Do Most Americans Favor Radical Wealth Redistribution?

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moneyAmericans love competition. From media heroes to sports teams, fictional characters to starving artists, the nation's cultural mythology teems with tales of desperate struggles and victorious underdogs. What's more, Americans like to reward their scrappy heroes with fame, wealth and all the trappings of success.

This was borne out by an academic study in which the majority of respondents advocated an unequal division of national wealth, with more cash going to the rich and upper middle class and less going to the poor and working class. These findings aren't surprising: unequal distribution spurs competition, and great rewards spur great achievement. What is shocking, however, is the degree of inequality that most respondents preferred: 92% of respondents expressed a desire to replace America's wealth distribution system with one much closer to Sweden's.

Sweden has long been vilified by pundits who are concerned about government intervention in the market and "socialist" programs to redistribute wealth. Surprisingly, however, the notoriously left-leaning country is also home to a very popular model for wealth distribution. In 2005, Harvard University's Michael I. Norton and Duke University's Dan Ariely polled a cross-section of 5,522 citizens about their preferences for wealth division. Their results, which they recently published in "Building a Better America - One Wealth Quintile at a Time," demonstrate that most Americans have a severely skewed vision of America's wealth distribution, and a surprisingly radical outlook on where the country's money should actually go.

Reality Versus Perception

For their study, Norton and Ariely divided America into five groups, which could be described as the rich, the upper middle class, the middle class, the lower class, and the poor. Currently, 85% of America's wealth, which is defined as total assets minus total liabilities, is held by the country's richest 20%. Meanwhile the upper middle class holds 11%, the middle class has 4%, and the lower class and poor share an anemic 0.3%. In terms of actual money, this translates into average non-income holdings of $2.3 million per rich person, $291,000 per upper class person, $106,000 per middle class person and $22,000 per lower class or poor person.

Of course, wealth is different from income, but the divisions are significant there, as well. The rich enjoy a median income of $259,700 per year, compared to $74,700 for the upper middle, $46,700 for the middle, and $20,200 for the lower class and poor.

In the poll, the vast majority of Americans across the political, gender and wealth spectrum displayed a markedly skewed understanding of how America's money is divided. On average, respondents thought that the rich hold only 58% of the nation's wealth, 32% less than their actual holdings. They thought that the middle class controls 13% of the country's wealth, more than three times their actual holdings. As for the bottom 40% of the population, the assumption was that the lower class and poor own a measly 9% of the country's wealth. In reality, these two groups control about one thirtieth of that amount.

Who Should Get the Money?

Although the perception that America's wealth distribution is unfair cut across partisan lines, Republicans and Democrats disagreed about the ideal distribution. People who voted for George Bush believed that the richest 20% of the population deserved roughly 35% of the nation's wealth. Kerry voters radically disagreed: they felt that the rich deserved only about 30%. When it came to the country's poorest citizens, Bush voters felt that they deserved about 9% of the country's assets; Kerry voters preferred to give them 12%.

Respondents making over $100,000 per year, the group most heavily skewed toward a top-heavy distribution of wealth, advocated a system in which the top 20% received about 40% of the country's assets and the bottom 20% got roughly 7%. Yet even this comparatively Dickensian wealth distribution still gave America's rich less than half of their current holdings, while giving the poorest more than twenty times their current holdings.

There are a wide range of explanations for why Americans don't push for a more equitable distribution of wealth, but none of them are conclusive. What is clear, however, is that the country is moving in the wrong direction: since 1983, America's richest 20% have seen their share of the pie increase by about 4%, while the rest of the country has gotten ever-smaller slivers. The middle class, for example, has lost over 23% of its relative share of wealth, and the poorest 40% of the population has seen its tiny share slashed by a brutal 78%. What's more, with the potential continuation of Bush tax cuts, inheritance tax cuts, and a shockingly low capital gains tax, it looks like those numbers are going to get even worse.

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jgrienin

The population seems to be made up of spenders and savers. No matter how much the spenders earn or win they spend it all. On the other hand the savers seem always to be able to put some back for a rainy day. It is the old story of the grasshopper and the ant. It is in our DNA. So what to do? I believe we need a system that helps those who find them selves in dire circumstances but go short of trying to equalize everyone since the spenders won't allow it by their actions of spending.

February 23 2011 at 11:24 AM Report abuse rate up rate down Reply
debwkokomo

So how did the middle class become second class citizens -- or, as Smith puts it, "Debt Serfs"? Not surprisingly, the answer is complicated, involving factors like the rising cost of education, the loss of pension funds and affordable health care, falling middle class wages, and the skyrocketing price of housing. Yet one clear answer lies in manufacturing. When looking at the declining American middle class, a good number to start with is 42,400. That's the total number of factories that the U.S. lost between 2001 and the end of 2009. Put another way, this translates into the outsourcing of 32% of all manufacturing jobs in America. See full article from DailyFinance: http://srph.it/csvnsM

November 04 2010 at 11:54 AM Report abuse +1 rate up rate down Reply
debwkokomo

a growing cadre of economic analysts note the steady erosion of the middle class, and the loss of its massive buying power. In a recent article, my Daily Finance colleague Charles Hugh Smith laid out a fairly clear argument for the disappearance of the middle class, at least in terms of wealth. As Smith notes, the top 20% of the American populace holds roughly 93% of the country's financial wealth, and the top 1% of the country holds approximately 43% of the money in the U.S. Meanwhile, the middle 20% of the population -- what would, officially, be called the middle class -- holds only 6% of the country's total assets. While disturbing, even this minuscule share of the wealth pie dwarfs the bottom 40% of the country, who control less than 1%. See full article from DailyFinance: http://srph.it/csvnsM

November 04 2010 at 11:41 AM Report abuse rate up rate down Reply
abudotcom

I dont have much, BUT whatever it is I have, ITS MINE, I EARNED IT, I WORKED for it, NO I DO NOT WANT ANYTHING FROM ANYBODY ELSE, BUT WHAT ITS MINE, its mine

November 04 2010 at 11:09 AM Report abuse rate up rate down Reply
debwkokomo

well when you people have nothing i guess you can blame yourselves

November 04 2010 at 11:06 AM Report abuse rate up rate down Reply
debwkokomo

Just how much should people be rewarded? Just because you are smart enough to take all the money you want (which the rich want it all) does that mean you should? When it is destroying the country (which it is) some of you people think it's ok? Who decides what a person is worth? Obviously the rich, do you want them to decide what you are worth? I'm sure you know all they want is all you have. They want you to owe them for life, for everything, your home, credit cards, insurance, education, etc. When they have 100% it won't be enough! That will make us all slaves!

November 04 2010 at 10:21 AM Report abuse rate up rate down Reply
1 reply to debwkokomo's comment
nama holston

...but on the flip side of your theory, debwkokomo, if the rich gave the poor an equal amount of money you would see an overwhelming amount squandered and the poor would still be poor and the "squandered money" would still go into the pockets of the rich. It's just life as we know it and will not change, and probably shouldn't change.

November 04 2010 at 10:29 AM Report abuse rate up rate down Reply
EARL

That top 20% also pay about 80% of all taxes collected while using very little in gov.support, and about 50% of all charity revenue. So, the top 20% pay for 80% of: roads bridges gov.buildings welfare unemployment utility taxes boat taxes sales tax income tax,etc,etc. They also have an invested / risk taking interest in 100's of thousands of businesses that employ the rest of the population. GREEDY LITTLE CHEATS

November 04 2010 at 5:32 AM Report abuse +1 rate up rate down Reply
jneuman771

Why not? It was done to the Republicans who gave us wealth distribution in 2001 with the tax bill. Guess we it would be nice to have it distributed back to the middle class. What do you think the odds are in that happening with them in the House? The reality is that 3 to 5% of our unemployed are basically incapable of working. They are the ones that are mentally diabled, challeged, or have other issues that precludes them from working. Further, a lot of lower end of the economic scale work hard. They just have not been able to get traction in getting a better job because of family circumstance, personal issues, geographic location. Only the well - off seem to have problems in being able to figure this out. Some people also just have bad luck! The dismay and the arrogance of the better off is one of ignorance but after a while ignorance is no excuse nor is lack of empathy.

November 03 2010 at 6:58 PM Report abuse +1 rate up rate down Reply
mrobin1863

We can make this really easy: Just give me yours!

November 03 2010 at 6:11 PM Report abuse -1 rate up rate down Reply
thought451

So if you are rich you must be the hardest working person in the world, and if you are poor then you are just a lazy grifter? The Czars must have been the hardest working persons in Russia. I guess that also puts drug dealers at the top of the list of the most virtuious. American are terribly insecure and believe that only money in great gobs will make them secure. What is wrong with a decent living wage for working people? Will you stand before God and state " I had every right to screw every grubby penny I could out of the working class." I do not really believe that most of the pervious writers actually would justify their actions with the above words. It just seems that way when you read their blogs.

November 03 2010 at 4:33 PM Report abuse -2 rate up rate down Reply