The paper analyzes how the attempt to assimilate ethnic groups into American society has contributed to social, economic, and political inequality. The hypothesis is that the official model of classical sociology has blinded us to a vast range of social phenomena which must be understood if we are to cope with the problems of contemporary America. While not often explicit, the American ideal that ethnic groups should be incorporated into the melting pot has created a society in which many observable forms of inequality are perpetrated. This stratification analysis extends the concept of poverty beyond the narrow limits of income to include political and personal relations. Among issues addressed are immigrant history, social acceptance, power and elitist vs. minority perspectives on education, religion, opportunity, and self-concept. A theory of ethnicity is advanced which explains ethnic identification as an integration of belongingness, self-esteem, the need for community relationships, symbolic interaction, and human understanding. The conclusion is that the ultimate aim of social policy in a democracy is to eliminate various forms of institutionalized inequalities rather than ethnicity, which is a basic right. References are included in the document. (Author/DB)