tax rates, too, which took some money from the rich to help with government services.

Then there was a further decline, or flattening, in the 1970s, but this time in good part due to a fall in stock prices, meaning that the rich lost some of the value in their stocks. By the late 1980s, however, the wealth distribution was almost as concentrated as it had been in 1929, when the top 1% had 44.2% of all wealth. It has continued to edge up since that time, with a slight decline from 1998 to 2001, before the economy crashed in the late 2000s and little people got pushed down again. Table 4 and Figure 5 present the details from 1922 through 2010.





Here are some dramatic facts that sum up how the wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts for the wealthy and the defeat of labor unions: Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s (Wolff, 2007).

The rest of the world
Thanks to a 2006 study by the World Institute for Development Economics Research -- using statistics for the year 2000 -- we now have information on the wealth distribution for the world as a whole, which can be compared to the United States and other well-off countries. The authors of the report admit that the quality of the information available on many countries is very spotty and probably off by several percentage points, but they compensate for this problem with very sophisticated statistical methods and the use of different sets of data. With those caveats in mind, we can still safely say that the top 10% of the world's adults control about 85% of global household wealth -- defined very broadly as all assets (not just financial assets), minus debts. That compares with a figure of 69.8% for the top 10% for the United States. The only industrialized democracy with a higher concentration of wealth in the top 10% than the United States is Switzerland at 71.3%. For the figures for several other Northern European countries and Canada, all of which are based on high-quality data, see Table 5.



The Relationship Between Wealth and Power
What's the relationship between wealth and power? To avoid confusion, let's be sure we understand they are two different issues. Wealth, as I've said, refers to the value of everything people own, minus what they owe, but the focus is on "marketable assets" for purposes of economic and power studies. Power, as explained elsewhere on this site, has to do with the ability (or call it capacity) to realize wishes, or reach goals, which amounts to the same thing, even in the face of opposition (Russell, 1938; Wrong, 1995). Some definitions refine this point to say that power involves Person A or Group A affecting Person B or Group B "in a manner contrary to B's interests," which then necessitates a discussion of "interests," and quickly leads into the realm of philosophy (Lukes, 2005, p. 30). Leaving those discussions for the philosophers, at least for now, how do the concepts of wealth and power relate?

First, wealth can be seen as a "resource" that is very useful in exercising power. That's obvious when we think of donations to political parties, payments to lobbyists, and grants to experts who are employed to think up new policies beneficial to the wealthy. Wealth also can be useful in shaping the general social environment to the benefit of the wealthy, whether through hiring public relations firms or donating money for universities, museums, music halls, and art galleries.

Second, certain kinds of wealth, such as stock ownership, can be used to control corporations, which of course have a major impact on how the society functions. Tables 6a and 6b show what the distribution of stock ownership looks like. Note how the top one percent's share of stock equity increased (and the bottom 80 percent's share decreased) between 2001 and 2010.

To Be Continued ...

[Chuckie]

Third, just as wealth can lead to power, so too can power lead to wealth. Those who control a government can use their position to feather their own nests, whether that means a favorable land deal for relatives at the local level or a huge federal government contract for a new corporation run by friends who will hire you when you leave government. If we take a larger historical sweep and look cross-nationally, we are well aware that the leaders of conquering armies often grab enormous wealth, and that some religious leaders use their positions to acquire wealth.

There's a fourth way that wealth and power relate. For research purposes, the wealth distribution can be seen as the main "value distribution" within the general power indicator I call "who benefits." What follows in the next three paragraphs is a little long-winded, I realize, but it needs to be said because some social scientists -- primarily pluralists -- argue that who wins and who loses in a variety of policy conflicts is the only valid power indicator (Dahl, 1957, 1958; Polsby, 1980). And philosophical discussions don't even mention wealth or other power indicators (Lukes, 2005). (If you have heard it all before, or can do without it, feel free to skip ahead to the last paragraph of this section)

Here's the argument: if we assume that most people would like to have as great a share as possible of the things that are valued in the society, then we can infer that those who have the most goodies are the most powerful. Although some value distributions may be unintended outcomes that do not really reflect power, as pluralists are quick to tell us, the general distribution of valued experiences and objects within a society still can be viewed as the most publicly visible and stable outcome of the operation of power.

In American society, for example, wealth and well-being are highly valued. People seek to own property, to have high incomes, to have interesting and safe jobs, to enjoy the finest in travel and leisure, and to live long and healthy lives. All of these "values" are unequally distributed, and all may be utilized as power indicators. However, the primary focus with this type of power indicator is on the wealth distribution sketched out in the previous section.

The argument for using the wealth distribution as a power indicator is strengthened by studies showing that such distributions vary historically and from country to country, depending upon the relative strength of rival political parties and trade unions, with the United States having the most highly concentrated wealth distribution of any Western democracy except Switzerland. For example, in a study based on 18 Western democracies, strong trade unions and successful social democratic parties correlated with greater equality in the income distribution and a higher level of welfare spending (Stephens, 1979).

And now we have arrived at the point I want to make. If the top 1% of households have 30-35% of the wealth, that's 30 to 35 times what they would have if wealth were equally distributed, and so we infer that they must be powerful. And then we set out to see if the same set of households scores high on other power indicators (it does). Next we study how that power operates, which is what most articles on this site are about. Furthermore, if the top 20% have 84% of the wealth (and recall that 10% have 85% to 90% of the stocks, bonds, trust funds, and business equity), that means that the United States is a power pyramid. It's tough for the bottom 80% -- maybe even the bottom 90% -- to get organized and exercise much power.

Income and Power
The income distribution also can be used as a power indicator. As Table 7 shows, it is not as concentrated as the wealth distribution, but the top 1% of income earners did receive 17.2% of all income in 2009. That's up from 12.8% for the top 1% in 1982, which is quite a jump, and it parallels what is happening with the wealth distribution. This is further support for the inference that the power of the corporate community and the upper class have been increasing in recent decades.



The rising concentration of income can be seen in a special New York Times analysis by David Cay Johnston of an Internal Revenue Service report on income in 2004. Although overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% - those between the 60th and 80th rungs of the income ladder -- made $1.02 for each dollar they earned in 1979. Furthermore, Johnston concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% -- that's one-tenth of one percent -- had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).

But the increase in what is going to the few at the top did not level off, even with all that. As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% -- that's one-hundredth of one percent -- receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). However, in an analysis of 2008 tax returns for the top 0.2% -- that is, those whose income tax returns reported $1,000,000 or more in income (mostly from individuals, but nearly a third from couples) -- it was found that they received 13% of all income, down slightly from 16.1% in 2007 due to the decline in payoffs from financial assets (Norris, 2010).

And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier. (For another recent revealing study by Johnston, read "Is Our Tax System Helping Us Create Wealth?").

How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay. It's also worth noting that only the first $106,800 of a person's income is taxed for Social Security purposes (as of 2010), so it would clearly be a boon to the Social Security Fund if everyone -- not just those making less than $106,800 -- paid the Social Security tax on their full incomes.

Do Taxes Redistribute Income?
It is widely believed that taxes are highly progressive and, furthermore, that the top several percent of income earners pay most of the taxes received by the federal government. Both ideas are wrong because they focus on official, rather than "effective" tax rates and ignore payroll taxes, which are mostly paid by those with incomes below $100,000 per year.

But what matters in terms of a power analysis is what percentage of their income people at different income levels pay to all levels of government (federal, state, and local) in taxes. If the less-well-off majority is somehow able to wield power, we would expect that the high earners would pay a bigger percentage of their income in taxes, because the majority figures the well-to-do would still have plenty left after taxes to make new investments and lead the good life. If the high earners have the most power, we'd expect them to pay about the same as everybody else, or less.

Citizens for Tax Justice, a research group that's been studying tax issues from its offices in Washington since 1979, provides the information we need. When all taxes (not just income taxes) are taken into account, the lowest 20% of earners (who average about $12,400 per year), paid 16.0% of their income to taxes in 2009; and the next 20% (about $25,000/year), paid 20.5% in taxes. So if we only examine these first two steps, the tax system looks like it is going to be progressive.

And it keeps looking progressive as we move further up the ladder: the middle 20% (about $33,400/year) give 25.3% of their income to various forms of taxation, and the next 20% (about $66,000/year) pay 28.5%. So taxes are progressive for the bottom 80%. But if we break the top 20% down into smaller chunks, we find that progressivity starts to slow down, then it stops, and then it slips backwards for the top 1%.

Specifically, the next 10% (about $100,000/year) pay 30.2% of their income as taxes; the next 5% ($141,000/year) dole out 31.2% of their earnings for taxes; and the next 4% ($245,000/year) pay 31.6% to taxes. You'll note that the progressivity is slowing down. As for the top 1% -- those who take in $1.3 million per year on average -- they pay 30.8% of their income to taxes, which is a little less than what the 9% just below them pay, and only a tiny bit more than what the segment between the 80th and 90th percentile pays.

What I've just explained with words can be seen more clearly in Figure 6.



We also can look at this information on income and taxes in another way by asking what percentage of all taxes various income levels pay. (This is not the same as the previous question, which asked what percentage of their incomes went to taxes for people at various income levels.) And the answer to this new question can be found in Figure 7. For example, the top 20% receives 59.1% of all income and pays 64.3% of all the taxes, so they aren't carrying a huge extra burden. At the other end, the bottom 20%, which receives 3.5% of all income, pays 1.9% of all taxes.



So the best estimates that can be put together from official government numbers show a little bit of progressivity. But the details on those who earn millions of dollars each year are very hard to come by, because they can stash a large part of their wealth in off-shore tax havens in the Caribbean and little countries in Europe, starting with Switzerland. And there are many loopholes and gimmicks they can use, as summarized with striking examples in Free Lunch and Perfectly Legal, the books by Johnston that were mentioned earlier. For example, Johnston explains the ways in which high earners can hide their money and delay on paying taxes, and then invest for a profit what normally would be paid in taxes.

Income inequality in other countries
The degree of income inequality in the United States can be compared to that in other countries on the basis of the Gini coefficient, a mathematical ratio that allows economists to put all countries on a scale with values that range (hypothetically) from zero (everyone in the country has the same income) to 100 (one person in the country has all the income). On this widely used measure, the United States ends up 95th out of the 134 countries that have been studied -- that is, only 39 of the 134 countries have worse income inequality. The U.S. has a Gini index of 45.0; Sweden is the lowest with 23.0, and South Africa is near the top with 65.0.

The table that follows displays the scores for 22 major countries, along with their ranking in the longer list of 134 countries that were studied (most of the other countries are very small and/or very poor). In examining this table, remember that it does not measure the same thing as Table 5 earlier in this document, which was about the wealth distribution. Here we are looking at the income distribution, so the two tables won't match up as far as rankings. That's because a country can have a highly concentrated wealth distribution and still have a more equal distribution of income due to high taxes on top income earners and/or high minimum wages -- both Switzerland and Sweden follow this pattern. So one thing that's distinctive about the U.S. compared to other industrialized democracies is that both its wealth and income distributions are highly concentrated.



The differences in income inequality between countries also can be illustrated by looking at the share of income earned by the now-familiar Top 1% versus the Bottom 99%. One of the most striking contrasts is between Sweden and the United States from 1950 to 2009, as seen in Figure 8; and note that the differences between the two countries narrowed in the 1950s and 1960s, but after that went their separate ways, in rather dramatic fashion.



The impact of "transfer payments"
As we've seen, taxes don't have much impact on the income distribution, especially when we look at the top 1% or top 0.1%. Nor do various kinds of tax breaks and loopholes have much impact on the income distribution overall. That's because the tax deductions that help those with lower incomes -- such as the Earned Income Tax Credit (EITC), tax forgiveness for low-income earners on Social Security, and tax deductions for dependent children -- are offset by the breaks for high-income earners (for example: dividends and capital gains are only taxed at a rate of 15%; there's no tax on the interest earned from state and municipal bonds; and 20% of the tax deductions taken for dependent children actually go to people earning over $100,000 a year).

But it is sometimes said that income inequality is reduced significantly by government programs that matter very much in the lives of low-income Americans. These programs provide "transfer payments," which are a form of income for those in need. They include unemployment compensation, cash payments to the elderly who don't have enough to live on from Social Security, Temporary Assistance to Needy Families (welfare), food stamps, and Medicaid.

Thomas Hungerford (2009), a tax expert who works for the federal government's Congressional Research Service, carried out a study for Congress that tells us about the real-world impact of transfer payments on reducing income inequality. Hungerford's study is based on 2004 income data from an ongoing study of a representative sample of families at the University of Michigan, and it includes the effects of both taxes and four types of transfer payments (Social Security, Temporary Assistance to Needy Families, food stamps, and Medicaid). The table that follows shows the income inequality index (that is, the Gini coefficient) at three points along the way: (1.) before taxes or transfers; (2) after taxes are taken into account; and (3) after both taxes and transfer payments are included in the equation. (The Citizens for Tax Justice study of income and taxes for 2009, discussed earlier, included transfer payments as income, so that study and Hungerford's have similar starting points. But they can't be directly compared, because they use different years.)



As can be seen, Hungerford's findings first support what we had learned earlier from the Citizens for Tax Justice study: taxes don't do much to reduce inequality. They secondly reveal that transfer payments have a slightly larger impact on inequality than taxes, but not much. Third, his findings tell us that taxes and transfer payments together reduce the inequality index from .52 to .43, which is very close to the CIA's estimate of .45 for 2008.

In short, for those who ask if progressive taxes and transfer payments even things out to a significant degree, the answer is that while they have some effect, they don't do nearly as much as in Canada, major European countries, or Japan.

Income Ratios and Power: Executives vs. Average Workers
Another way that income can be used as a power indicator is by comparing average CEO annual pay to average factory worker pay, something that has been done for many years by Business Week and, later, the Associated Press. The ratio of CEO pay to factory worker pay rose from 42:1 in 1960 to as high as 531:1 in 2000, at the height of the stock market bubble, when CEOs were cashing in big stock options. It was at 411:1 in 2005 and 344:1 in 2007, according to research by United for a Fair Economy. By way of comparison, the same ratio is about 25:1 in Europe. The changes in the American ratio from 1960 to 2007 are displayed in Figure 9, which is based on data from several hundred of the largest corporations.



It's even more revealing to compare the actual rates of increase of the salaries of CEOs and ordinary workers; from 1990 to 2005, CEOs' pay increased almost 300% (adjusted for inflation), while production workers gained a scant 4.3%. The purchasing power of the federal minimum wage actually declined by 9.3%, when inflation is taken into account. These startling results are illustrated in Figure 10.



Although some of the information I've relied upon to create this section on executives' vs. workers' pay is a few years old now, the AFL/CIO provides up-to-date information on CEO salaries at their Web site. There, you can learn that the median compensation for CEO's in all industries as of early 2010 is $3.9 million; it's $10.6 million for the companies listed in Standard and Poor's 500, and $19.8 million for the companies listed in the Dow-Jones Industrial Average. Since the median worker's pay is about $36,000, then you can quickly calculate that CEOs in general make 100 times as much as the workers, that CEO's of S&P 500 firms make almost 300 times as much, and that CEOs at the Dow-Jones companies make 550 times as much. (For a more recent update on CEOs' pay, see "The Drought Is Over (At Least for CEOs)" at NYTimes.com; the article reports that the median compensation for CEOs at 200 major companies was $9.6 million in 2010 -- up by about 12% over 2009 and generally equal to or surpassing pre-recession levels. For specific information about some of the top CEOs, see http://projects.nytimes.com/executive_compensation.

If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select -- and which includes some fellow CEOs on whose boards they sit -- gives them the pay they want. The trick is in hiring outside experts, called "compensation consultants," who give the process a thin veneer of economic respectability.

The process has been explained in detail by a retired CEO of DuPont, Edgar S. Woolard, Jr., who is now chair of the New York Stock Exchange's executive compensation committee. His experience suggests that he knows whereof he speaks, and he speaks because he's concerned that corporate leaders are losing respect in the public mind. He says that the business page chatter about CEO salaries being set by the competition for their services in the executive labor market is "bull." As to the claim that CEOs deserve ever higher salaries because they "create wealth," he describes that rationale as a "joke," says the New York Times (Morgenson, 2005).

Here's how it works, according to Woolard:

The compensation committee [of the board of directors] talks to an outside consultant who has surveys you could drive a truck through and pay anything you want to pay, to be perfectly honest. The outside consultant talks to the human resources vice president, who talks to the CEO. The CEO says what he'd like to receive. It gets to the human resources person who tells the outside consultant. And it pretty well works out that the CEO gets what he's implied he thinks he deserves, so he will be respected by his peers. (Morgenson, 2005.)

The board of directors buys into what the CEO asks for because the outside consultant is an "expert" on such matters. Furthermore, handing out only modest salary increases might give the wrong impression about how highly the board values the CEO. And if someone on the board should object, there are the three or four CEOs from other companies who will make sure it happens. It is a process with a built-in escalator.

As for why the consultants go along with this scam, they know which side their bread is buttered on. They realize the CEO has a big say-so on whether or not they are hired again. So they suggest a package of salaries, stock options and other goodies that they think will please the CEO, and they, too, get rich in the process. And certainly the top executives just below the CEO don't mind hearing about the boss's raise. They know it will mean pay increases for them, too. (For an excellent detailed article on the main consulting firm that helps CEOs and other corporate executives raise their pay, check out the New York Times article entitled "America's Corporate Pay Pal", which supports everything Woolard of DuPont claims and adds new information.)

If hiring a consulting firm doesn't do the trick as far as raising CEO pay, then it may be possible for the CEO to have the board change the way in which the success of the company is determined. For example, Walmart Stores, Inc. used to link the CEO's salary to sales figures at established stores. But when declining sales no longer led to big pay raises, the board simply changed the magic formula to use total companywide sales instead. By that measure, the CEO could still receive a pay hike (Morgenson, 2011).

There's a much deeper power story that underlies the self-dealing and mutual back-scratching by CEOs now carried out through interlocking directorates and seemingly independent outside consultants. It probably involves several factors. At the least, on the workers' side, it reflects their loss of power following the all-out attack on unions in the 1960s and 1970s, which is explained in detail in an excellent book by James Gross (1995), a labor and industrial relations professor at Cornell. That decline in union power made possible and was increased by both outsourcing at home and the movement of production to developing countries, which were facilitated by the break-up of the New Deal coalition and the rise of the New Right (Domhoff, 1990, Chapter 10). It signals the shift of the United States from a high-wage to a low-wage economy, with professionals protected by the fact that foreign-trained doctors and lawyers aren't allowed to compete with their American counterparts in the direct way that low-wage foreign-born workers are.

(You also can read a quick version of my explanation for the "right turn" that led to changes in the wealth and income distributions in an article on this site, where it is presented in the context of criticizing the explanations put forward by other theorists.)

On the other side of the class divide, the rise in CEO pay may reflect the increasing power of chief executives as compared to major owners and stockholders in general, not just their increasing power over workers. CEOs may now be the center of gravity in the corporate community and the power elite, displacing the leaders in wealthy owning families (e.g., the second and third generations of the Walton family, the owners of Walmart). True enough, the CEOs are sometimes ousted by their generally go-along boards of directors, but they are able to make hay and throw their weight around during the time they are king of the mountain.

The claims made in the previous paragraph need much further investigation. But they demonstrate the ideas and research directions that are suggested by looking at the wealth and income distributions as indicators of power.

[Wind]

Have you looked into the Venus Project? Jacque Fresco was a visionary ahead of his time.


Source: https://www.youtube.com/watch?v=e66jQ-pZYnc

[Chuckie]

yeah absolutely I agree with that ...

Here's the thing there's always a thing: In the future, when everyone has their own mountain of diamond (Astronomers have discovered a planet that is literally made of diamond) there would be plenty for expansion into the infinite? universe, A neverending supply of resources for a neverending expansion of humanity. That's ok, there is no sin in pursuing life, it is why life exists.

[Wind]

Source: https://www.youtube.com/watch?v=VbsIP8kYUFc

[Dreamtimer]

I haven't digested this yet.

[sourcetruth]

That is an insane amount of wealth concentration. There is no good reason why such a small amount of people should control so much wealth.

In other countries like europe the problem isn't as bad.
https://equitablegrowth.org/new-worl...ates-compares/

[Chuckie]

very true ... Northern Europe looks the best.

[Chuckie]

Social Change

The Left and the Right in Thinking, Personality, and Politics
by G. William Domhoff

The aim of this essay is to provide a big-picture canvas of the wider meanings of the Left-Right dimension in human thinking and personality. It's a dimension that precedes and transcends politics, but may well explain some of the puzzles about the political Left and Right. I begin by discussing general findings on the cross-cultural differences in the thinking and attitudes of Leftists and Rightists on many different aspects of life. Then I describe how this dimension has manifested itself in language, and how it became part of politics during the French Revolution. Then I show how the left-right dimension manifests itself in personality, and that political preferences do relate to this dimension.

After showing the considerable difference between the political Left and Right in personality and social attitudes, I suggest that they nonetheless share certain essential similarities that are relatively rare in the general population, especially a high degree of moral fervor and moral anger, even while they differ completely on what they are fervent and angry about. My next step is to suggest that this shared moral fervor leads political Leftists and Rightists to have similar condescending attitudes towards their more moderate left-oriented or right-oriented compatriots, those who are merely "liberal" or only moderately "conservative."

I conclude this document with a puzzle. Both Leftists and Rightists end up working in various hierarchical, top-down organizations. That fact seems fairly straightforward and understandable for the Rightists because they believe in hierarchy, as will be shown. But how do Leftists, who are egalitarian in their values, often end up in very hierarchal organizations? It's at this point that we have to look to social psychology and sociology for answers.

The left-right dimension in general thinking
In the 1960s, a psychologist interested in philosophy and ideology, Silvan Tomkins, wrote an essay in which he argued there is a Left-Right dimension in every area of waking thought, from beliefs about mathematics to beliefs about child-rearing practices. Based on his research, Tomkins (1964) concluded that those on the Right end of this continuum first and foremost tended to be rule-oriented. They see rules as external to themselves, and even to people in general. Rules are part of the universe, or ordained by God. In addition, Rightists are often uncomfortable about emotions and tend to deny their feelings. They therefore want emotions under control. They also favor hierarchy, at least in part because they want to keep impulses under control through rules. The best people, those who follow rules and control emotions, should be in charge. Rightists become angry with rule breaking, not with oppressive authority.

Rightists tend to be very individually oriented. They tend not to see groups and social classes. They think that success is a matter of individual effort, overlooking the social support that they and everyone else has had in order to advance in life. This individualistic orientation, along with their respect for hierarchy, makes them into natural supporters of the current power structure, whatever their socioeconomic standing.

On the other hand, according to Tomkins, Leftists are oriented toward human needs and pleasures, not rules, and think that people create rules. They are attracted to new experiences and positive feelings. They are for equality and do not like hierarchy; they are egalitarians who are willing to change the rules if they think that is necessary. In addition, they tend to focus on groups and social networks. This group-oriented stance, along with their emphasis on equality, makes them natural allies of the underdogs, whether this means low-income people or people excluded from the dominant society on the basis of race, ethnicity, sexual orientation, or religious preference.

It is this underlying dimension of human thinking and experience that has been rediscovered by cognitive linguist George Lakoff (1996) in his work on "moral politics," in which he comes to similar conclusions about Right and Left thinking based on a metaphoric analysis of what Leftists and Rightists say and write. Lakoff's "Strict Father Morality" model fits with what Tomkins says about the Right, and his "Nurturant Parent Morality" model is consistent with what Tomkins says about the Left.

It also has been found in the excellent work in social psychology by Bob Altemeyer, such as The Authoritarian Specter (Harvard University Press, 1996) and in his free PDF book, The Authoritarians, which can be downloaded from his Web site (with an update on the Tea Party). For a very useful source that provides many summary chapters and a set of references that covers the whole topic, see John T. Jost and Jim Sidanius (Eds.), Political Psychology: Key Readings (Psychology Press, 2004). Even more recent work by Jost and his colleagues on the personality differences between Leftists and Rightists is summarized later in this document.

Tomkins developed a questionnaire to test his ideas on American participants, mostly college students. The questionnaire asked people to endorse one or both of a series of paired statements, such as "Numbers were invented" or "Numbers were discovered." As Tomkins expected, he found that people differed in consistent ways on which statements they endorsed, supporting his hypothesis that there were Right and Left ways of looking at the world over and beyond how people felt about any specific issue. For example, when confronting the statements about numbers being either invented or discovered, Left-oriented thinkers (and keep in mind that we are not yet talking about politics, but a general way of thinking) replied that people invented number, whereas Right-oriented thinkers tended to say they were discovered, i.e., that they exist independently of people. (The issue here is not which is "really" the correct answer, if there is one, but simply what people say off the top of their heads.)

Similarly, Right-oriented thinkers were for strict child rearing in order to tame the unruly emotions in children ("spare the rod and spoil the child"), while Leftist-oriented thinkers saw children as little flowers to be nurtured and supported, that is, allowed to grow more or less "naturally." More generally, when asked whether people are basically "evil" or "good" in terms of human nature, Right-oriented thinkers tended to say "evil" and Left-oriented thinkers tended to say "good." In fact, people's preference on this question about basic human nature best predicts how they will answer many other questions in a "Right" or a "Left" way. So we can say that beliefs about human nature are an anchor point of the general Left-Right dimension.

To show that there is a Left and Right to every question and even every academic discipline, Tomkins noted in his essay that the field of psychology is on the Left side, with engineering and the natural sciences on the Right, and the humanities to the Left of psychology. However, even within a field like psychology, there are Right and Left sides to every issue, with the "hard-nosed" experimentalists and "quantifiers," who study specific narrow psychological processes, on the Right, and the more field-oriented and clinical researchers, who use "qualitative" methods, on the Left.

In closing this section, let me stress that we are talking here about pure types at the ends of a continuum. Everyone believes in controlling impulses at one time or another, not just Right-oriented thinkers, and just about everyone likes to explore and take risks in some situations, not just Left-oriented thinkers. Thus, most people are somewhere in the middle in their overall thinking, and they are sometimes complex blends of the two orientations. Moreover, Tomkins claims that some of the most famous and creative people in Western history, such as the philosopher Kant and the composer Beethoven, are those who are able to synthesize aspects of the Left and Right, thereby appealing to both sides of the continuum. The point for now, though, is that there is a general Left-Right dimension that transcends any particular issue.

Why do we talk about politics in terms of Right and Left?
Why do we speak of the hierarchically oriented stand-patters as "Rightists" and the egalitarian, we-can-do-better, let's-change-things people as "Leftists?" According to the Oxford English Dictionary and conventional wisdom, it's because the conservatives happened to sit on the king's right when they marched into the French National Assembly that was convened in 1789 in the face of the upheavals facing the king and his court. Since the conservatives were on the right, it followed that the upstart bourgeoisie, radical intellectuals, and other insurgents had to sit on the left (see Laponce, 1981, Chapter 3, who analyzed French newspaper accounts from the 1790s to explain how the use of right and left spread across that country and into the rest of the world).

According to this account, the use of Left and the Right to characterize political views is just an historical accident. A precedent was set via something like the flip of a coin, and then it became a custom, and was invested with all kinds of meaning, and things rolled on from there, a small example perhaps of the "path-dependent" nature of history, which basically follows the old adage that one thing leads to another.

But Tomkins and other scholars claim it may not be that simple. As they note, Right and Left have been invested with deep meanings throughout Western history, and indeed, in every other culture we know about as well. The Right is always good and straight and true and up, and the Left tends to be the opposite. For example, the Maori, the indigenous people of New Zealand, have a very complex cosmology that ties many basic dimensions of life to the left and the right, as do many other peoples (e.g., Hertz, 1960; Needham, 1973). In the Bible, the elect sit on the right hand of God.

These associated meanings of Left and Right are also seen in word etymologies, which reveal the "meaning complexes" that embed specific terms (Thass-Tienemann, 1955, 1967). In many Romance languages, for example, the left is related to strange stuff and lesser aspects of life. For example, sinistra, the Latin word for left, is the root for our word "sinister." Gauche, the French word for left, has negative connotations. In Norwegian, the word for right, hoyer, literally means "higher." The Spanish word for right, derecho (derived from Latin directus), also means "upright" or "correct."

Or take a look at English. People are "out in left field," not right field, when they have a far-out opinion. We give people "left-handed compliments." So the question may be: why did the nobility sit on the king's right in the first place?

Perhaps the left-right, bad-good dichotomy had its origins in the basic dualisms that exist in human thought everywhere, as implied by Tomkins's work. That's a big claim, but it gains support in work by psychologist Charles Osgood and his colleagues (1975) from the 1950s to 1970s. Osgood basically asked people all over the world to make snap judgments on just about anything you can think of -- whether it was colors like "red" and "blue," or concepts like "left" and "right," or specific people like presidents Dwight Eisenhower and John F. Kennedy -- using a series of polar opposites, such as soft/hard, up/down, hot/cold, and fast/slow. So, for example, if you were asked to rate a "turtle," you might strongly think it was more "hard" than "soft" and more "slow" than "fast." You also might rate a turtle as somewhat more "down" than "up" because they are close to the ground. You might be hard pressed to decide if a turtle is "hot" or "cold," so you might pick the middle point on the seven-point scale, meaning that it does not strike you as either "hot" or "cold."

On the other hand, if you were asked to rate a "giraffe," you might say it was more "soft" than "hard" because of its smooth skin and colorful fur, and more "fast" than "slow" because it can run plenty fast when it has to. You probably would rate it as more "up" than "down" because of its long neck, and you might say it is more "hot" than "cold" because you figure it is a warm-blooded animal living on the hot plains of Africa.

Osgood called his list of polar adjectives "the semantic differential." Based on very large samples of people from all over the world, and using very rigorous statistical analyses, Osgood established that there are three basic dimensions when people impute meaning. These dimensions hold all over the world and for whatever we rate, whether turtles or giraffes or presidents or cooking pots or colors or pictures. The importance of each of the three dimensions varies from concept to concept, but they are the main factors that inform any intuitive judgment we make:

First, there is the evaluative dimension. Do I like it or not like it, which is soon translated in our thinking into a "good-bad" dimension. The evaluative dimensions includes polar opposites such as good/bad, pretty/ugly, and friendly/unfriendly

Second, there is the activity dimension. Basically, is it active or passive, fast or slow?

Third, there is the potency dimension. Is it strong or weak?

If the Left-Right dimension explained by Tomkins also has any relationship to our thinking about politics, then there should be differences on the semantic differential. So I tested this possibility by giving the semantic differential to college freshman and sophomores who did not know the purpose of the study. Eighty rated only the concept "Right," 78 rated the concept "Left." Then I studied children from the first grade through high school in Napa, California, thanks to an insider connection that got me entrée into dozens of classrooms in a single day, back in the mid-1960s (Domhoff, 1969). The two sheets of paper put before the students looked like what appears below, with either the word Left or Right at the top of the page, followed by instructions to judge where they would place Left and Right on each of the pairs of polar adjectives that we used (e.g., good/bad, male/female, unclean/clean). They had seven blanks they could mark to express the degree to which their idea of Left or Right fit with one or the other side of the continuum, which means they could mark the middle choice ("4") if the word at the top did not remind them of either side.

There was one added twist to this study. I used a set of polar adjectives that were related to "left" and "right" by the Maori of New Zealand to see if we had similar conceptions to what they have. The scale appears below.

"right"
light - - - - - - - dark
curved - - - - - - - straight
high - - - - - - - low
female - - - - - - - male
sacred - - - - - - - profane
heterosexual - - - - - - - homosexual
mysterious - - - - - - - commonplace
unclean - - - - - - - clean
correct - - - - - - - incorrect
bad - - - - - - - good
beautiful - - - - - - - ugly
limp - - - - - - - erect
strong - - - - - - - weak


Sure enough, just like the Maori, the older children and college students tended to say that the Left was bad, dark, profane, female, unclean, curved, limp, homosexual, weak, mysterious, low, ugly, and incorrect, while the right was judged as just the opposite -- good, light, sacred, male, clean, straight, erect, heterosexual, strong, commonplace, high, beautiful, and correct. This suggests there is a pan-human meaning to the Left and the Right.

If we look more closely at how we think about leftness, it is not always simply "bad," as in "not good." It is more like the Left is bad in the sense of "tempting." That is, the Left involves impulses that are not a good idea because they upset people and get you in trouble, which is in keeping with Tomkins's claim that expressing or controlling emotions is a key factor in the Left-Right dimension. But it is not just that the Right is good and the Left is "baaad," as in the admiring comment, "he's a baaad cat." The Right is also "up" and the Left is "down," as also seen in the rating of the Right as "high" and the Left as "low." That is, the hierarchical dimension that Tomkins talks about is built into the Left-Right dimension, too, through the basic equation of "good" and "up" and "bad" and "down" in our mental universe. How are you feeling today? "I'm really up, today, thanks." Or, "sorry to say, but I am feeling down today." When we are elated we are "high as a kite," on "cloud nine," or "walking on air." When we are feeling discouraged or depressed, we are "down" or "low," or "in the dumps."

So, it seems that Right and Left really do stand for something in our minds. They stand for proper, right-minded thinking versus playful/sinful/heretical thinking, and hierarchy versus equality, just as Tomkins suggests. To support God, the King, the President, the bosses, or the department chairperson is to be on the Right. To question or rebel against them is to be on the Left.

However, there is one serious problem with what I have said so far, as one of the best personality psychologists of the past 40 years, Robert McCrae, pointed out to me. I've made it sound as if the Right is "better" than the Left, as though they are the truly virtuous ones. He goes on to suggest it might be useful to point out that what I've written applies to the way people think, but not necessarily to the way they act. Yes, rightists believe in rules, but they are not any more likely to follow them, or be orderly and punctual, diligent and hardworking. That's because there are four other basic dimensions to personality in addition to the left-right dimension -- which is called the "openness" dimension within the widely accepted "Five-Factor Model of Personality" that McCrae and his co-workers developed. (It's also called the "Big Five" model, and its five factors can be most easily remembered with the acronym "OCEAN." They are openness, conscientious, extraversion, agreeableness, and neuroticism, all of which are pretty much self-explanatory.

As McCrae explained to me, and as work with the Five-Factor Model shows, the right and the left differ on openness, but not necessarily on the other four dimensions (c.f. McCrae, 1996; McCrae & Costa, 1980). For my purposes here, the important difference concerns the conscientiousness dimension: not all rightists are conscientious enough to stick with their rules, any more than leftists or people in the middle are. McRae points out that when we are scandalized by misbehavior by Rightists -- or shrug off misbehavior on the Left -- it's because we sometimes forget that what people believe and what they do are often two very different matters.

With the distinction between openness and conscientiousness in mind, we can now ask whether what I have outlined in this and previous sections (about the Left and the Right in thinking and personality) relates to the actual people who are political Rightists and Leftists in countries like the United States. I now turn to the evidence that it does, starting with a study that a colleague and I did of political Leftists and Rightists using the Tomkins questionnaire.

The Left and Right in politics
Tomkins also claimed that the Left-Right dimension appears in politics, and I am now going to present evidence that such is the case.

But before I do that, I need to make sure we are all on the same page when it comes to talking about different political orientations in the United States. First, most people in the United States usually think of the Left-Right dimension as the "liberal-conservative" dimension, and rightly so, because it means the same thing at a theoretical level. However, a terminology problem arises because those who are "left of center" divide into two basic types, as do those "right of center." On the Left side, just to the left of the center," we find the "liberals," whereas those to the left of liberals are called "Leftists." In the past, the Leftists usually defined themselves as either "socialists," "communists," or "anarchists." Today they are more likely to self-identify as "progressives" or "anti-capitalists," although there are also those who lean in an anarchistic direction who call themselves "libertarian socialists" to emphasize their respect for individual rights and their wariness of a large government. Meanwhile, just to make things a little more complicated, the term "progressive" has also been adopted by some moderate liberals who don't want to be associated with "The L-Word." On the Right side, just to the right of the center, there are "moderate conservatives" and on their right we find the "ultra-conservatives," with the varying types of ultra-conservatives self-identifying as "New Rightists," "Christian Rightists," and "Neo-conservatives." There's also a very small and unusual group on the right, the "Libertarians," who dislike government but are -- in theory -- in favor of freedom to smoke dope, be gay, etc. They are in some ways a mirror image of anarchists, and they are civil libertarians, but anarchists and libertarians also differ totally in that the anarchists are internationalists and dislike markets, whereas libertarians are more nationalistic and love markets over and beyond just about anything else. In any event, it is the New Rightists, Christian Rightists, Neo-conservatives, and Libertarians that I am calling political Rightists in this essay. All of this can be confusing, so below is a chart that tries to provide an overview.



It's also important to make clear that the political substance of what is "Left" and what is "Right" can vary from time to time and place to place due to the different histories of different countries. This point is especially critical for understanding the differences between the European Right and the American Right. The European Right mythologizes a past of strong states, complete with kings and their courts, and a hierarchical church. It can see itself submerged in the state, and could therefore move, just 70-80 years ago, to the extreme of fascism.

The American Right, on the other hand, due to the history of the United States, has a myth of a highly individualistic past, with a minimum amount of government. That is, the American Right is based on the tenets of 19th century, Big-L "Liberalism," the philosophy that codifies and justifies a small-government, a "free" market, and anti-union policies and practices. It claims that people are rational self-maximizers. The people who become the wealthiest are assumed to be the smartest and the fittest. The American right therefore shares an elitist orientation with other Rightists, but it doesn't glorify the government.

Meanwhile, the small-L liberals in America, that is, those left of center within the Democratic Party, who want to end racism and sexism and exploitation of ordinary workers, came to the conclusion many decades ago that federal-level government programs were the only way to achieve their goals. The federal government would have to end segregation, women would have to have the right to vote, and workers would have to have the right to unionize to counter the power of big corporations. This need for action at the national level was especially obvious in the case of freedom for African-Americans because the state governments in the racist, segregationist South were clearly not going to change one iota without federal pressures (see Starr, 2007, for a full discussion of how the small-L liberals gradually evolved from the big-L liberals and therefore differ from the present conservatives and Rightists, who stick to the original big-L positions).

However, the American Rightists, given their strong desire to keep things as they are, and their respect for hierarchy, including the hierarchical relationship between whites and blacks and men and women as well as capitalists and workers, often see small-L liberalism as a form of "collectivism." Contrary to Rightist rhetoric, however, small-L liberalism is a relatively slight modification of old-style liberalism and an expansion of democracy to include more than the owners of income-producing properties. In other words -- and this is crucial -- most Americans are either 19th-century liberals or 20th-century liberals in an ideological sense. Contrary to what the Rightists believe, there are few or no socialists or communists. And contrary to the view from the Left, the American Rightists are not fascists. Put another way, the conservatives and liberals use extremist rhetoric when talking about each other. However, because most Americans are one or another variant of Big-L liberalism -- that is, they are neither communists/socialists nor fascists -- they are usually able to compromise their differences without violence. On the other hand, the fact that the two sides can come to demonize each other so completely is a testament to the more fanatical aspects of the human mind.

Now we are ready for studies that try to relate styles of thinking and personality to political preferences. Such studies have a long history that dates back to the late 1930s in the United States, with the best and most rigorous of these studies having been done since the 1990s by political psychologists whom I will discuss shortly. However, I want to start with a study from the 1960s that used the Tomkins Left-Right questionnaire to study members of actual Leftist and Rightist political groups. It's a study I did with my colleague Henry Minton at California State University at Los Angeles in the autumn of 1964, just before the presidential election between liberal Democratic presidential candidate Lyndon B. Johnson and ultra-conservative Republican Barry Goldwater. We were able to give the Tomkins questionnaire and several personality tests -- to be discussed in a moment -- to five groups:



In addition to the Tomkins questionnaire, we collected basic demographic information on the participants that isn't essential here because everyone back then was standard-issue young white college students, along with something that is important for my current purposes, a self-rating on a 7-point liberalism-conservatism dimension. We also gave the Internationalism-Nationalism Scale, which is known to correlate with conservatism.

It's also important to note that we did not use the two or three Tomkins statements that relate at all to politics -- the ones about the nature of government and the best way to deal with criminals. In other words, we made the Tomkins questionnaire apolitical in that it focuses on statements about human nature, numbers, child rearing, and a few other non-political issues.

Here's what we found. First, on the liberalism-conservatism self-rating scale, all but one of the Communists and Trotskyists gave themselves the strongest possible liberalism rating, a "1," with one person giving himself a "2." All of the Young Democrats gave themselves a "2," "3," or "4," which clearly differentiates them from the Leftists. And all but two of the Young Republicans gave themselves the most extreme conservative ratings, a "6" or a "7;" the remaining two rated themselves as "3" and "5." So the self-ratings completely differentiate the various groups, with the exception of the Young Republican who gave himself a "3"; he turned out to have been raised in a liberal family.

The second analysis consisted of a correlational matrix that included the liberal-conservative self-rating, along with the international/chauvanistic nationalism scale, the Tomkins questionnaire, and the Jackson-Minton Adjective Checklist. This analysis first of all showed that the participants' subjective self-ratings correlated very highly, r= .78, with the internationalism-nationalism scale, with the conservatives on the highly nationalistic, super-patriotic side, a finding that has been reported in virtually every study that has been done of Leftists and Rightists in the past 60 years. That means we are on solid ground when we turn to the Tomkins results.

The Total Left Scores, that is, the total number of Left-oriented statements that the person endorsed, correlated .46 with liberal self rating and .35 with internationalism, which is a solid result in the world of personality studies, and the Total Right Scores correlated .51 with the self rating and .65 with nationalism, which is an even more impressive result.

Although those are good correlations by the standards of personality studies, it's a fair question to ask why they aren't even higher. One important reason is that some of the self-identified Leftists and Young Republicans had not yet found their "natural" home on the Left-Right continuum. That is, we know from the biographies and autobiographies of many political figures that they start out at one place and end up at another. In particular, there are many dramatic examples of young Leftists who move to the Right. Many of the famous Neo-Conservatives of the 1970s through the 1990s started out as Socialists or Trotskyists in the 1950s and 1960s, for example. There is also a little movement from the Right to the center, and even to mild liberalism; Hillary Clinton would be a good case in point. Based on her upbringing, she was for Goldwater in 1964, but by the time she had finished college and law school she was a liberal. (More generally, there is a modest correlation between parental and offspring politics as people are growing up, but other factors enter into political orientation after age 18 or 19 -- including what the new generation as a whole is experiencing -- e.g., "the Sixties," "the Eighties," "The Great Recession.") So young adults often differ from their parents in political orientation, and siblings often differ from each other, too, for that matter. There's also social class and peer-group influences and situational factors like where you work.

There is one very interesting study of liberals and conservatives from the 1960s that is consistent with the Tomkins dimension. It is a by-product of a follow-up study of University of Minnesota students who had taken a battery of vocational interest tests in the late 1930's in an attempt to predict their future career interests. When they were studied via questionnaires and interviews 25 years later, they provided new information on their interests and attitudes, including their political orientation. So, as one small part of the data analysis, the participants were divided into liberals and conservatives (Rossmann & Campbell, 1965). And they differed in their interests, hobbies, and occupations in ways we would expect from the Tomkins dimension.

And as I noted earlier, there is a large amount of new information on Leftists and Rightists that has been collected since the 1990s. In fact, it is in general better information because it uses tests that are far more rigorous than the now-abandoned Tomkins scale and adds new ideas and insights to the picture. Most of these new findings are summarized in a synthesis by political psychologists John T. Jost and David M. Amodio (2012), who did many of the original studies themselves. They also put the new studies within their historical context, including three references to the work by Tomkins.

The studies carried out or summarized by Jost and Amodio amply confirm that Leftists are more open than Rightists. In a meta-analysis of 88 studies in 12 different countries, they also show that factors such as death anxiety, dogmatism, intolerance for ambiguity, and need for order were positively correlated with conservatism and negatively correlated with liberalism, whereas openness to new experience, cognitive complexity, and tolerance of uncertainly were all positively correlated with liberalism and negatively correlated with conservatism (Jost & Amodio, 2012, p. 57). Moreover, the new work goes beyond Tomkins in demonstrating that it is not just "emotion" in general that Rightists fear more than Leftists. In particular, they are more likely to react to uncertainty and ambiguity by feeling threatened and anxious, which may lead to their negative attitude toward new experiences and their dogmatism.

By this point, many readers may be wondering just what percentage of people are Rightists or Leftists in their political orientation, or more generally, what does the distribution of people along the general right-left political spectrum look like. That's a difficult question to answer very precisely for the United States because the largest and most reliable studies tend to ask only whether people consider themselves "liberals," "moderates," or "conservatives." About 25% of voters said they were liberals in exit polls after the 2012 presidential elections, compared to 35% who said they were conservatives, and 40% who said they were moderates, with questions about party identification clouding the picture because 11% of liberals said they voted for the Republican presidential candidate and 17% on conservatives said they voted for President Barack Obama (Edison Research, 2012).

Of course, the differences in values and personality between political Leftists and Rightists are not the whole story. For example, there is ample evidence of extremely authoritarian Leftist political parties in the United States. In particular, there are various Marxist-Leninist parties that say they practice "democratic centralism," meaning that everyone has an equal chance to speak and participate, but they then agree to follow what the majority decides. What invariably happens in these groups is that they come to be run by an inner circle, the "central committee," which is in turn usually dominated by one strong leader. Some of the accounts of these groups are harrowing; there is evidence of self-righteous manipulation of the members and a willingness to use violence (Ellis, 1998; Lalich, 2004).

Similarities between those on the political Right and Left
Although the Right and Left have major differences that make it almost impossible for them to agree on anything, they also have certain -- if not immediately apparent -- similarities as well. In fact, they are remarkably similar for how different they are. Since these similarities are of a type that tends to make them blind to any other view, these similarities further reinforce the dichotomy between them: that is, the similarities I am about to discuss make for more differences.

First, they share the same high degree of moral outrage and anger. This strong moral outrage makes them into absolutists. They become True Believers in their cause, with no doubts whatsoever. They see everyone else as sell-outs and trimmers. This includes many people who share their sympathies, but not their fanaticism. This disdain for less fanatical friends who share their general beliefs also reveals to us what the tamer versions of Rightists and Leftists, that is, conservatives and liberals, have in common: they are more pragmatic, tentative, and experimental in their beliefs. As might be expected, then, and as everyday observation makes apparent, there is often tension between moderate conservatives and Rightists on the Right side of the divide and between liberals and Leftists on the other side.

On the Right, the tension is due to the fact that the moderate conservatives are willing to accept the current situation on most issues, whereas Rightists are not. Rightists in the Republican Party often contemptuously call moderate conservatives "RINOs," which means "Republican in Name Only," and therefore fair game for attack because they are weak-kneed compromisers and backsliders. For example, most American conservatives do not want to go back to black-white segregation or to the subjugation of women, even though most conservatives of the 1950s and 1960s opposed the extension of equality, fairness, and opportunity to women and African-Americans (including famous libertarians of the 1950s through the 1990s such as William F. Buckley). Present-day conservatives have accepted those changes; they figure that's the way things are, but things should change no further (and people like Buckley came to accept the changes and even regret some of their past views).

However, those on the far Right have not accepted most of these changes. They talk about the 1950s as a golden era, even though there were far fewer ultra-conservatives than there are now, and even though it was a time of racial segregation and almost complete male dominance. The thought that there have been changes in the tried and true ways completely upsets them. Indeed, they claim that the problems of today are due to the changes since the 1950s. There has been "moral degeneration," something that Rightists have been saying throughout Western history. They have once again created a self-serving myth about the past.

Similarly, there is tension between liberals and Leftists over many issues. Liberals want small gradual improvements, but political Leftists want major changes right now. When various types of Leftists have to define what they share in common, they are sure of one thing -- they are not mere liberals. Put another way, Leftists often define themselves as "not-liberals."

The moral outrage of True Believers of the Right and Left leads them to share a second similarity: they see everything as rushing to a huge crisis. They share the feeling that things have become intolerable and can't go on any longer. This sense of crisis is defined as growing immorality and degeneracy on the Right and as intolerable inequality, corruption, and injustice on the Left. However, at the same time, both Right and Left have hope because they believe that things are going to come out all right, that is, the way they want them to.

These feelings of impending doom followed by a new dawn lead the political Right and Left to share the same underlying theory of how history unfolds and how it will end. For both extremes, it is a story of an original paradise that is lost due to one or another mistake or sin, followed by a growing crisis that leads to an apocalypse, which then leads to a regaining of paradise. That is, both Right and Left begin with the idea that human beings once lived in positive, non-conflictual social groups that were, sadly, disturbed by one factor or another, which has led to the current crisis that is soon to reach an apocalyptic climax. This huge climax -- this Armageddon, this revolution, this upheaval -- will be followed by a new positive state of being. It will incorporate some positive aspects of what developed after the primordial human society was left behind.

Where Right and Left differ is in the substance of the matter. Reflecting the differences along the Right-Left dimension, what varies is the nature of the original human social setting, the cause of the problems that developed, and the nature of the resolution. This is best seen by looking at Christianity, which is the underlying theory of many on the far Right, and Marxism, which is the underlying theory of many on the far Left.



Although the two theories of history have very similar structures, their substance is completely different. The Rightist theory is far more individualistic and psychological. The Leftist theory is almost completely group or class oriented, and hence sociological. These differences far overshadow the similarities and drive the two extremes even further apart.

Third, the two extremes share the same story about how the current society is structured. However, they draw very different conclusions about who the good guys and the bad guys are in this shared scenario. The common story line goes like this:



The country is sustained by good and hard-working average people in the middle like us, but we have little or no power. For the Right, these "good people" are the middle class of small business owners, farmers, and white-collar workers. For the Left, they are the workers, that is, the people who work with their hands in factories and fields.
Although important and hard-working, we good people are exploited and dominated by the few at the top. For the Right, that means the bureaucrats, internationalist financiers, pointy-headed intellectuals, and effete liberals. For the Left, that means the capitalists.
Moreover, we good people have to contend with the ne'er-do-wells, those who don't contribute to the overall good of the society like we do. For the Right, that means the alleged welfare bums and allegedly shiftless people of color. For the Leftists, it means the apathetic and gullible "lumpenproletariat."
Since this state of affairs is not fair to the good and hard-working majority, we have a right to be angry, and we should organize to create social change that brings about a new social order. For the Right, that means a return to an idyllic world of small business, small government, male dominance, and white Christian rule. For the Left, it means a transition to economic, gender, and racial equality (see Berlet & Lyons, 2000, for a statement of these ideas).
But these similarities in moral fervor and in the narrative structure of the Left and Right's views of history do not fully explain how Leftists often end up in very rigid parties and perhaps eventually willing to call for revolutionary violence or engage in physical attacks on property and/or persons. A larger theory is therefore needed. The starting point for that theory can be found in group dynamics and organizational theory. That is, based on work in social psychology and sociology, it is possible to explain how extreme political groups on the Right and the Left can share many similarities even though the substance of their concerns is very different.

In concluding this wide-ranging essay, I realize that it is only one dimension of the work that needs to be done by political psychologists, political sociologists, and other social scientists to integrate the psychological, social psychological, and sociological levels that will be needed to understand these complex and sensitive issues. Richard Ellis (The Dark Side of the Left) and Janja Lalich (Bounded Choice) provide two starting points on how Leftist groups become hierarchical and sometimes violent.

[Chuckie]

My instincts never fail me, this is what I've been saying about Hillary Clinton ever since I knew who Hillary Clinton was: I maintain her natural instinct is to be a rightists but social conditions forced her into the left paradigm. Same is true of Gabbard, Kamala Harris has a smidgeon of the same salt. Here's the thing, 'Personality' is always an accurate determiner and when one thinks about it, why wouldn't it be:

"Although those are good correlations by the standards of personality studies, it's a fair question to ask why they aren't even higher. One important reason is that some of the self-identified Leftists and Young Republicans had not yet found their "natural" home on the Left-Right continuum. That is, we know from the biographies and autobiographies of many political figures that they start out at one place and end up at another. In particular, there are many dramatic examples of young Leftists who move to the Right. Many of the famous Neo-Conservatives of the 1970s through the 1990s started out as Socialists or Trotskyists in the 1950s and 1960s, for example. There is also a little movement from the Right to the center, and even to mild liberalism; Hillary Clinton would be a good case in point. Based on her upbringing, she was for Goldwater in 1964, but by the time she had finished college and law school she was a liberal. (More generally, there is a modest correlation between parental and offspring politics as people are growing up, but other factors enter into political orientation after age 18 or 19 -- including what the new generation as a whole is experiencing -- e.g., "the Sixties," "the Eighties," "The Great Recession.") So young adults often differ from their parents in political orientation, and siblings often differ from each other, too, for that matter. There's also social class and peer-group influences and situational factors like where you work."

[sourcetruth]

It is because of the capitalistic and consumeristic system that these economic problems exist and allow some people to be too rich. Capitalism is an outdated system that needs to be replaced in our modern world.
By living a minimalistic lifestyle, I don't give into the consumeristic culture of the capitalistic system.

[Dreamtimer]

We forgot about taking care of our future generations. "Not my problem" became the attitude. Short-term attitudes make for long-term problems. I just wish the long game played by the right actually lifted all boats instead of legislating religious beliefs. That's a backwards path on dangerous drugs. And we'll be slogging out of it for some time now. Which will make economics even more challenging.

That long game turned out to be quite short-sighted. Stopping progress is not a worthy vision. It's not a vision at all.

I'd forgotten what a tome this thread was. It's nearly a course in economics.

[Chuckie]

It is because of the capitalistic and consumeristic system that these economic problems exist and allow some people to be too rich. Capitalism is an outdated system that needs to be replaced in our modern world.
By living a minimalistic lifestyle, I don't give into the consumeristic culture of the capitalistic system.

that's a good point ST, just don't fall into the trap of thinking that at some point you won't need money. I'm a failure though. I love TV!

We forgot about taking care of our future generations. "Not my problem" became the attitude. Short-term attitudes make for long-term problems. I just wish the long game played by the right actually lifted all boats instead of legislating religious beliefs. That's a backwards path on dangerous drugs. And we'll be slogging out of it for some time now. Which will make economics even more challenging.

That long game turned out to be quite short-sighted. Stopping progress is not a worthy vision. It's not a vision at all.

I'd forgotten what a tome this thread was. It's nearly a course in economics.

I'd forgotten about it too, DT. Some things are too weird to even try to clarify. It can be shortened though. Rightists suck!

[Aianawa]

An anomaly of late, when Kasakstan had probs and then the Ukraine silliness, really gold would normalllly gone fast towards usa 2.500 per troy ounce n more, did not, why ?.

[modwiz]

An anomaly of late, when Kasakstan had probs and then the Ukraine silliness, really gold would normalllly gone fast towards usa 2.500 per troy ounce n more, did not, why ?.

Because Kakastan said no.