This work intends to present United States of America as a stratified society that is segregated along socio-political lines based on wealth and income. It focuses on the argument that the society is ruled by the rich and that every citizen belongs to one stratum or another depending on how much wealth he or she owns. In addition to this, the opponents and proponents of this concept are also revealed and the basis of their stand in response to the theory is highlighted. The attempt to create a balance and fairness through taxation process is also evaluated with the view that high income earners are taxed higher than low income earners. The last section of this paper gives a conclusive analysis on the effectiveness of this process and the need to revise the socio- economic structure as a means of improving the future of the American society.
Relationship between Wealth, Income and Power. Power can be defined as the ability of an individual or group of individuals to produce intended and foreseen effects on others for the good of those who exercise it. Wealth on the other hand refers to the value of everything that people own, with exception of what they owe. A person’s wealth is thus determined by marketable assets under ones direct ownership and control (Domhoff 2). Even though power and wealth are perceived to be completely different concepts that cannot be mistaken to mean the same, an analysis from American society reveals that the two are directly related such that the presence of one is likely to lead to the other. As Domhoff observed, wealth is seen as a source of power whereas power is a means of acquiring wealth (Domhoff 4).
The correlation between wealth, income and power is revealed in various ways in the United States. To begin with, the elites exercise control over the society by giving donations to political parties, payments to lobbyists and grants to expert policy makers who in turn make new policies that would only favor the wealthy. In addition to this, certain forms of wealth such as stock ownership are often used to control corporations which further affect the functions of the society (Domhoff 13). Domhoff also argues that power can lead to wealth since the leaders in senior positions utilize such opportunities to make several deals and contracts that favor their own economic interests. Income distribution is also revealed to be a strong power indicator in the U.S. As wolf argues, the elite who only forms 1% of income earners in 2006 earned a total of 21% of the states income, leaving the rest 79% to be shared among the majority middle and low class citizens (Wolf 101).
Opponents of the view that America is ruled by the Wealthy. Despite the fact that Domhoff has over the ages attempted to revise and update his theory to justify that America has always been ruled by the minority elites, several scholars have emerged to critique his position. Drawing on Davies argument, there is no longer a single identifiable group of dominant economic actors in the U.S economy (Davies 106). For him, the pressure for the firms and the state to conform emanates directly from the capital global market rather than private wealth owners. This therefore implies that the need to meet the demands of the ever competing market outweighs the private interests not only in the U.S, but in the entire global world.
A section of scholars who strongly believe that America, being a democratic society, exercises a free market capitalism that avails equal opportunities to invest, create wealth and rise to power. These opponents thus believe that the ruling class can only transcend to economic and political power through hard work, personal achievements and merit (Davies 113). These opponents also argue that in the American society, political leadership is elected through free and fair voting which allows the competitors to freely seek for the majority support. It therefore follows that both the rich and the poor have equal rights to occupy political positions. This argument is further justified by the fact that the political positions are occupied on representation of the majority. Therefore, whether the leaders emanate from the low or the high class, they rule on behalf of the majority whose interests they serve.
Proponents of the view that America is ruled by the Rich. Proponents of this theory on the other hand argue that the American society is indeed ruled by the money owners who exercise control over income generating properties, land and business enterprises. They justify their stand by stating that the rich use their income and wealth to create social, economic and political structures that favor expansion of their interest. The poor majority on the other hand remains exploited through labor pattern that makes them enslaved by the companies owned by the rich yet they cannot liberate themselves from that system since they depend on the wages for subsistence and survival.
Progressive Taxation for enhancing Equity. In response to this perception, the state has attempted to develop a progressive taxation system as a means of creating a balance and enhancing fair distribution of resources. In this system, the high income earners pay higher percentage of tax as compared to low income earners. This would imply that a greater percentage of their resources are ploughed back to the national economy hence used to elevate the status of the poor.
The implementation of transfer payments is another strategy that the state uses to enhance fairness and equality in distribution of resources (Hungerford 86). Transfer payments in this case refers to an amount of stipend paid by the government to the needy such as unemployed and elderly people who cannot meet the cost of basic needs especially food, housing and medical services. The state thus takes it as her legal responsibility to utilize the tax collected from the rich to sustain the poor members of the society as a way of bridging the gap between the two.
Personal opinion on the Distribution of Wealth and Power in the American Society. The American society has over ages been ruled by the rich minority who utilize their positions of power to exploit the poor majority. Even though the government has attempted to address this situation through progressive taxation and transfer payments, minimal impacts have been realized. This is based on the fact that even after progressive taxation, the rich still remain with a greater percentage of resources as compared to the poor who pay little or no tax. The tax progression only focuses on the percentage of the tax paid and ignores what remains under the control of the wealthy. Transfer payments on the other hand does not fully address the crisis since it only considers basic needs of the poor and does not create room for investment and wealth creation.
In conclusion, the American society needs a reform in her socio-economic and political policies that will restructure the society in a manner that the gap between the rich minority and the poor majority is bridged. This will require a system that does not only focus on the ability to create and sustain wealth among the elites, but also empower the low income earners to be equal share holders in the national economy. This would further create a true democratic society in which both the political and economic power is in the hands of the majority and serves the interest of the general public.