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Monday, December 5, 2022

Social class in the United States

From Wikipedia, the free encyclopedia
 
Douglas Tilden's monument to the working and supporting classes along Market Street in the heart of San Francisco's Financial District

Social class in the United States refers to the idea of grouping Americans by some measure of social status, typically economic. However, it could also refer to social status or location. The idea that American society can be divided into social classes is disputed, and there are many competing class systems.

Many Americans believe in a social class system that has three different groups or classes: the American rich, the American middle class, and the American poor. More complex models propose as many as a dozen class levels, including levels such as high upper class, upper class, upper middle class, middle class, lower middle class, lower class and lower lower middle class. while others disagree with the American construct of social class completely. Most definitions of a class structure group its members according to wealth, income, education, type of occupation, and membership within a hierarchy, specific subculture, or social network. Most concepts of American social class do not focus on race or ethnicity as a characteristic within the stratification system, although these factors are closely related.

Sociologists Dennis Gilbert, William Thompson, Joseph Hickey, and James Henslin have proposed class systems with six distinct social classes. These class models feature an upper or capitalist class consisting of the rich and powerful, an upper middle class consisting of highly educated and affluent professionals, a middle class consisting of college-educated individuals employed in white-collar industries, a lower middle class composed of semi-professionals with typically some college education, a working class constituted by clerical and blue collar workers whose work is highly routinized, and a lower class divided between the working poor and the unemployed underclass.

Markers

Class in the United States from 2005, featuring occupational descriptions by Thompson & Hickey as well as United States Census Bureau data pertaining to personal income and educational attainment for those age 25 or older.

Some definitions of class look only at numerical measures such as wealth or income. Others take into account qualitative factors, such as education, culture, and social status. There is no consensus on which of these variables is essential and which are merely common correlates. It is also disputed whether sharp lines can be drawn; one point of view in the debate:

A stratified society is one marked by inequality, by differences among people that are regarded as being higher or lower…it is logically possible for a society to be stratified in a continuous gradation between high and low without any sharp lines…in reality…there is only a limited number of types of occupations…People in similar positions…grow similar in their thinking and lifestyle…they form a pattern, and this pattern creates social class.

— Dennis Gilbert, The American Class Structure, 1998

Social status

It is impossible to understand people's behavior…without the concept of social stratification, because class position has a pervasive influence on almost everything…the clothes we wear…the television shows we watch…the colors we paint our homes in and the names we give our pets…Our position in the social hierarchy affects our health, happiness, and even how long we will live.

— William Thompson and Joseph Hickey, Society in Focus, 2005

Social class is sometimes presented as a description of how members of the society have sorted themselves along a continuum of positions varying in importance, influence, prestige, and compensation. In these models, certain occupations are considered to be desirable and influential, while others are considered to be menial, repetitive, and unpleasant. (In some cases, non-occupational roles such as a parent or volunteer mentor, are also considered.) Generally, the higher the ranking on such a scale, the higher the skill and education levels required to perform it.

Some sociologists consider the higher income and prestige of higher ranked jobs to simply be incentives to encourage members of society to obtain the skills necessary to perform important work. This is an important mechanism in the economic theory of capitalism, and is compatible with the notion that class is mutable and determined by a combination of choices and opportunities.

In other cases, class or status is inherited. For example, being the son or daughter of a wealthy individual, may carry a higher status and different cultural connotations than being a member of nouveau riche ("new money") or have a planned path of positive freedom. Those taking the functionalist approach to sociology and economics view social classes as components essential for the survival of complex societies such as American society.

Income

Income in the United States is most commonly measured by United States Census Bureau in terms of either household or individual and remains one of the most prominent indicators of class status. As 82% of all households, 16% of those in the top quintiles, had two income earners the discrepancy between household and personal income is quite considerable. In 2005 the top 95% of income earners made $12,500 or more, while 18% of households had incomes over $100,000. Personal income is largely the result of scarcity. As individuals who hold higher status positions tend to possess rare skills or assume positions society deems very essential, have higher incomes. Overall the median household income was $46,326 in 2005 while the median personal income (including only those above the age of 25) was $32,140.

Per capita household income, the income a household is able to allocate to each member of the household is also an important variable in determining a given household's standard of living. A high household income may be offset by a large household size; thus, resulting in a low per capita household income. In 2005, the median household income per capita was $24,672.

It should be stressed...that a position does not bring power and prestige because it draws a high income. Rather, it draws a high income because it is functionally important and the available personnel are for one reason or another scarce. It is therefore superficial and erroneous to regard high income as the cause of a man's power and prestige, just as it is erroneous to think that a man's fever is the cause of his disease...The economic source of power and prestige is not income primarily, but the ownership of capital goods (including patents, good will, and professional reputation). Such ownership should be distinguished from the possession of consumers' goods, which is an index rather than a cause of social standing.

— Kingsley Davis and Wilbert E. Moore, Some Principles of Stratification, 1945

In the passage above, Davis and Moore argue that income is one of the most prominent features of social class; it is not one of its causes. In other words, income does not determine the status of an individual or household but rather reflects on that status. Some say that income and prestige are the incentives provided by society in order to fill needed positions with the most qualified and motivated personnel possible.

The New York Times has used income quintiles to define class. It has assigned the quintiles from lowest to highest as lower class, lower middle class, middle class, upper middle class, and upper class. These definitions equate class with income, permitting people to move from class to class as their income changes.

Dual income controversy

Percentage of 2+ income households in each of the quintiles (1/5 of the population).

Income is one of the most commonly used attributes of a household to determine its class status. The relationship between income, which mostly arises from the scarcity of a certain skill, may however, prove to be more complex than initially perceived. While the idea is that income reflects status, household income may just be the product of two or more incomes.

In 2005, 42% of American households had two or more income earners. The vast majority (77%) of households in the top quintile had two or more income earners. This means that the majority of household income in the top quintile are the result of two income earners pooling their resources, establishing a close link between perceived affluence and the number of income earners in a given household. This raises the question of whether or not the combination of incomes results in higher social status. Of course, there is no definite answer as class is a vague sociological concept.

The parade of income earners with height representing income suggest that the relationship between the distribution of income and the class structure is...blurred in the middle...we saw dual-income working class marchers looking down on single-income upper-middle class marchers. In sum, the class structure as we have defined it...does not exactly match the distribution of household income.

— Dennis Gilbert, The American Class Structure, 1998

Sociologist Dennis Gilbert states that it is possible for households to out-earn other households over higher class standing through increasing their number of income earners. He furthermore states that household size also played an essential role, as the standard of living for two persons living off one upper middle class personal income may very well be higher than that of a household with four members living off two working class personal incomes.

The combination of two or more incomes allows for households to increase their income substantially without moving higher on the occupational ladder or attaining higher educational degrees. Thus it is important to remember that the favorable economic position of households in the top two quintiles is in some cases the result of combined income, rather than demand for a single worker.

Education

Educational attainment is related to both occupation, as seen above, and income. This graph shows the educational attainment of individuals age 25–64, employed full-time, by occupational field.

Tertiary education (or "higher education") is required for many middle-class professions, depending on how the term middle class is to be defined. Tertiary education is rarely free, but the costs vary widely: tuition at elite private colleges often exceeds $200,000 for a four-year program, although financial aid may be significant. On the other hand, public colleges and universities typically charge much less, particularly for state residents.

Also, scholarships offered by universities and government do exist, and low-interest loans are available. Still, the average cost of education, by all accounts, is increasing. The attainment of post-secondary and graduate degrees is the perhaps most important feature of a middle and upper middle class person with the university being regarded as the most essential institution and gatekeeper of the professional middle class. Educational attainment is also directly linked to income.

In 2005, the vast majority of those with doctorate and professional degrees were among the nation's top 15% of income earners. Those with bachelor's degrees had incomes considerably above the national median while the median income for those with some college education remained near the national median. According to United States Census Bureau, 9% of persons aged 25 or older had a graduate degree, 27.9% had a bachelor's degree or more with 53% having attended college.

With 85% of the population having graduated from high school, it becomes apparent that the average American does not have a college degree, but is likely to have attended college for some time and has graduated from high school. Overall, educational attainment serves as the perhaps most essential class feature of most Americans, being directly linked to income and occupation.

Culture

Broadly speaking, the United States aspires to be an egalitarian country with social mobility; the American Dream includes the idea from the Declaration of Independence that "all men are created equal" and have the "unalienable right" to "Life, Liberty and the pursuit of Happiness". The phrase "second-class citizen" has a strong negative connotation in national politics. In practice, socioeconomic mobility in the United States is relatively low compared to Nordic countries and Canada, and income inequality in the United States is relatively high. Educational attainment and income are strongly correlated, but relatively low funding for K-12 schools in poor neighborhoods raises concerns about a cycle of poverty. These apparent contradictions lead to divergent views on whether American society is divided into distinct classes or should be analyzed that way.

In some American subcultures, people considered to be of a particular race, ethnicity, income range, educational background, religion, or gender are a significant majority; for example, hip-hop culture vs. preppy culture or fans of water polo vs. NASCAR. Other subcultures are relatively diverse.

Once defined, social classes can be considered to feature their own sub-cultures, including different ways of socializing children. Due to class mobility individuals may also acculturate to the culture of another class when ascending or descending in the social order. All social classes in the United States, except the upper class, consist of tens of millions of people. Thus social classes form social groups so large that they feature considerable diversity within and any statement regarding a given social class' culture needs to be seen as a broad generalization.

Since 1970, sociologists Paula LeMasters and Melvin Kohl have set out repeatedly to research class-based cultures. Class culture has been shown to have a strong influence on the mundane lives of people, affecting everything from the manner in which they raise their children, initiation and maintenance of romantic relationship to the color in which they paint their houses. The strongest cultural differences seem to run along the professional middle class-working class divide. A recent increase in residential class segregation and the overall tendency of individual to associate mostly with those of equal standing as themselves has further strengthened class differences.

Parental views are perhaps the most essential factor in determining the socialization process which shapes new members of society. The values and standards used in child rearing are commonly closely related to the parent's occupational status. Parents from the professional class tend to raise their children to become curious independent thinkers, while working-class parents raise their children to have a more communal perspective with a strong respect for authority. Middle-class parents tend to emphasize internal standards and values while working-class parents emphasize external values.

Sociologist Dennis Gilbert uses a list of values identified by Melvin Kohn to be typical of the professional middle and working class. Middle-class parents' values for their children and themselves included: "Consideration of Others, Self-Control, Curiosity, Happiness, Honesty, Tolerance of Nonconformity, Open to Innovation...Self-Direction." This contrasted with surveyed working class individuals, who reported: "Manners, Obedience...Neatness, Cleanliness, Strong Punishment of Deviant Behavior, Stock to Old Ways, People not Trustworthy...Strict Leadership" as values for themselves and their children. There is a strong correlation between these values and the occupational activities of the respondents. The job characteristics of middle class respondents included: "Work Independently, Varied Tasks, Work with People or Data," versus working-class parents of reported "Close Supervision and Repetitive Work..."

Not once in a professional middle-class home did I see a young boy shake his father's hand in a well-taught manly gesture...Not once did I hear a middle-class parent scornfully-or even sympathetically-call a crying boy a sissy or in any way reprimand him for his tears...even as young as six or seven, the working-class boys seemed more emotionally controlled-more like miniature men-than those in the middle-class families.

— Lillian Rubin, Worlds of Pain, 1976

Gender roles are also viewed differently by those in the higher and lower social classes. Middle class individuals, who were more open towards "nonconformity" and emphasized individual self-direction as well as critical thinking, were also less stringent in their application of gender roles. Working class individuals, on the other hand, emphasized gender roles. While working-class people have more and more assimilated to middle class culture regarding their view and application of gender roles, differences remain. Professional class people are more likely to have an egalitarian distribution of work in their household with both spouses being equals in heterosexual marriages. According to Dennis Gilbert, "College life, generally a prologue to upper-middle class careers, delays marriage and encourages informal, relatively egalitarian association between men and women."

Academic models

The following are reported income-, education-, and occupation-based terms for specific classes commonly used by sociologists.

Academic class models
Dennis Gilbert, 2002 William Thompson & Joseph Hickey, 2005 Leonard Beeghley, 2004
Class Typical characteristics Class Typical characteristics Class Typical characteristics
Capitalist class (1%) Top-level executives, high-rung politicians, heirs. Ivy League education common. Upper class (1%) Top-level executives, celebrities, heirs; income of $500,000+ common. Ivy league education common. The super-rich (0.9%) Multi-millionaires whose incomes commonly exceed $3.5 million or more; includes celebrities and powerful executives/politicians. Ivy League education common.
Upper middle class (15%) Highly-educated (often with graduate degrees), most commonly salaried, professionals and middle management with large work autonomy. Upper middle class (15%) Highly-educated (often with graduate degrees) professionals & managers with household incomes varying from the high 5-figure range to commonly above $100,000. The rich (5%) Households with net worth of $1 million or more; largely in the form of home equity. Generally have college degrees.
Middle class (plurality/
majority?; ca. 46%)
College-educated workers with considerably higher-than-average incomes and compensation; a man making $57,000 and a woman making $40,000 may be typical.
Lower middle class (30%) Semi-professionals and craftsmen with a roughly average standard of living. Most have some college education and are white-collar. Lower middle class (32%) Semi-professionals and craftsmen with some work autonomy; household incomes commonly range from $35,000 to $75,000. Typically, some college education.
Working class (30%) Clerical and most blue-collar workers whose work is highly routinized. Standard of living varies depending on number of income earners, but is commonly just adequate. High school education.
Working class (32%) Clerical, pink- and blue-collar workers with often low job security; common household incomes range from $16,000 to $30,000. High school education. Working class
(ca. 40–45%)
Blue-collar workers and those whose jobs are highly routinized with low economic security; a man making $40,000 and a woman making $26,000 may be typical. High school education.
Working poor (13%) Service, low-rung clerical and some blue-collar workers. High economic insecurity and risk of poverty. Some high school education.
Lower class (ca. 14–20%) Those who occupy poorly-paid positions or rely on government transfers. Some high school education.
Underclass (12%) Those with limited or no participation in the labor force. Reliant on government transfers. Some high school education. The poor (ca. 12%) Those living below the poverty line with limited to no participation in the labor force; a household income of $18,000 may be typical. Some high school education.
References: Gilbert, D. (2002) The American Class Structure: In An Age of Growing Inequality. Belmont, CA: Wadsworth, ISBN 0534541100. (see also Gilbert Model);
Thompson, W. & Hickey, J. (2005). Society in Focus. Boston, MA: Pearson, Allyn & Bacon; Beeghley, L. (2004). The Structure of Social Stratification in the United States. Boston, MA: Pearson, Allyn & Bacon.
1 The upper middle class may also be referred to as "Professional class" Ehrenreich, B. (1989). The Inner Life of the Middle Class. NY, NY: Harper-Collins.

Upper class

This term is applied to a wide array of elite groups existing in the United States of America. The term commonly includes the so-called "blue bloods" (multi-generational wealth combined with leadership of high society) such as the Astor or Roosevelt families. Twentieth century sociologist W. Lloyd Warner divided the upper class into two sections: the "upper-upper class" (or bourgeoisie) and "lower-upper class" (or "scoobs"). The former includes established upper-class families while the latter includes those with great wealth. As there is no defined lower threshold for the upper class it is difficult, if not outright impossible, to determine the exact number or percentage of American households that could be identified as being members of the upper-class(es).

Income and wealth statistics may serve as a helpful guideline as they can be measured in a more objective manner. In 2005, approximately one and a half percent (1.5%) of households in the United States had incomes exceeding $250,000 with the top 5% having incomes exceeding $157,000. Furthermore, only 2.6% of households held assets (excluding home equity) of more than one-million dollars. One could therefore fall under the assumption that less than five percent of American society are members of rich households. The richest 1% of the American population owns as much as the combined wealth of the bottom 90%, or perhaps even more.

Members of the upper class control and own significant portions of corporate America and may exercise indirect power through the investment of capital. The high salaries and the potential for amassing great wealth through stock options have greatly increased the power and visibility of the "corporate elite". There is disagreement over whether the "nouveau riche" should be included as members of the upper class or whether this term should exclusively be used for established families. Many sociologists and commentators make a distinction between the upper class (in the sense of those in the families of inherited wealth) and the corporate elite. By implication, the upper class is held in lower regard (as inheritors of idle wealth) than the self-made millionaires in prestigious occupations.

Inherited wealth

Yet another important feature of the upper class is that of inherited privilege. While most Americans, including those in the upper-middle class need to actively maintain their status, some upper class persons do not need to work in order to maintain their status. Status tends to be passed on from generation to generation without each generation having to re-certify its status. Overall, the upper class is financially the best compensated and one of the most influential socio-economic classes in American society.

Corporate elite

The high salaries and, especially, the potential wealth through stock options, has supported the term corporate elite or corporate class. Top executives, including Chief Executive Officers, are among the financially best compensated occupations in the United States. The median annual earnings for a CEO in the United States were $140,350 (exceeding the income of more than 90% of United States households). The Wall Street Journal reports the median compensation for CEOs of 350 major corporations was $6,000,000 in 2005 with most of the money coming from stock options.

In New York City in 2005, the median income (including bonuses) of a corporate "chief operating officer" (the No. 2 job) was $377,000. The total compensation for a "top IT officer" in charge of information technology in New York City was $218,000. Thus even below the CEO level of top corporations, financial compensation will usually be sufficient to propel households with a mere one income earner in the top 1%. In 2005 only 1.5% of American households had incomes above $250,000 with many reaching this level only through having two income earners.

Top executives are among the highest paid workers in the United States economy. However, salary levels vary substantially depending on the level of managerial responsibility; length of service; and type, size, and location of the firm. For example, a top manager in a very large corporation can earn significantly more than a counterpart in a small firm. Median annual earnings of general and operations managers in May 2004 were $77,420. The middle 50% earned between $52,420 and $118,310. Because the specific responsibilities of general and operations managers vary significantly within industries, earnings also tend to vary considerably...the median annual earnings of chief executives in May 2004 were $140,350; although chief executives in some industries earned considerably more...the median income of chief executive officers in the nonprofit sector was $88,006 in 2005, but some of the highest chief executives made more than $700,000.

— United States Department of Labor

Many politically powerful people make money before coming to office, but in general the political power elite have official incomes in the $150,000 to $185,000 range; members of Congress are paid $174,000, and are effectively required to have a residence in their district as well as one in Washington.

Upper middle

The upper middle class consists of highly educated salaried professionals whose work is largely self-directed. Many have advanced graduate degrees and household incomes commonly exceed the high five-figure range. Members of this class commonly value higher education – most holding advanced academic degrees – and are often involved with personal and professional networks including professional organizations. The upper middle class tends to have great influence over the course of society.

Occupations which require high educational attainment are well compensated and are held in high public esteem. Physicians, lawyers, accountants, engineers, scientists and professors are largely considered to be upper middle class. The very well educated are seen as trendsetters; the anti-smoking, pro-fitness, and organic food movements, as well as environmentalism, are largely indigenous to this socio-economic grouping. Education serves as perhaps the most important value and also the most dominant entry barrier of the upper middle class.

Sociologists Dennis Gilbert, Willam Thompson, and Joseph Hickey estimate the upper middle class to constitute roughly 15% of the population (or roughly three in every twenty persons). The hallmark of this class is its high educational attainment.

Middle class

The middle class shrinkage

The middle class is perhaps the most vaguely defined of the social classes. The term can be used either to describe a relative elite of professionals and managers – also called the upper middle class – or it can be used to describe those in-between the extremes of wealth, disregarding considerable differences in income, culture, educational attainment, influence, and occupation.

As with all social classes in the United States, there are no definite answers as to what is and what is not middle class. Sociologists such as Dennis Gilbert, James Henslin, William Thompson, and Joseph Hickey have brought forth class models in which the middle class is divided into two sections that combined constitute 47% to 49% of the population. The upper middle or professional class constitutes the upper end of the middle class which consists of highly educated, well-paid professionals with considerable work autonomy. The lower end of the middle class – called either lower middle class or just middle class – consists of semi-professionals, craftsmen, office staff, and sales employees who often have college degrees and are very loosely supervised.

Everyone wants to believe they are middle class. For people on the bottom and the top of the wage scale the phrase connotes a certain Regular Joe cachet. But this eagerness to be part of the group has led the definition to be stretched like a bungee cord.

— Dante Chinni, the Christian Science Monitor

Although income thresholds cannot be determined since social classes lack distinct boundaries and tend to overlap, sociologists and economists have put forward certain income figures they find indicative of middle class households. Sociologist Leonard Beeghley identifies a husband making roughly $57,000 and a wife making roughly $40,000 with a household income of roughly $97,000 as a typical middle-class family.

Sociologists William Thompson and Joseph Hickey identify household incomes between $35,000 and $75,000 as typical for the lower middle and $100,000 or more as typical for the upper middle class. Though it needs to be noted that household income distribution neither reflects standard of living nor class status with complete accuracy.

Traditional middle class

Many primary and secondary level teachers in the United States are in the middle class.

Those households more or less at the center of society may be referred to as being part of the American middle or middle-middle class in vernacular language use. In the academic models featured in this article, however, the middle class does not constitute a strong majority of the population. Those in the middle of the socio-economic strata—the proverbial Average Joe—are commonly in the area where the working and lower middle class overlap.

The most prominent academic models split the middle class into two sections. Yet, it remains common for the term middle class to be applied for anyone in between either extreme of the socio-economic strata. The middle class is then often sub-divided into an upper-middle, middle-middle, and lower-middle class. In colloquial descriptions of the class system the middle-middle class may be described as consisting of those in the middle of the social strata. Politicians and television personalities such as Lou Dobbs can be seen using the term middle class in this manner, especially when discussing the middle-class squeeze. The wide discrepancy between the academic models and public opinions that lump highly educated professionals together in the same class with secretaries may lead to the conclusion that public opinion on the subject has become largely ambiguous.

Lower middle class

The lower middle class is, as the name implies, generally defined as those who occupy the lower portion of the middle class. People in this class commonly work in supporting occupations.

Sociologists Dennis Gilbert, William Thompson, and Joseph Hickey, however, only divide the middle class into two groups. In their class modes the middle class only consists of an upper and lower middle class. The upper middle class, as described above, constitutes roughly 15% of the population with highly educated white collar professionals who commonly have salaries in the high-5-figure range and household incomes in the low-6-figure range. Semi-professionals with some college degrees constitute the lower middle class. Their class models show the lower middle class positioned slightly above the middle of the socio-economic strata. Those in blue- and pink-collar as well as clerical occupations are referred to as working class in these class models.

Working class

Definitions of the term working class vary greatly. While Lloyd Warner found the vast majority of the American population to be in either the upper-lower class or lower-lower class in 1949, modern-day experts such as Michael Zweig, an economist for Stony Brook University, argue that the working class constitutes most of the population.

Dennis Gilbert places 13% of households among the "working poor" with 12% being in the "underclass". Thompson & Hickey place roughly 17% to 20% of households in the lower classes. The lower classes constituting roughly a fifth to a quarter of American society consists mainly of low-rung retail and service workers as well as the frequently unemployed and those not able to work. Overall, 13% of the population fall below the poverty threshold. Hunger and food insecurity were present in the lives of 3.9% of American households, while roughly twenty-five million Americans (ca. 9%) participated in the food stamp program.

Agriculture

Farm workers

Before industrialization, "yeoman farmers"—self-sufficient, politically independent landowners—made up a large portion of the country's population. Jeffersonian democracy and Jacksonian democracy successfully expanded the political rights of the yeomen, and the geographical extent of the nation to provide them farms. This culminated in the Homestead Act of 1862 which provided hundreds of thousands of free farms. Before 1865 large southern plantations used slaves. After emancipation, a system of sharecropping and tenant farming for both whites and blacks in the South provided a semi-independent status for farmers who did not own their land. In contemporary times, migrant agricultural workers—mostly Mexicans—perform field and packing work.

Farmers

Only 0.7% of the population of the United States is employed in the agricultural sector. Most are proprietors of independent farms. Once the dominant American social class, this group diminished in overall numbers during the 20th century, as farm holdings grew more consolidated, farming operations became more mechanized, and most of the population migrated to urban areas.

Today, the agricultural sector has essentially taken on the characteristics of business and industry generally. In contemporary usage, a "farmer" is someone who owns and operates a farm, which more often than not will be a sizable business enterprise; "agricultural workers" or "farm workers", who perform the actual work associated with farming, typically come out of the lower classes; indeed, they are often near-destitute immigrants or migrant farm workers. In this respect, farming mirrors big business: like any enterprise, a farm has owners (who may be a family or a corporation), salaried managers, supervisors, foremen and workers.

With the number of farms steadily diminishing, the stereotypical humble homestead is increasingly the exception, for viable farming now means agribusiness; the large amounts of capital required to operate a competitive farm require large-scale organization. The large landowners in California's Central Valley, Coachella Valley and Imperial Valley fall squarely within the upper class. Among farmers, "income" in the conventional sense is not an accurate standard of wealth measurement, because farmers typically keep their official income low by placing their assets into farming corporations rather than drawing the money directly. The stereotypical poor, marginal farmer "eking out a living" from the soil, an image deeply ingrained in most Americans' minds by folklore, films, and even history texts, has now been largely displaced by agribusiness, which has bought them out and consolidated their holdings.

Class and health

A homeless American citizen. (August 4, 2005)

Income also has a significant impact on health as those with higher incomes have better access to healthcare facilities, higher life expectancy, lower infant mortality rate and increased health consciousness. In 2006, Harvard researchers divided the United States into "eight Americas."

Life expectancy ranges from 84.9 years for Asian-Americans who had an average per capita income of $21,566, to 71.1 years for urban African-Americans with an average per capita income of $14,800.

Furthermore, like other post-industrial nations, the United States saw increased health consciousness among persons of higher social status. Persons of higher status are less likely to smoke, more likely to exercise regularly, and be more conscious of their diet. Additionally, poorer Americans are more likely to consume lower quality, processed foods. One can therefore conclude that low socio-economic status contributes to a person's likelihood of being obese.

Class and politics

A study by Larry Bartels found a positive correlation between Senate votes and opinions of high income people, conversely, low income people had a negative correlation with Senate votes.

Income remains one of the main indicators of class, as it commonly reflects educational attainment as well as occupation. A frequent distinction in political attitudes can be found among individuals residing in households with differing incomes. For example, during the 2000 United States presidential election, voter turnout among those in the top 26% with household incomes exceeding $75,000 was 27% higher than the average.

Inequality and crisp definition of any existent class groupings

Some academics consider American society sociologically and economically fragmented in such a manner that no clear class distinctions can be made. This means that there are no pronounced breaks in socioeconomic strata, which makes class division highly subjective and disputable. Others, such as sociologist Dennis Gilbert, dispute the concept of a well-mixed society, and claim that distinct social networks can be identified for each class. W. Lloyd Warner also asserts the existence of class markers:

We are proud of those facts of American life that fit the pattern we are taught but somehow we are often ashamed of those equally important social facts which demonstrate the presence of social class. Consequently, we tend to deny them, or worse, denounce them and by doing so we tend to deny their existence and magically make them disappear from consciousness.

— W. Lloyd Warner, What is Social Class in America, 1949

Warner asserts that social class is as old as civilization itself and has been present in nearly every society from before the Roman Empire, through medieval times, and to the modern-day United States. He believes that complex societies such as the United States need an equally complex social hierarchy.

In popular culture

The existence of class differences in American society has long been the focus of popular culture, whether in the form of books, films, or plays. Social class, for example, is a theme used in the 1948 production Mister Roberts, in a scene where the ship's captain displays resentment toward the title character, contrasting his own impoverished background to that of Roberts himself:

I think you're a pretty smart boy. I may not talk very good, Mister, but I know how to take care of smart boys. Let me tell you something. Let me tell you a little secret. I hate your guts, you college son-of-a-****! You think you're better than I am! You think you're better because you've had everything handed to you. Let me tell you something, Mister – I've worked since I was ten years old, and all my life I've known you superior bastards. I knew you people when I was a kid in Boston and I worked in eating-places and you ordered me around ... "Oh bus-boy! My friend here seems to have thrown up on the table. Clean it up, please!" I started going to sea as a steward and I worked for you then ... "Steward, take my magazine out to the deck chair!" ... "Steward, I don't like your looks. Please keep out of my way as much as possible!" Well, I took that crap! I took that for years from pimple-faced bastards who weren't good enough to wipe my nose! And now I don't have to take it any more! There's a war on, by God, and I'm the Captain and you can wipe my nose! The worst thing I can do to you is to keep you on this ship! And that's where you're going to stay! Now get out of here.

 

Sunday, December 4, 2022

African-American upper class

From Wikipedia, the free encyclopedia

The African-American upper class is a social class that consists of African-American individuals who have high disposable incomes and high net worth. The group may include highly paid white-collar professionals such as academics, engineers, lawyers, accountants, doctors, politicians, business executives, venture capitalists, CEOs, celebrities, entertainers, entrepreneurs and heirs. This social class, sometimes referred to as the black upper class, the black upper middle class or black elite, represents one percent of the total black population in the United States.

This group of black people has a history of organizations and activities that distinguish it from other classes within the black community, as well as from the white upper class. Many of these traditions, which have persisted for several generations, are discussed in Lawrence Otis Graham's 2000 book, Our Kind of People: Inside America's Black Upper Class. Scholarship on this class from a sociological perspective is generally traced to E. Franklin Frazier's Black Bourgeoisie (first edition in English in 1957 translated from the 1955 French original).

Today, the African American upper class exists throughout the United States, particularly in the Northeast and in the South, with the largest contiguous majority black high income neighborhoods being in the Washington, DC metropolitan area, particularly in Prince George's County and Charles County. Majority black high income neighborhoods are also found in the New York, Los Angeles, Chicago, Houston, Memphis, Dallas, and Atlanta metropolitan areas.

Historical background

When enslaved Africans were brought to the Americas in the 17th and 18th centuries, there began to be mixed-race children of African and European descent in the Americas. Then called "mulattoes," they were sometimes not enslaved by their white slave-holding fathers and comprised a large part of the free black population in the South. In addition, numbers of Africans escaped to freedom during the American Revolution. Others were manumitted by their enslavers. The free black community in the US had therefore increased considerably by 1800, and although most of them were very poor, some were able to own farmland or to learn mechanical or artistic trades.

Some people escaped slavery and served in the American Civil War (1861–1865) for the Union and after the war, an extremely small number of freed people along the Georgia coast received 40 acres (160,000 m2) and a mule, which contributed to land ownership among blacks following the emancipation of slaves.

Following the outbreak of the Civil War, abolitionists such as Frederick Douglass claimed that enlisting Black soldiers would strengthen the North in winning the war and would be a significant step forward in the fight for equal rights: "Once let the Black man get upon his person the brass letters, U.S.; let him get an eagle on his button, and a musket on his shoulder and bullets in his pocket," Douglass said, "and there is no power on earth which can deny that he has earned the right to citizenship." This is just what President Lincoln feared: He was concerned that arming African Americans, particularly former or escaped slaves, might lead to the declaring independence of the loyal border states. As a result, the Union's chances of winning the war would be slim to none.

Other former slaves, often mixed-race former house slaves who shared ancestry with their onetime owners and had acquired marketable skills such as cooking and tailoring, worked in domestic fields or were able to open small businesses such as restaurants and catering firms. Some free blacks in the North also founded small businesses and even newspapers. They were able to get a head-start on the blacks who were essentially still enslaved by their lack of access to wealth accumulation, particularly when it came to owning their own land.

History of college education

During the American Civil War in the 1860s, organizations like the American Missionary Association, which had sponsored elementary schools for Southern blacks, established some of the first historically black colleges and universities. These include Fisk University, founded in 1866; Hampton University, and Tuskegee University. Those who attended these schools, as well as such other black colleges as Howard University, Morehouse College and Spelman College, were able to acquire skills and academic knowledge that put them in a distinctly different class. Cheyney University, Lincoln University, PA founded in 1854, and Wilberforce University founded in 1856, were the only black colleges operational prior to the American Civil War; these schools were located in the North. However, there had been a few predominantly white colleges, such as Oberlin College in Ohio and Berea College in Kentucky, that had accepted black students even before the war, and their black graduates had been given a head start on economic stability.

Since the founding of the historically black schools, often attended originally by the children of skilled former slaves who had been able to establish businesses or farms in the post-war period, several generations of many families have often become alumni of Talladega, Spelman, Morehouse, Howard, Fisk, Tuskegee, Dillard, Atlanta University (now Clark Atlanta University), and Hampton. While today there are well over one hundred historically black colleges and universities (HBCUs) in the US, these early institutions have consistently been the favorites for upper-class blacks. In particular, Spelman College, Howard University, and Morehouse College, have historically been heavily favored by the Black intelligentsia due to their selectivity, academic rigor, name recognition, networking opportunities, location, and black cultural enrichment.

However, since integration, many children of the black upper class have attended predominantly non-black colleges and universities. "In the first time period covered by the scholars, black colleges were attracting significant numbers of students from professional, middle-class black families. [These people] are now the students who are cherry-picked by highly selective, prestigious institutions that weren't looking for them in the 1970s", said Michael L. Lomax, president of the United Negro College Fund.

A small number of free blacks during the 19th century were also admitted into private, predominately white institutions such as Harvard and Amherst.

Greek organizations

In 1904 Sigma Pi Phi fraternity, also known as "The Boulè," was established as the first Greek-letter fraternity for African Americans, admitting only African-American men who were college graduates, had gained considerable achievement within their chosen industries, and measured as having good character. The fraternity is not present as an undergraduate fraternity. Within a decade, African American undergraduate college students established fraternities and sororities as small, selective social groups that later developed an emphasis on scholarship and social activism. Occasionally, alumni members of an undergraduate fraternity are invited to join Sigma Pi Phi as mid-career adults.

Alpha Phi Alpha fraternity at Cornell University in 1906 was established as the first African-American intercollegiate fraternity. Today there are a total of nine historically black sororities and fraternities that make up the National Pan-Hellenic Council, sometimes referred to as the "Divine Nine." These include Alpha Phi Alpha (1906), Alpha Kappa Alpha (1908), Kappa Alpha Psi (1911), Omega Psi Phi (1911), Delta Sigma Theta (1913), Phi Beta Sigma (1914), Zeta Phi Beta (1920), Sigma Gamma Rho (1922), and Iota Phi Theta (1963).

Some argue that historically black Greek organizations differ from those that are traditionally all-white, because of their importance to blacks long after they have left their respective colleges and universities. Graham said in his book Our Kind of People: Inside America's Black Upper Class that these sororities and fraternities "are a lasting identity, a circle of lifetime friends, a base for future political and civic activism".

Social and family organizations

Over the years, the black upper class has also founded numerous other organizations that allow them to socialize, build networks and get involved in communities.

Notable organizations

One of the most notable is Jack and Jill of America, Inc., a mothers' club for African-American women founded in Philadelphia, Pennsylvania in 1938. It was created by a group of middle and upper middle class mothers who wanted to bring their children together to experience a variety of educational, social and cultural opportunities, which, due to segregation and racism, were not otherwise readily available to African-American children, regardless of the socio-economic status of their parents. As of 2000 there were around 218 chapters across the US and the world with about 9,500 members. Separated into age groups, children attend monthly activities extensively planned by the mothers of that age group, which may include philanthropic endeavors, community service, pool parties, ski weekends, theater, museums, lectures, and college tours. Membership is by invitation only and, even then, not guaranteed due to the extensive candidate selection process, which may last a year or longer and may include a vote by existing members. Membership is limited to mothers of children between the ages of 2-19. Annual costs of membership, including dues and activity fees, may easily reach thousands of dollars. Cory Booker's mother was a member and Booker participated in activities.

The Links, Incorporated, founded in 1946, is an invitation-only social service organization that requires each member to accumulate many volunteer hours. It is known for numerous annual social activities, including debutante cotillions, fashion show luncheons, auctions and balls. Women interested in joining any of the local chapters must be nominated by a current member. Members include philanthropists, college presidents, judges, doctors, bankers, lawyers, executives, educators or the wives of well-known public figures including Kamala Harris, Marian Wright Edelman, and Betty Shabazz. As of 2008 there were about 12,000 members in 273 chapters in 42 states.

The 100 Black Men of America was founded in 1963 in New York City. The organization has chapters across the US and internationally, and is primarily composed of college-degreed black men. Its primary mission is to improve the quality of life within their communities and enhance educational and economic opportunities for all African-Americans. It currently has over 10,000 members.

The National Coalition of 100 Black Women was founded in 1970 in New York City. The organization has chapters across the US and its membership is primarily composed of black women who have college degrees. It advocates on behalf of black women and girls, as well as promotes leadership development and gender equity in health, education, and economic empowerment.

Other social and family organizations

The Girl Friends, Incorporated is a social organization of African American women. It was founded in 1927 during the Harlem Renaissance, by a small group of close friends. As of 2016 the organization included more than 1,700 members in 47 chapters in cities across the country. Although the original concept was purely social, over the years, The Girl Friends, Incorporated expanded to include charitable and cultural activities. In 1989, the Girl Friends Fund founded a separate 501(c)3 organization to provide financial assistance to students countrywide.

The National Smart Set is a private social club founded in 1937 in Washington, DC. Members are African-American women who are leaders in their professions and, often, leaders of other respected and notable clubs and organizations. There are 700 members in 26 chapters. Each of the 26 local chapters provides philanthropic services and financial support to causes within the geographic region. At the national level, the organization donates to member-agreed causes including the MLK Memorial, Smithsonian's National Museum of African-American History and Culture, NAACP Legal Defense Fund, Lupus Foundation and the Hampton University Proton Therapy Institute. Membership to the National Smart Set is by invitation and the organization seeks to contain its size to ensure that members develop and nurture nation-wide bonds and relationships.

National Tots and Teens, Incorporated is another well-noted family organization. It is unique in that fathers hold membership with mothers; single father-headed households are eligible for membership. Tots and Teens was founded by Geraldine Jacoway-Ross of Los Angeles, California in May 1952. In 1953 its second chapter was organized in Baltimore, Maryland. Ross wanted to expose her daughter and other youths to experiences they would not otherwise be exposed to. Tots and Teens holds a variety of activities for youth and parents such as ski trips, debutante cotillions, volunteer projects, and cultural events. Membership is by invitation only and requires two families for sponsorship and the first year the family is viewed as a prospective member without full membership status.

Twigs, Incorporated was founded by Clara J. Bostic in Yeadon (Philadelphia) in 1948 as "an association whose objective is to encourage and foster mental, physical, social and cultural development of the children who are members." The organization is national in scope and sponsors a wide variety of activities. It has sponsored ACT/SAT prep sessions, book fairs geared toward African-American children, and leadership development for Twigs youth groups. Twigs has sponsored an annual scholarship competition through its chapters for community youth graduating from high school and continuing their education at four-year institutions. The organization has an archival repository housed at the Historical Society of Pennsylvania.

Other prominent women's groups include the Chums, Inc.; Knights of Peter Claver & Ladies Auxiliary; Continental Societies, Inc.; the Drifters, Inc.; the CARATS, Incorporated; the Moles, Inc.; the Pierians; the Carousels; Top Ladies of Distinction (TLOD); The National Association of Negro Business and Professional Women's Club, Inc.; National Women of Achievement, Inc.; and the Northeasterners.

A few organizations have been founded specifically for upper class black men. Some of these include the Comus Social Club, the What Good Are We Social Club a.k.a. "The Whats" (Howard University, Washington, DC), the Reveille Club, the Hellians (Washington, DC; Baltimore, Maryland; and Jackson, Mississippi), the Chesterfield Club of Selma, Alabama the Thebans, the Tux Club, the Consorts, Bachelor-Benedict Club, the National Association of Guardsmen, the El Dorado Club of Houston, Texas, and the Bonanza Social Club of Baton Rouge, Louisiana.

Home ownership rates

According to a 2007 estimate, 80 percent of upper-class blacks own their own homes. This is compared to 66 percent of those earning more than $50,000 and 52 percent of those who earn between $30,000 and $49,999 in income.

Notable black business districts during segregation

The following are a few black business districts, areas, and cities that swelled with success during the era of legal segregation, which also contributed to the rise of the African-American upper class.

Criticism

Academic Donald Earl Collins has criticized members of the black middle- and upper-classes for having attitudes and values similar to their white counterparts. Some in the black community have been very critical of the black upper class community, in particular after the release of Graham's book Our Kind of People. Darren Walker of the Rockefeller Foundation says that the behaviors of the black upper classes exclude many from the privileges the group enjoys, arguing "one part of our community seems quite comfortable adopting the exclusive practices of the majority community that for many years kept us out."

Redistribution of income and wealth

Redistribution of income and wealth is the transfer of income and wealth (including physical property) from some individuals to others through a social mechanism such as taxation, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law. The term typically refers to redistribution on an economy-wide basis rather than between selected individuals.

Interpretations of the phrase vary, depending on personal perspectives, political ideologies and the selective use of statistics. It is frequently used in politics, where it is used to refer to perceived redistribution from those who have more to those who have less.

Occasionally, however, the term is used to describe laws or policies that cause redistribution in the opposite direction, from the poor to the rich.

The phrase is often coupled with the term class warfare, with high-income earners and the wealthy portrayed as victims of unfairness and discrimination.

Redistribution tax policy should not be confused with predistribution policies. "Predistribution" is the idea that the state should try to prevent inequalities from occurring in the first place rather than through the tax and benefits system once they have occurred. For example, a government predistribution policy might require employers to pay all employees a living wage and not just a minimum wage, as a "bottom-up" response to widespread income inequalities or high poverty rates.

Many alternate taxation proposals have been floated without the political will to alter the status quo. One example is the proposed "Buffett Rule", which is a hybrid taxation model composed of opposing systems intended to minimize the favoritism of special interests in tax design.

The effects of a redistributive system are actively debated on ethical and economic grounds. The subject includes an analysis of its rationales, objectives, means, and policy effectiveness.

History

In ancient times, redistribution operated as a palace economy. These economies were centrally based around the administration, meaning the dictator or pharaoh had both the ability and the right to say who was taxed and who received special treatment.

Another early form of wealth redistribution occurred in Plymouth Colony under the leadership of William Bradford. Bradford recorded in his diary that this "common course" bred confusion, discontent, distrust, and the colonists looked upon it as a form of slavery.

A closely related term, distributism (also known as distributionism or distributivism), refers to an economic ideology that developed in Europe in the late 19th and early 20th century. It was based on the principles of Catholic social teaching, particularly the teachings of Pope Leo XIII in his encyclical Rerum Novarum and Pope Pius XI in Quadragesimo Anno. More recently, Pope Francis echoed the earlier Papal statements in his Evangelii Gaudium.

Role in economic systems

Different types of economic systems feature varying degrees of interventionism aimed at redistributing income, depending on how unequal their initial distributions of income are. Free-market capitalist economies tend to feature high degrees of income redistribution. However, Japan's government engages in much less redistribution because its initial wage distribution is much more equal than Western economies. Likewise, the socialist planned economies of the former Soviet Union and Eastern bloc featured very little income redistribution because private capital and land income were restricted. To attain an efficient allocation of resources with the desired distribution of income, if the assumptions of the competitive model are satisfied by the economy, the sole role of the government is to alter the initial distribution of wealth – the major drivers of income inequality in capitalist systems – was virtually nonexistent; and because the wage rates were set by the government in these economies.

A comparison between Socialist and Capitalist Systems in terms of distribution of income is much easier as both these systems stand practically implemented in a number of countries under compatible political systems. Inequality in almost all the Eastern European economies has increased after moving from socialist controlled systems to market-based economies.

For the Islamic distribution, the following are the three key elements of the Islamic Economic System, which have significant implications for the distribution of income and wealth (if fully implemented) and are markedly different from Capitalism. The Islamic system is defined by the following three key elements: Ushr and Zakat, the prohibition of usury, and the Inheritance Law. Ushr is an obligatory payment from agriculture output at the time of harvesting. If agricultural land is irrigated by rain or some other natural freely available water the producer is obliged to pay ten percent of the output as Ushr.

In case irrigation water is not free of cost then the deduction would be five percent, while Zakat is a major instrument of restricting the excessive accumulation of wealth and helping the poor and most vulnerable members of the society, Secondly, usury, or charging interest, is prohibited. Elimination of interest from the economic system is a revolutionary step with profound effects on all spheres of economic activities. Finally, the Inheritance Law Of Islam is the distribution of the property of a deceased person from closest family members and moving towards a more distant family. Son(s), daughter(s), wife, husband and parents are the prime recipients. This distribution is explicitly illustrated in Qur’an and cannot be changed or modified. Under varying conditions, the share received by different relatives accordingly changes. The important principle is that the owner at the time of his/her death cannot change these shares. 

How views on redistribution are formed

The context that a person is in can influence their views on redistributive policies. For example, despite both being Western civilizations, typical Americans and Europeans do not have the same views on redistribution policies. This phenomenon persists even among people who would benefit most from redistributive policies, as poor Americans tend to favor redistributive policy less than equally poor Europeans. Research shows this is because when a society has a fundamental belief that those who work hard will earn rewards from their work, the society will favor lower redistributive policies. However, when a society as a whole believes that some combination of outside factors, such as luck or corruption, can contribute to determining one's wealth, those in the society will tend to favor higher redistributive policies. This leads to fundamentally different ideas of what is ‘just’ or fair in these countries and influences their overall views on redistribution.  

Another context that can influence one's ideas of redistributive policies is the social class that one is born into. People tend to favor redistributive policy that will help the groups that they are a member of.  This is displayed in a study of Latin American lawmakers, where it is shown that lawmakers born into a lower social class tend to favor more redistributive policies than their counterparts born into a higher social class. Research has also found that women generally support redistribution more than men do, though the strength of this preference varies across countries. While literature remains mixed on if monetary gain is the true motivation behind favoring redistributive policies, most researchers accept that social class plays some role in determining someone's views towards redistributive policies. Nonetheless, the classic theory that individual preferences for redistribution decrease with their income, leading to societal preferences for redistribution that increase with income inequality has been disputed. Perhaps the most important impact of government on the distribution of “wealth” is in the sphere of education—in ensuring that everyone has a certain amount of human capital. By providing all individuals, regardless of the wealth of their parents, with a free basic education, government reduces the degree of inequality that otherwise would exist.

Income inequality has many different connotations, three of which are of particular importance: (1) The moral dimension, which leads into the discussion of human rights. What kinds of reasons should a society accept for the emergence or existence of inequality and how much inequality between its members is reconcilable with the right of each individual to human dignity? (2) The second dimension links inequality to political stability. How much inequality can a society endure before a significant number of its members begin to reject the existing pattern of distribution and demand fundamental changes? In societies with very rigid forms of the income distribution, this may easily lead to public protest, if not violence. Authorities are then faced with the option of reacting to protests with repression or reform. In societies with flexible tools of negotiation and bargaining on income, smoother mechanisms of adaptation may be available. (3) The third dimension – in many cases the dominant pattern in the social debate – links inequality to economic performance. Individuals who achieve more and perform better deserve a higher income. If everybody is treated the same, the overall willingness to work may decline. The argument includes the scarcity of skills. Societies have to provide incentives to ensure that talents and education are allocated to jobs where they are needed most. Not many people doubt the general accuracy of these arguments – but nobody has ever shown how to correctly measure performance and how to find an objective way of linking it to the prevailing level of the income distribution. Inequality is needed – to some extent – but nobody knows how much of it is good.

Inequality in developing countries

The existence of high inequality within many developing countries, side-by-side with persistent poverty, started to attract attention in the early 1970s. Nonetheless, through the 1980s and well into the 1990s, the mainstream view in development economics was still that high and/or rising inequality in poor countries was a far less important concern than assuring sufficient growth, which was the key to poverty reduction. The policy message for the developing world was clear: one could not expect to have both lower poverty and less inequality.

Modern forms of redistribution

The redistribution of wealth and its practical application are bound to change with the continuous evolution of social norms, politics, and culture. Within developed countries income inequality has become a widely popular issue that has dominated the debate stage for the past few years. The importance of a nation's ability to redistribute wealth in order to implement social welfare programs, maintain public goods, and drive economic development has brought various conversations to the political arena. A country's means of redistributing wealth comes from the implementation of a carefully thought out well described system of taxation. The implementation of such a system would aid in achieving the desired social and economic objective of diminishing social inequality and maximizing social welfare. There are various ways to impose a tax system that will help create a more efficient allocation of resources, in particular, many democratic, even socialist governments utilize a progressive system of taxation to achieve a certain level of income redistribution. In addition to the creation and implementation of these tax systems, "globalization of the world economy [has] provided incentives for reforming the tax systems" across the globe. Along with utilizing a system of taxation to achieve the redistribution of wealth, the same socio-economic benefit can be achieved if there are appropriate policies enacted within a current political infrastructure that addresses these issues. Modern thinking towards the topic of the redistribution of wealth, focuses on the concept that economic development increases the standard of living across an entire society.

Today, income redistribution occurs in some form in most democratic countries, through economic policies. Some redistributive policies attempt to take wealth, income, and other resources from the "haves" and give them to the "have-nots", but many redistributions go elsewhere.

For example, the U.S. government's progressive-rate income tax policy is redistributive because much tax revenue goes to social programs such as welfare and Medicare.

In a progressive income tax system, a high income earner will pay a higher tax rate (a larger percentage of their income) than a low income earner; and therefore, will pay more total dollars per person.

Other taxation-based methods of redistributing income are the negative income tax for very low income earners and tax loopholes (tax avoidance) for the better-off.

Two other common types of governmental redistribution of income are subsidies and vouchers (such as food stamps or Section-8 housing vouchers). These transfer payment programs are funded through general taxation, but benefit the poor or influential special interest groups and corporations. While the persons receiving transfers from such programs may prefer to be directly given cash, these programs may be more palatable to society than cash assistance, as they give society some measure of control over how the funds are spent.

In addition to having a progressive tax rate, the U.S. Social Security system also redistributes wealth to the poor via its highly progressive benefit formula.

Governmental redistribution of income may include a direct benefit program involving either cash transfers or the purchase of specific services for an individual. Medicare is one example. Medicare is a government-run health insurance program that covers people age 65 or older, certain younger people with disabilities, and people with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). This is a direct benefit program because the government is directly providing health insurance for those who qualify.

The difference between the Gini index for the income distribution before taxation and the Gini index after taxation is an indicator for the effects of such taxation.

Wealth redistribution can be implemented through land reform that transfers ownership of land from one category of people to another, or through inheritance taxes, land value taxes or a broader wealth tax on assets in general. Before-and-after Gini coefficients for the distribution of wealth can be compared.

Interventions like rent control can impose large costs. Some alternative forms of interventions, such as housing subsidies, may achieve comparable distributional objectives at less cost. If the government cannot costlessly redistribute, it should look for efficient ways of redistributing—that is, ways that reduce the costs as much as possible. This is one of the main concerns of the branch of economics called the economics of the public sector.

Class analysis

One study suggests that "the middle class faces a paradoxical status" in that they tend to vote against income redistribution, even though they would benefit economically from it.

Objectives

The objectives of income redistribution are to increase economic stability and opportunity for the less wealthy members of society and thus usually include the funding of public services.

One basis for redistribution is the concept of distributive justice, whose premise is that money and resources ought to be distributed in such a way as to lead to a socially just, and possibly more financially egalitarian, society. Another argument is that a larger middle class benefits an economy by enabling more people to be consumers, while providing equal opportunities for individuals to reach a better standard of living. Seen for example in the work of John Rawls, another argument is that a truly fair society would be organized in a manner benefiting the least advantaged, and any inequality would be permissible only to the extent that it benefits the least advantaged.

Some proponents of redistribution argue that capitalism results in an externality that creates unequal wealth distribution.

Many economists have argued that wealth and income inequality are a cause of economic crises, and that reducing these inequalities is one way to prevent or ameliorate economic crises, with redistribution thus benefiting the economy overall. This view was associated with the underconsumptionism school in the 19th century, now considered an aspect of some schools of Keynesian economics; it has also been advanced, for different reasons, by Marxian economics. It was particularly advanced in the US in the 1920s by Waddill Catchings and William Trufant Foster. More recently, the so-called "Rajan hypothesis" posited that income inequality was at the basis of the explosion of the 2008 financial crisis. The reason is that rising inequality caused people on low and middle incomes, particularly in the US, to increase their debt to keep up their consumption levels with that of richer people. Borrowing was particularly high in the housing market and deregulation in the financial sector made it possible to extend lending in sub-prime mortgages. The downturn in the housing market in 2007 halted this process and triggered the financial crisis. Nobel Prize laureate Joseph Stiglitz, along with many others, supports this view.

There is currently a debate concerning the extent to which the world's extremely rich have become richer over recent decades. Thomas Piketty's Capital in the Twenty-First Century is at the forefront of the debate, mainly focusing on within-country concentration of income and wealth. Branko Milanovic provided evidence of increasing inequality at the global level, showing how the group of so-called "global plutocrats", i.e. the richest 1% in the world income distribution, were the main beneficiaries of economic growth in the period 1988–2008. More recent analysis supports this claim, as 27% of total economic growth worldwide accrued to the top 1% of the world income distribution in the period 1980–2016. The approach underpinning these analyses has been somehow critiqued in certain publications such as The Economist.

Moral obligation

Peter Singer's argument contrasts to Thomas Pogge's in that he states we have an individual moral obligation to help the poor. The rich people who are living in the states with more redistribution, are more in favor of immigrants than poorer people, because this can make them pay less wages. 

Economic effects of inequality

Number of high-net-worth individuals in the world in 2011

Using statistics from 23 developed countries and the 50 states of the US, British researchers Richard G. Wilkinson and Kate Pickett show a correlation between income inequality and higher rates of health and social problems (obesity, mental illness, homicides, teenage births, incarceration, child conflict, drug use), and lower rates of social goods (life expectancy, educational performance, trust among strangers, women's status, social mobility, even numbers of patents issued per capita), on the other. The authors argue inequality leads to the social ills through the psychosocial stress, status anxiety it creates.

A 2011 report by the International Monetary Fund by Andrew G. Berg and Jonathan D. Ostry found a strong association between lower levels of inequality and sustained periods of economic growth. Developing countries (such as Brazil, Cameroon, Jordan) with high inequality have "succeeded in initiating growth at high rates for a few years" but "longer growth spells are robustly associated with more equality in the income distribution." The Industrial Revolution led to increasing inequality among nations. Some economies took off, whereas others, like many of those in Africa or Asia, remained close to a subsistence standard of living. General calculations show that the 17 countries of the world with the most-developed economies had, on average, 2.4 times the GDP per capita of the world’s poorest economies in 1870. By 1960, the most developed economies had 4.2 times the GDP per capita of the poorest economies. Regarding to GDP indicator, GDP has nothing to say about the level of inequality in society. GDP per capita is only an average. When GDP per capita rises by 5%, it could mean that GDP for everyone in the society has risen by 5%, or that GDP of some groups has risen by more while that of others has risen by less—or even declined.

Criticism

Public choice theory states that redistribution tends to benefit those with political clout to set spending priorities more than those in need, who lack real influence on government.

The socialist economists John Roemer and Pranab Bardhan criticize redistribution via taxation in the context of Nordic-style social democracy, reportedly highlighting its limited success at promoting relative egalitarianism and its lack of sustainability. They point out that social democracy requires a strong labor movement to sustain its heavy redistribution, and that it is unrealistic to expect such redistribution to be feasible in countries with weaker labor movements. They point out that, even in the Scandinavian countries, social democracy has been in decline since the labor movement weakened. Instead, Roemer and Bardhan argue that changing the patterns of enterprise ownership and market socialism, obviating the need for redistribution, would be more sustainable and effective at promoting egalitarianism.

Marxian economists argue that social democratic reforms – including policies to redistribute income – such as unemployment benefits and high taxes on profits and the wealthy create more contradictions in capitalism by further limiting the efficiency of the capitalist system via reducing incentives for capitalists to invest in further production. In the Marxist view, redistribution cannot resolve the fundamental issues of capitalism – only a transition to a socialist economy can. Income redistribution will lower poverty by reducing inequality, if done properly. But it may not accelerate growth in any major way, except perhaps by reducing social tensions arising from inequality and allowing poor people to devote more resources to human and physical asset accumulation. Directly investing in opportunities for poor people is essential. 

The distribution of income that emerges from competitive markets may be very unequal. However, under the conditions of the basic competitive model, a redistribution of wealth can move the economy to a more equal allocation that is also Pareto efficient.

Introduction to entropy

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