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Do the rich rule America? Not really

The media have seized on a recent study that shows that a powerful "American elite" rules America.

It's a scary finding. But a closer look at the data suggests that policymaking in America—like the economy—is not necessarily a zero-sum game when it comes to the wealthy.

The study, by Martin Gilens, of Princeton University and Benjamin I. Page, of Northwestern University, is one of the most empirical analyses yet on the impact on policy of various economic groups. It looked at polls for 1,779 policy questions between 1981 and 2002 and broke the responses down by income. The study then looked at which policy proposals were enacted.

The findings were clear. When a policy was supported only by ordinary citizens, it had little chance of succeeding. When a policy was supported by the "elite"—which it defines as the top 10 percent of earners, making $146,000 or more—the policy was adopted about 45 percent of the time.

The rich are a varied group with a range of opinions. While Thomas Steyer, founder of Farallon Capital Management, pictured here, opposes the Keystone Pipeline, other wealthy individuals such as T. Boone Pickens support it. That complicates studies about the wealthy's political views.
David Paul Morris | Bloomberg | Getty Images
The rich are a varied group with a range of opinions. While Thomas Steyer, founder of Farallon Capital Management, pictured here, opposes the Keystone Pipeline, other wealthy individuals such as T. Boone Pickens support it. That complicates studies about the wealthy's political views.

Rather than a "Majoritarian Electoral Democracy," the U.S. more closely resembles an "Economic Elite Domination," the study said.

"If policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America's claims to being a democratic society are seriously threatened," the study said.

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Yet buried in the study is a large and important caveat. Much of the time, the elites want the same policies as the mass electorate. So it's misleading to say the wealthy always get what they want in Washington at the expense of the mass voter (though this does happen occasionally). The political efforts of the elites may often benefit the broader population, the study said.

"Our evidence does not indicate that in U.S. policymaking, the average citizen always loses out," the study said. "Since the preferences of ordinary citizens tend to be positively correlated with the preferences of economic elites, ordinary citizens often win the policies they want, even if they are more or less coincidental beneficiaries rather than causes of the victory."

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It adds that "Policymaking is not necessarily a zero-sum game among these actors."

Granted, the study defines the "elite" as those making $146,000 or more, which is "neither very rich nor very elite." The top 1 percent or top 0.1 percent may have political agendas that are more different from the masses. And it says that there are cases when the policies of the rich are opposed to the policies of the masses.

But the notion of the rich always shaping policies at the expense of the rest of the country is simply misleading. The study—and other polls before it—suggest that rich and the rest often share the same political goals.

Take the subject of taxes. It's widely assumed that the rich want lower taxes. But a study in 2012 by American Express Publishing and The Harrison Group found that 67 percent of the top 1 percent of American earners support higher income taxes.

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A more recent study from Spectrem Group found that the richer you are, the more likely you are to support higher tax rates.

On issues like the environment, trade and immigration, the views of the wealthy are often as divided as the rest of the population.

While Charles Koch may advocate lower taxes, Warren Buffett advocates higher taxes on the highest earners. T. Boone Pickens supports the Keystone pipeline, while wealthy environmentalist Tom Steyer opposes it.

So yes, the wealthy may hold more sway in Washington because they write the biggest checks, but the rich are a varied group. And what they want is not always so different from the rest of America.

—By CNBC's Robert Frank.

Financial Advisors