🔗 Share this article

Among countless US citizens, the economic climate over the last half-decade has been difficult. Prices have escalated while pay remains unchanged. High mortgage rates have made buying a home a grim prospect. The unemployment rate has been slowly rising.

The majority of individuals have stated they're putting off major life decisions, including starting a family or changing careers, because of economic uncertainty. But for a select few of people, the recent half-decade couldn't have been more successful.

The Billionaire Boom

The assets of the world's billionaires expanded 54% in 2020, at the climax of the pandemic. And even amid all the market volatility, the stock market has only kept rising. This increase has mostly helped just a tiny percentage of Americans: 10% of the population controls 93% of stock market wealth.

Despite the imbalance as this division seems, it's the economic framework working as it is existing today.

"Affluent individuals have purchased their jets, they've bought their multiple houses and mansions, but now they're buying senators and media outlets," explained wealth disparity expert Chuck Collins. "We're now moving into this other chapter of maximum resource removal where the wealthy are exploiting the system of inequality."

Understanding Wealth Tiers

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

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

• At the foundation, 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.

Altogether, the residents of these villages comprise the top 10% of the wealth income distribution, about 14 million Americans altogether, though their circumstances vary dramatically.

"You could be in Lower Richistan, and you're still traveling in the coach section of a commercial plane," Collins noted. "Whereas in Upper Richistan, you're traveling via a private jet. That's a really distinct lifestyle. You fly private, you have no investment in the commercial aviation system. You don't care if the whole system shuts down – 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 power that this group has greatly exceeds those who are simply well-off, let alone the typical citizen who doesn't live in "Richistan" at all.

But Collins thinks the activist mantra "end extreme wealth" misses the point and has a "whiff of exterminism" to it.

"It's the difference between individual behaviors and a structure of regulations," Collins said. "We should be focused on an economic system that funnels so much wealth upward to the billionaires."

Wealth Accumulation Mechanisms

To understand how wealth at the billionaire level works, Collins breaks it down into four parts: acquiring fortune, protecting assets, policy control and maximum resource extraction.

When many Americans think about wealth, they usually think only about the first step, Collins said. People can create a modest amount of wealth through creating or operating a successful business, which could get them membership in Affluent Town.

But getting to Billionaireville requires substantial commitment and strategy in those next three steps. Collins describes what he calls the "fortune security field": the tax lawyers, accountants and wealth managers who use their skills 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, anonymous shell companies, philanthropic entities and other methods 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 translates to political power, Collins says, and can be used to defend wealth and ensure continued growth.

The final phase 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' routine activities largely through capital management, which allows wealthy individuals to fund private companies.

"Private equity is searching for those corners of the economy where they can increase profits 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 accumulated 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 boost their expenses."

Tangible Effects

The results 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 meaningful wage increases. And Collins said the pain and frustration of this kind of society can lead to serious unrest.

"The most powerful affluent rulers understand people are being excluded [and] are monetarily hurting," Collins said, adding that conservative politicians have been good at tapping into a potent "fake grassroots movement".

Political Reality

The contradiction, Collins points out in his book, is that government officials have appointed a series of billionaires to government roles. Along with affluent innovators who had brief but powerful roles overseeing significant decreases to the federal workforce, other crucial appointments for commerce, treasury, education and the interior are also all billionaires.

This political landscape, along with help from legislative supporters, helped pass major tax legislation, which will make lasting reductions for the wealthy and corporations.

Future Solutions

While legislative bodies continue to argue that foreign entry and bad trade agreements are the source of everyone's economic problems, "the question becomes: Will the other major party, which has also been controlled by the billionaires and big money, be able to seriously confront the underlying harms?" Collins said.

Left-leaning officials, he argues, know what policies are needed to "alter economic flow", including significant reforms to the tax system, boosting the minimum wage and empowering worker groups.

"It was so, so close, and the law really did reflect the will of the bulk of people who really want lawmakers to fix some of these pressing issues," Collins said. "Oligarchic power is not about building so much as blocking. It's easier to block than it is to make something significant occur, 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 tide turns, and then it really is about maintaining a ongoing grassroots effort to make progress on this severe disparity we're living in," he said. "We can solve this. It is solvable."