Description of U.S. economic class structure.

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W7 Readings:
Belonging to a Class
Peter L. Hoag, Ph.D.
Human Development Department
CSU East Bay
2016 Spring Update

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Content
 Introduction
 Class
 The Gap
 U.S. Income
 U.S. Expenses
 References

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Introduction
As a follow-up on first two weeks PowerPoints, and especially the W3
PowerPoint on “Race”, this “Class” PowerPoint provides some facts
about the growing schism between today’s rich and poor classes in the
U.S., and the negative impact this growing schism is having on the
quality of life for America’s once prosperous middle class.

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Class: The Numbers (1929 or 1981?)
In the attempt to remain apolitical during this most important,
presidential election year, I’ve contained “nothing but the facts” on the
negative impact that this growing gap between rich and poor is having
on the quality of life for the American middle class.

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Class: U.S. History (1/4)
As most clearly documented by Nomi Prins in
her recent, All the Presidents’ Banks (2014),
this post-1980s deterioration of the middle
class, is not a new phenomena. It is a repeat
of what has been the norm for most of our
nation’s past 300 year history.
Naomi Prins is a former Goldman
Sachs executive and recent, author
of several ground breaking books
on the tight relationship that exists
between current and past
presidents and the banking
industry.

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Class: The New Trans National Class
William I Robinson: UCSB Profile
The Trans National Class (TNC):
In his recent and most important
Global Capitalism and the Crisis of
Humanity, international journalist
and UC Santa Barbara Sociologist,
Dr. William I. Robinson, provides a
unique and provocative way of
understanding the rise of a new,
21st century transnational capitalist
class (TNC), as well as insights
into the challenges that must be
taken to rescue our planet and its
inhabitants from today’s globalized,
“toxic capitalism” (adapted from
Amazon review by Bill Fletcher,
Amazon).
William Robinson (2015) complements Prins’ historical study of
America’s class structure by illustrating the degree to which a
“transnational capitalist class” and not nation-states now control most of
today’s international economy.

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Class: World Income Distribution
This chart compares the relative distribution of wealth among classes in each region as well
as among all regions of the world. Whereas the bottom X-axis represents population deciles
ranging from left to right from lowest to highest income classes for that region (each decile
has the same number of people in it); the Y-axis represents each region’s share of the
world’s total wealth.
Class Patterns: Whereas the upper
income classes of Europe and the
U.S. possess particularly large shares
of their own and the world’s total
wealth, the middle to upper middle
income populations of Latin America,
Asia and China possess the larger
shares of their own and the world’s
total wealth. It is the lower income
brackets of Africa, and again India
and Asia that posses the larger
shares of their own and the world’s
total wealth. The lower and lower-
middle income classes of America
alone possesses a significantly
smaller share of it’s own country’s
and the world’s total wealth.
Super-low incomes for
America’s lower class desciles

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The Gap: U.S. Wealth Deciles
Several factors have contributed
to today’s widening “gap”
between rich and poor,
including: (1) the replacement of
jobs with more efficient high
tech production systems; (2) the
loss of jobs from the increased
hiring of off-shore labor under
free-trade agreements, (3) the
loss of workers’ bargaining
powers due to the forced loss of
American union memberships;
and most importantly (4) the
U.S. court’s deregulation of big
business and its support for
unlimited campaign funding
under the protection of the 2009
Citizen’s United “corporate
personhood” decision.

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Class: U.S. Wealth Distribution
The bar chart on the left provides a clear
breakdown of today’s wealth gap
between rich and poor. This chart
breaks down the 2011 distribution of U.S.
wealth by the percent of the population
who own that wealth. In this chart, the
top 5% of the U.S. population owns
most, i.e., 72%, of the total wealth of this
country. The household income of this
top 5% begins at only $186,000 per year
but quickly escalates, as revealed in the
bottom video to well over $62.2M per
year for the top 0.001% of the
population.
Click on this and think “reality”…!

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Class: U.S. Wealth Distribution
This chart breaks out in finer detail the amount of
wealth that is owned by only the top 1.0%, 0.1%,
.01% and .001% of the nation’s population.
Whereas the previous chart showed that the top
1% of the country’s households own nearly half
the wealth of the U.S. (43% in 2011), only 001%
of the U.S. population (1,311 super wealthy
households) own most (80%) of this top 1%
wealth of this country!
Check it out on the Web: Top .001% share

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The Gap: U.S. GINI Ranking
So how does this U.S.
wealth “gap” compare
with most other nations
in the world? According
to the most recent 2000
Gini Index, a sample of
some of the world’s
major nations shows that
the U.S. not only has a
relatively high 0.38
wealth gap; but a wealth
gap that is higher than
many other lesser
developed nations, let
most other, more
developed European
and Asian nations. This
U.S. index, moreover,
increased between 1980
and the year 2000.
Gini Definition
The Gini Index is a measure of the income distribution of a country’s
residences where a value of “0” would represent an equal distribution among all
members of the residents; and a value of 1 would represent maximal inequality
among the residents.

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The Gap: U.S. GINI History
This Gap between rich and
poor U.S. citizens has not
always been as high as it
has since our post-1980’s
recession. For a period of
three prosperous decades
(between the end of WWII
and the beginning of the
1980s recession) a much
lower, U.S. GINI index was in
keeping with most of our
European peers.

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The Gap: Two Depressions?
The current, post-1980’s “recession” is not yet being referred to as our second
“Great Depression”. But, in terms of the widening gap between rich and poor,
today’s top 10% of the U.S. population now own slightly more than the rest of our
population than they did during the height of the “Great Depression” of 1929.
NOTE: The
Y-axis
indicates
the percent
of this
nation’s
income
that is
earned by
the top
10% of the
nation’s
income
earners.

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The Gap: US Class Wealth Sources
Differences in the sources of
wealth among the top one
percenters in this country and
the rest of the population are
dramatic. While the ownership
of businesses and corporate
stocks and bonds represent
the largest sources of wealth
among the one percenters;
rental properties and trust
accounts represent the largest
sources of wealth among the
rest of the population.

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Income: US CEO Wages and Unions
This rather
simple but most
telling chart
illustrates the
inverse
relationship that
has occurred
over the last
century between
U.S. union
memberships
and the share of
corporate profits
kept by
management as
opposed to
company
workers.

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Income: International CEO & Worker Wages
These recent 2014
numbers illustrate the
exceptionally high
ratio of CEO to worker
salaries in the U.S.
(i.e., a 475 ratio)
compared to most
other nations in the
world, and especially
in European nations
where management to
worker salary ratios
range from 12-15
times.

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Income: U.S. Employment &. GDP
Despite the
negative impact
that our post 911
wars and 2008
recession have had
on our rising cost of
living and falling
employment
figures, our nation’s
GDP (its income
including that of
its.001 percenters)
has since sored to
an all time high
while the job
market has lost 5
million jobs.

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Income: U.S. Corporate & Personal Taxes
Although individual and
corporate tax rates
saw a similar rise
during the first decade
of the progressive’s
New Deal Program
(from 10% in 1934 to
over 45% in 1944);
these individual and
corporate tax rates
have since been
inversely related with
individual rates
remaining at 40% to
just under 50%, and
corporate rates falling
from just under 40% to
their present 13.4%.

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Most of our federal revenue comes from individual income and payroll taxes,
and not from corporate taxes, the latter of which have decreased from a high of
20% of the GDP in the 1950’s to their more recent 8% in the year 2010.
 a
Income: All U.S. Fed. Income Sources
Legend
Federal Excise Taxes: Taxes embedded in
the cost of good, e.g., gasoline sales taxes.
Payroll Taxes: Taxes paid by an employer or
deducted from an employees paycheck to
cover an employee’s social security, health
care, workers compensations benefits, etc.
Corporate Income Taxes: These taxes vary
from 15% to 34% but after tax loop-holes and
subsidies, the “effective” rates range from
0.3% to 15% (see the next slide).
Individual Income Taxes: Individual income
taxes, which cover nearly half or our national
income, range from today’s 15% to 39% and
2% to 95% in the 1940s.

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LEGEND
 Effective Tax Rate: Percent total industry earnings.
 Tax Subsidies: Amount of government welfare,
which amounted to $92 billion in 2013, or 15% of
the 2012 federal budget compared to $59 billion, or
3% of the budget for all public welfare programs.
Income: U.S Corporate & Personal Taxes
“On paper at least, the federal tax law requires
corporations to pay 35 percent of their profits in
federal income taxes. In fact, some of the 288
corporations in this study did pay close to the
35 percent official tax rate. But the vast
majority paid considerably less. And some paid
nothing at all. Over the five years covered by
this study, the average effective tax rate (that
is, the percentage of U.S. pretax profits paid in
federal corporate income taxes) for all 288
companies was only 19.4 percent.” - CTJ Site

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This final chart shows a striking, inverse relationship in the growth of corporate
profits since the 1970’s and the drop in corporate income tax receipts -- as a
percent of those corporate profits during this same period of time.
Income: U.S. Corporate Taxes & Income
Link: US Corporate Taxes

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U.S. military costs as a percent of our total
federal budget have remained at a fairly
constant 16% since WWII. However, the
amount of dollars we spend on our military
is close to being equal to the amount of
dollars being spent by the next half dozen
military powers in the world.
Costs: U.S. Military

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The below list represent some of the more popular journalists and academics
who were mentioned in the above slides, as well as others that may be of
interest if you are looking for more ‘facts’ about the status of the current U.S. as
well as global economy, some of the major causes for the poor condition of our
own U.S. economy, the impact that this condition is having on our life cycle, and
what kind of changes in this economy might best correct these current
problems. All these authors are internationally known and widely respected for
their views on the US and global economies. All of them have Web sites, all of
them are listed in Wikipedia, and all of their works can be reviewed on Amazon,
as well as our library.
 Noam Chomsky
 Tom Hartman
 David Harvey
 Chris Hedges
 Naomi Klein
 Dalai Lama
 Robert Reich
 Richard Wolff
References to the Economics Literature

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Reference: Hedges, Chris
Chris Hedges: This well known “investigative reporters” is also known for
several best-selling books including War Is a Force That Gives Us Meaning
(2002), Death of the Liberal Class (2010) and his most recent New York Times
best seller, written with the cartoonist Joe Sacco, Days of Destruction, Days of
Revolt (2012).
In his “Why is America in Decline” and in his more recent, The
Death of the Liberal Class, Hedges examines the failure of the
liberal class to confront the rise of the corporate state and the
consequences of a liberalism that has become profoundly
bankrupted. Hedges argues there are five pillars of the liberal
establishment – the press, liberal religious institutions, labor
unions, universities and the Democratic Party— and that each
of these institutions has, over the past 20-30 years become more
concerned with status and privilege than justice and progress.
Through the court’s personalization of the corporation; million and
now billion dollar campaign funding; and congressional lobbyists,
our representatives in both parties have sold out to the constituents
they once represented. In doing so, the liberal class has become
irrelevant to society at large.

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Reference: Wolff, Richard
Richard Wolff: Professor Wolff's
major interests and publications as a
professor of economics at the
University of Massachusetts since
1981, and the New School in New
York since 2007 include studies of
US economic history, including
alternative economic theories
(neoclassical, Keynesian, and
Marxist) as they might apply to a
solution for our current economic
crisis. Professor Wolff has written, co-
authored, and co-edited a half dozen
books and dozens of scholarly and
popular journal articles. His recent
analyses of current economic events
appear regularly in the webzine of the
Monthly Review, as do his lectures
on YouTube.
List of
book on
Amazon

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Reference: Hartman, Thom
Thom Hartmann: This internationally syndicated talk show host for over
2.75 million listeners each week is simulcast on RT television in more
than 40 million homes. He is also a New York Times bestselling author
of 24 books, including The Last Hours of Ancient Sunlight. Talkers
magazine named Hartmann #9 on their "2013 Heavy Hundred" list.
The below reviews appear on Amazon for his most
recent book, The Crash of 1916 (See also the
Interview of this 2014 book on RT):
"Thom Hartmann provides page after page of crucial history to show how our
country headed into deep decline. And he offers an action plan of reform and
renewal that can avert economic and environmental collapse. A rare and
readable blend of history and hope."—Jeff Cohen, author of Cable News
Confidential
"Thom Hartmann explains the way critical social lessons fade over time, and
how dangerous that cycle is. America is at the tail end of such a cycle today,
as we stand amidst terrible inequality and on the precipice of tremendous
change. And, yes, Thom offers a compelling plan of action for activists.
Everyone should read this book."—Richard L. Trumka, president, AFl-CIO

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References: Chomsky, Harvey, and Reich
David Harvey: Distinguished Professor the City
University of New York is among the top twenty most
cited authors in the humanities literature and is the
world's most cited geographer. His books include The
Limits to Capital, Social Justice and the City, and The
Condition of Postmodernity, among many others.
Noam Chomsky: Solid numbers back this short
history of our country’s crippling class structure by
the world’s most widely translated political scientist
in this country, currently a retired, linguistic professor
at MIT. See his own Web site for more info. and the
dozens (and dozens!) of his books on Amazon.
Robert Reich: UCB School of Public Policy professor and former
US Secretary of Labor and Harvard University Professor asks,
“How Unequal Can America Get?”. YouTube video discusses
inequality of income, wealth and opportunity throughout the world,
including the US through today’s globalized FINANCIAL system.
See also his 2013 interview with Bill Boyers.

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Reference: Dalai Lama
What is your “opinion” …
backed, of course, by
REFERENCES to valid and
reliable facts and theories!
What needs to be changed in
the current economic system
to make a healthy as well as
prosperous lifecycle available
for most members of our
community, our nation and
the world?

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End: Week 5 Lecture:
U.S. Class Structure