🔗 Share this article

To numerous Americans, the economy over the last half-decade has been difficult. Prices have skyrocketed while pay remains unchanged. Steep mortgage rates have made buying a home a dismal prospect. The jobless rate has been slowly rising.

Most people have reported they're putting off major life decisions, including having kids or switching jobs, because of economic uncertainty. But for a tiny fraction of people, the recent half-decade couldn't have been more successful.

Wealth Explosion

The fortune of the world's billionaires expanded 54% in 2020, at the peak of the pandemic. And even during all the market volatility, the stock market has only persisted in expanding. This growth has largely benefited just a small number of Americans: 10% of the population controls 93% of stock market wealth.

Despite the imbalance as this distribution seems, it's the economic framework working as it is presently configured.

"The wealthy have acquired their jets, they've purchased 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 maximum resource removal where the wealthy are taking advantage of the system of inequality."

Understanding Wealth Tiers

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

To modernize the concept, Collins categorizes these "affluence districts" based on income levels:

• At the lowest tier, Affluent Town, are the 10 million Americans who have a annual salary of at least $110,000 and an total assets 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 make up 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 flying in the coach section of a commercial plane," Collins noted. "Whereas in Upper Richistan, you're using a private jet. That's a really distinct lifestyle. You fly private, you have no interest in the commercial aviation system. You don't care if the whole system shuts down – you're set."

The Billionaireville Effect

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

But Collins thinks the political catchphrase "end extreme wealth" misses the point and has a "suggestion of eradication" to it.

"It's the distinction between personal actions and a structure of regulations," Collins said. "We should be worried about an economic system that directs so much wealth upward to the billionaires."

Fortune Building Strategies

To understand how wealth at the billionaire level works, Collins separates it into four parts: getting the wealth, securing fortune, political capture and extreme wealth removal.

When many Americans think about wealth, they usually think solely about the first step, Collins said. People can create a reasonable quantity of wealth through establishing or managing a successful business, which could get them residency 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 strategic about their taxes.

"Wealth defense professionals use a extensive selection of tools such as trusts, foreign deposits, anonymous shell companies, charitable foundations and other mechanisms to hold assets," he writes.

Government Power and Extreme Wealth Removal

To advance a wealth defense strategy, a family needs government backing. Wealth of over $40m becomes political power, Collins says, and can be used to secure fortune and ensure continued growth.

The last stage is a different kind of wealth accumulation, one that Collins calls "hyper extraction" to describe how the wealthy have come to influence nearly every single part of an Americans' routine activities largely through investment firms, which allows wealthy individuals to fund private companies.

"Private equity is searching for those corners of the economy where they can extract value a little bit harder," Collins said. "One thing I don't think people understand is these billionaire private-equity funds are what happens when so much wealth is stored in so few hands, and they can kind of turn around and say, 'Where else can we squeeze money 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 hardship and discontent of this kind of society can lead to profound dissatisfaction.

"The most powerful wealthy elites understand people are being left behind [and] are economically suffering," Collins said, adding that Republicans have been good at connecting with a potent "false common-man appeal".

Political Reality

The irony, Collins points out in his book, is that government officials have appointed a string of billionaires to cabinet positions. Along with affluent innovators who had brief but powerful 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 congressional allies, helped pass huge tax bills, which will make enduring decreases for the wealthy and corporations.

The Path Forward

While government groups continue to argue that border policies and unfavorable commercial treaties are the source of everyone's economic problems, "the question becomes: Will the opposing party, which has also been controlled by the billionaires and big money, be able to meaningfully address the underlying harms?" Collins said.

Progressive politicians, he argues, know what policies are needed to "reverse the updraft of wealth", including substantial modifications to the tax system, raising the minimum wage and supporting labor organizations.

"It was so, so close, and the bill really did embody the will of the majority of people who really want lawmakers to fix some of these urgent problems," Collins said. "Elite control is not about developing so much as preventing. It's easier to block than it is to make something meaningful happen, but the muscle memory is there. We know what that looks like."

Collins is optimistic that there can be change, but said it would require sustained political momentum.

"It may be sooner than expected that the balance shifts, and then it really is about preserving a ongoing grassroots effort to make progress on this severe disparity we're living in," he said. "We can fix this. It is fixable."