Wealthy elite

Posted by E-George on May 29, 2010

I’ve been thinking a lot lately about the notion of the wealthy elite. When a person blithely uses the phrase wealthy elite to whom are they referring, exactly? Add on to that the media and social malaise surrounding the ubiquitously faceless 1% of American’s hold 99% of its wealth.

Who are these wicked and miserly wealthy? Who is this heartless 1%?

I’d like to start by defining wealth. Webster’s Dictionary defines it thusly:

Main Entry: wealth
Pronunciation: \ˈwelth also ˈweltth\
Function: noun
Etymology: Middle English welthe, from wele weal
Date: 13th century
1 obsolete : weal, welfare
2 : abundance of valuable material possessions or resources
3 : abundant supply : profusion
4 a : all property that has a money value or an exchangeable value b : all material objects that have economic utility; especially : the stock of useful goods having economic value in existence at any one time

Oxford Dictionary says:

wealth

• noun 1 an abundance of valuable possessions or money. 2 the state of being rich. 3 an abundance or profusion of something desirable.

— ORIGIN from WELL1 or WEAL2, on the pattern of health.

Then, there’s the whole Wikipedia article on wealth that starts out fairly plainly but then dips into sociological opinion. And that, in itself, is what I think the media and redistribution proponents are talking about.

The IRS tax bracketing puts wealthy or rich as people who earn a gross adjusted income (i.e., pre-taxed income) of $200,000 and up. This elusive 1% of wealthy Americans are actually dubbed as the “super rich”, ostensibly these guys and folks like them.

Rank	Name	Net Worth	Company
1.	Bill Gates	$57 billion	Microsoft
2.	Warren Buffett	$50 billion	Berkshire Hathaway
3.	Larry Ellison	$27 billion	Oracle
4.	Jim Walton	$23.4 billion	Wal-Mart
5.	S. Robson Walton	$23.3 billion	Wal-Mart
6.	Alice Walton	$23.2 billion	Wal-Mart
7.	Christy Walton & family	$23.2 billion	Wal-Mart inheritance
8.	Michael Bloomberg	$20 billion	Bloomberg
9.	Charles Koch	$19 billion	oil, commodities
10.	David Koch	$19 billion	oil, commodities

And, when someone – even myself to a certain degree – sees numbers that seem incomprehensible being reported as possessed by a single individual the temptation arises to think that it is perverse for one person to have so much when so many have so little. But, if I take a closer look at the Forbes article on The World’s Billionaires it clearly talks about assets held by the individual that create a total net worth. In my mind, that puts a separate spin on things. Bill Gates isn’t running around with $57 billion dollars of liquid cash in his pocket – his assets in terms of stock, property, and other non-liquid items coalesce into $57 billion dollars. But, even Bill Gates isn’t part of that alleged 1% of “wealthy” Americans – he’s part of a super subset.

Getting into how the IRS defines wealthy (or, SOI: Status of Income), the youngest set of data I could find was from 2004 and goes like this:

An estimated 2.7 million U.S. adults in 2004 had gross assets of $1.5 million or more. In total, these top wealth holders owned nearly $11.1 trillion in assets. After accounting for debts and mortgages of $850.1 billion, these individuals had a combined net worth of over $10.2 trillion. A little less than 1.6 million, or 57.0 percent, of top wealth holders were men, while just under 1.2 million were women. Overall, male top wealth holders had a higher average net worth than their female counterparts.

The asset portfolio of top wealth holders varied considerably by gender, age, and relative wealth. Women’s portfolios contained a greater proportion held in personal residences and publicly traded stock than those of men. Conversely, men’s portfolios were made up of proportionately more closely held stock and business assets. In each wealth and age class, male top wealth holders had a higher ratio of debts to assets than female top wealth holders. For both genders, the wealthiest individuals held proportionately more of their assets in stock and less in real estate than their less wealthy counterparts. Overall, the value of the personal residence made up a smaller percentage of the portfolios held by older top wealth holders than in the portfolios held by younger individuals.

Source: http://www.irs.gov/taxstats/article/0,,id=185880,00.html

The Excel spreadsheet that opened related to the article had four columns of interest:

Size of net worth	Total assets		Debts and mortgages		Net worth
	Number	Amount	Number	Amount	Number	Amount
	(1)	(2)	(3)	(4)	(5)	(6)
Total	2,728	11,076,759	2,099	850,622	2,728	10,201,246
Under $1.5 million[1]	531	736,039	468	231,035	531	480,113
$1.5 million under $2.0 million	746	1,386,077	544	98,187	746	1,287,890
$2.0 million under $3.5 million	846	2,316,701	614	147,370	846	2,169,331
$3.5 million under $5.0 million	247	1,082,889	192	58,950	247	1,023,939
$5.0 million under $10.0 million	231	1,668,002	176	104,811	231	1,563,191
$10.0 million under $20.0 million	79	1,155,326	64	69,849	79	1,085,477
$20.0 million or more	47	2,731,726	40	140,421	47	2,591,305

^{[1] Includes people with zero or negative net worth}

Plus, this