🔗 Share this article

To numerous US citizens, the economic climate over the last half-decade has been challenging. Expenses have escalated while pay remains unchanged. Steep mortgage rates have made buying a home a bleak prospect. The unemployment rate has been slowly rising.

Many Americans have stated they're putting off major life decisions, including starting a family or switching jobs, because of financial volatility. But for a very small group of people, the last five years couldn't have been any better.

Fortune Expansion

The wealth of the world's billionaires expanded 54% in 2020, at the height of the pandemic. And even during all the financial uncertainty, the stock market has only kept rising. This growth has mostly helped just a limited group of Americans: 10% of the population owns 93% of stock market wealth.

However unequal as this division seems, it's the economic framework working as it is currently designed.

"The wealthy have purchased their jets, they've purchased their multiple houses and mansions, but now they're acquiring senators and media outlets," explained economic inequality analyst Chuck Collins. "We're now moving into this other chapter of maximum resource removal where the wealthy are preying on the system of inequality."

Mapping Economic Classes

To help others grasp 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, imagined the different levels of wealth as "Wealthville" villages: Prosperity Village, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

To update the concept, Collins classifies these "economic communities" based on income levels:

• At the lowest tier, Affluent Town, are the 10 million Americans who have a family earnings of at least $110,000 and an total assets of over $1.5m.
• The villages get more select 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.

Collectively, 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 sitting in the coach section of a commercial plane," Collins explained. "Whereas in Upper Richistan, you're using 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 collapses – you're set."

The Billionaireville Effect

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 well-off, let alone the typical citizen who doesn't inhabit "Richistan" at all.

But Collins thinks the activist mantra "end extreme wealth" doesn't capture the real problem and has a "whiff of exterminism" to it.

"It's the distinction between personal actions and a structure of regulations," Collins explained. "We should be concerned about an economic system that channels 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, 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 reasonable quantity of wealth through starting or running a successful business, which could get them admission in Affluent Town.

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

"Wealth defense professionals use a extensive selection of tools such as trusts, international accounts, anonymous shell companies, philanthropic entities and other mechanisms to hold assets," he explains.

Government Power and Extreme Wealth Removal

To enhance a wealth defense strategy, a family needs government backing. Wealth of over $40m translates to political power, Collins says, and can be used to protect assets and maintain expansion.

The final phase is a different kind of wealth accumulation, one that Collins calls "maximum taking" to describe how the wealthy have come to influence nearly every single part of an Americans' daily existence largely through capital management, which allows wealthy individuals to support 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 understand is these billionaire private-equity funds are what happens when so much wealth is stored in so few hands, and they can essentially pivot and say, 'Where else can we generate returns out of the economy?' Healthcare? Great. Mobile home parks? These people can't go anywhere, [so] you can raise their rents."

Tangible Effects

The consequences 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 suffering and anger of this kind of society can lead to profound dissatisfaction.

"The most powerful oligarchs understand people are being left behind [and] are economically suffering," Collins said, adding that Republicans have been good at accessing a potent "fake grassroots movement".

Policy Situation

The irony, Collins points out in his book, is that government officials have appointed a series of billionaires to administrative posts. Along with wealthy entrepreneurs who had brief but powerful roles overseeing massive cuts to the federal workforce, other key positions for commerce, treasury, education and the interior are also all billionaires.

This government structure, along with help from political partners, helped pass major tax legislation, which will make lasting reductions for the wealthy and corporations.

Potential Changes

While political parties continue to argue that border policies and unfavorable commercial treaties 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 effectively tackle the underlying harms?" Collins said.

Progressive politicians, he argues, know what policies are needed to "alter economic flow", including substantial modifications to the tax system, boosting the minimum wage and empowering worker groups.

"It was so, so close, and the law really did represent the will of the majority of people who really want lawmakers to solve some of these pressing issues," Collins said. "Elite control is not about developing so much as stopping. It's easier to block than it is to make something significant occur, but the historical precedent 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 sustaining a sustained really popular movement to make progress on this profound imbalance we're living in," he said. "We can address this. It is addressable."