Power in America: based on local and global economic inequality?

It may come as a surprise to many people but a recent study (Norton & Ariely, 2010) showed that most Americans (high income or low income, female or male, young or old, Republican or Democrat) have no idea on just how concentrated the wealth distribution actually is in the USA.

Generally speaking, wealth is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale.We also need to distinguish wealth from income.

Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income.

Based on the available statistics ((Who rules America) we see that in terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that 10% of the US population in fact own the United States of America.

The income distribution also can be used as a power indicator.This is not as concentrated as the wealth distribution, but the top 1% of income earners did receive 17% of all income in the year 2003 and 21.3% in 2006. That's up from 12.8% for the top 1% in 1982, which is quite a jump, and it parallels what is happening with the wealth distribution. This is further support for the inference that the power of the corporate community and the upper echelons of the population have been increasing in recent decades.

Thanks to a 2006 study by the World Institute for Development Economics Research -- using statistics for the year 2000 -- we now have information on the wealth distribution for the world as a whole, which can be compared to the United States and other well-off countries. The authors of the report admit that the quality of the information available on many countries is very spotty and probably off by several percentage points, but they compensate for this problem with very sophisticated statistical methods and the use of different sets of data. With those caveats in mind, we can still safely say that the top 10% of the world's adult citizens control about 85% of global household wealth -- defined very broadly as all assets (not just financial assets), minus debts. 

Bottom line: Economic inequality is not only a US problem but also a Global one. It will require a complete revamp and a rewrite of all economic textbooks. This will happen either voluntarily or by force. Unfortunately the window of opportunity for Governments and International Institutions to make these changes on a voluntarily basis is becoming very limited   
 
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