🔗 Share this article

To numerous Americans, the financial landscape over the recent five-year span has been tough. Costs have escalated while pay remains stagnant. Steep mortgage rates have made purchasing property a grim prospect. The rate of unemployment has been gradually increasing.

Most people have indicated they're postponing major life decisions, including raising children or changing careers, because of economic uncertainty. But for a select few of people, the recent half-decade couldn't have been more prosperous.

Wealth Explosion

The assets of the world's billionaires grew 54% in 2020, at the height of the pandemic. And even amid all the economic instability, the stock market has only continued to grow. This growth has primarily advantaged just a limited group of Americans: 10% of the population owns 93% of stock market wealth.

As uneven as this allocation seems, it's the economic framework working as it is currently designed.

"Affluent individuals have purchased their jets, they've bought their multiple houses and mansions, but now they're securing senators and media outlets," commented wealth disparity expert Chuck Collins. "We're now stepping into this other chapter of extreme wealth extraction where the wealthy are exploiting the system of inequality."

Mapping Economic Classes

To help others comprehend what exactly it means to be "wealthy" in the US, Collins utilizes a concept from journalist Robert Frank who, in a 2007 book on the rich, conceptualized the different levels of wealth as "Affluencia" villages: Prosperity Village, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

To contemporize the concept, Collins organizes these "wealth villages" based on income levels:

• At the lowest tier, Affluent Town, are the 10 million Americans who have a household income of at least $110,000 and an overall wealth of over $1.5m.
• The villages get more restricted as wealth goes up: Lower Richistan has 2.6 million households who have wealth between $6m and $13m.
• Middle Richistan has 1.3 million households who have assets worth an average of $37m.
• Upper Richistan, made up of 130,000 Americans (roughly the size of a small city) has between $60m to $1bn in wealth.

In total, the residents of these villages constitute the top 10% of the wealth income distribution, about 14 million Americans altogether, though their lifestyles vary dramatically.

"You could be in Lower Richistan, and you're still sitting in the coach section of a commercial plane," Collins said. "Whereas in Upper Richistan, you're traveling via a private jet. That's a really separate reality. You fly private, you have no investment in the commercial aviation system. You don't care if the whole system fails – you're set."

Ultra-Wealth Impact

The highest hill in "Richistan" is Billionaireville, which is made up of about 800 American billionaires who are some of the world's richest. The influence that this group has substantially outweighs those who are simply wealthy, let alone the typical citizen who doesn't inhabit "Richistan" at all.

But Collins thinks the activist mantra "billionaires shouldn't exist" fails to address the core issue and has a "hint of elimination" to it.

"It's the separation between individual behaviors and a framework of policies," Collins commented. "We should be focused on an economic system that channels so much wealth upward to the billionaires."

The Four Pillars of Billionaire Wealth

To understand how wealth at the billionaire level works, Collins breaks it down into four parts: acquiring fortune, securing fortune, political capture and maximum resource extraction.

When many Americans think about wealth, they usually think solely about the first step, Collins said. People can create a limited sum of wealth through starting or running a successful business, which could get them membership in Affluent Town.

But getting to Billionaireville requires significant resources and planning in those next three steps. Collins describes what he calls the "asset protection sector": the tax lawyers, accountants and wealth managers who use their expertise to ensure that the super rich are being calculated about their taxes.

"Wealth defense professionals use a broad range of tools such as legal entities, international accounts, secret corporations, non-profit organizations and other vehicles to hold assets," he details.

Government Power and Extreme Wealth Removal

To advance a wealth defense strategy, a family needs political support. Wealth of over $40m converts to political power, Collins says, and can be used to secure fortune and maintain expansion.

The last stage is a different kind of wealth accumulation, one that Collins calls "extreme removal" to describe how the wealthy have come to touch nearly every single part of an Americans' everyday life largely through capital management, which allows wealthy individuals to fund private companies.

"Private equity is searching for those sectors of the economy where they can extract value a little bit harder," Collins said. "One thing I don't think people comprehend is these billionaire private-equity funds are what happens when so much wealth is parked in so few hands, and they can basically shift and say, 'Where else can we extract profits out of the economy?' Healthcare? Great. Mobile home parks? These people can't go anywhere, [so] you can increase their costs."

Tangible Effects

The effects of this inequality go beyond the wealth getting wealthier. It's about people paying more for their healthcare, rent and vet bills without seeing any significant salary growth. And Collins said the pain and frustration of this kind of society can lead to profound dissatisfaction.

"The most powerful oligarchs understand people are being marginalized [and] are monetarily hurting," Collins said, adding that conservative politicians have been good at tapping into a potent "false common-man appeal".

Policy Situation

The contradiction, Collins points out in his book, is that political leaders have appointed a succession of billionaires to government roles. Along with tech billionaires who had short yet influential roles overseeing substantial reductions to the federal workforce, other key positions for commerce, treasury, education and the interior are also all billionaires.

This administrative framework, along with help from political partners, helped pass significant fiscal policies, which will make permanent tax cuts for the wealthy and corporations.

Potential Changes

While political parties continue to argue that foreign entry and poor economic deals are the source of everyone's economic problems, "the question becomes: Will the other major party, which has also been captured by the billionaires and big money, be able to meaningfully address the underlying harms?" Collins said.

Liberal leaders, he argues, know what policies are needed to "alter economic flow", including significant reforms to the tax system, increasing the minimum wage and empowering worker groups.

"It was so, so close, and the law really did embody the will of the majority of people who really want lawmakers to address some of these pressing issues," Collins said. "Oligarchic power is not about creating so much as preventing. It's easier to block than it is to make something substantial take place, but the institutional knowledge is there. We know what that looks like."

Collins is hopeful that there can be change, but said it would require continuous government action.

"It may be quickly that the pendulum swings back, and then it really is about sustaining a ongoing grassroots effort to make progress on this severe disparity we're living in," he said. "We can address this. It is solvable."