Among countless US citizens, the economic climate over the recent five-year span has been challenging. Costs have skyrocketed while pay remains flat. Steep mortgage rates have made homeownership a dismal prospect. The rate of unemployment has been gradually increasing.
The majority of individuals have indicated they're postponing major life decisions, including raising children or moving to new employment, because of the instability. But for a select few of people, the recent half-decade couldn't have been more prosperous.
The wealth of the world's billionaires expanded 54% in 2020, at the peak of the pandemic. And even amid 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 holds 93% of stock market wealth.
As uneven as this distribution seems, it's the economic framework working as it is existing today.
"Rich elites have acquired their jets, they've acquired their multiple houses and mansions, but now they're buying senators and media outlets," commented inequality researcher Chuck Collins. "We're now entering this other chapter of hyper-extraction where the wealthy are preying on the system of inequality."
To help others understand what exactly it means to be "wealthy" in the US, Collins adopts a concept from journalist Robert Frank who, in a 2007 book on the rich, envisioned the different levels of wealth as "Affluencia" villages: Wealth Borough, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.
To modernize the concept, Collins categorizes these "economic communities" based on income levels:
Altogether, the residents of these villages make up the top 10% of the wealth income distribution, about 14 million Americans altogether, though their experiences 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 different cultural experience. 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 highest hill in "Richistan" is Billionaireville, which is made up of about 800 American billionaires who are some of the world's wealthiest. The power that this group has greatly exceeds those who are simply affluent, let alone the ordinary person who doesn't inhabit "Richistan" at all.
But Collins thinks the activist mantra "abolish billionaires" fails to address the core issue and has a "whiff of exterminism" to it.
"It's the separation between personal actions and a framework of policies," Collins said. "We should be concerned about an economic system that funnels so much wealth upward to the billionaires."
To understand how wealth at the billionaire level works, Collins separates it into four parts: getting the wealth, 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 modest amount of wealth through establishing or managing a successful business, which could get them membership in Affluent Town.
But getting to Billionaireville requires serious investment and tactics in those next three steps. Collins describes what he calls the "asset protection sector": the tax lawyers, accountants and wealth managers who use their skills to ensure that the super rich are being deliberate about their taxes.
"Wealth defense professionals use a wide variety of tools such as legal entities, international accounts, undisclosed businesses, non-profit organizations and other vehicles to hold assets," he writes.
To enhance a wealth defense strategy, a family needs policy assistance. Wealth of over $40m translates to political power, Collins says, and can be used to protect assets and ensure continued growth.
The ultimate step is a different kind of wealth accumulation, one that Collins calls "hyper extraction" to describe how the wealthy have come to affect nearly every single part of an Americans' routine activities largely through investment firms, which allows wealthy individuals to fund private companies.
"Private equity is looking for those sectors of the economy where they can squeeze things 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 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 raise their rents."
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 substantial income improvement. And Collins said the suffering and anger of this kind of society can lead to deep discontent.
"The most powerful oligarchs understand people are being left behind [and] are economically suffering," Collins said, adding that conservative politicians have been good at accessing a potent "phony populism".
The irony, Collins points out in his book, is that political leaders have appointed a succession of billionaires to cabinet positions. Along with tech billionaires who had temporary but significant roles overseeing substantial reductions to the federal workforce, other important roles 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.
While legislative bodies continue to argue that border policies and unfavorable commercial treaties are the source of everyone's economic problems, "the challenge is: Will the opposing party, which has also been influenced by the billionaires and big money, be able to effectively tackle the underlying harms?" Collins said.
Left-leaning officials, he argues, know what policies are needed to "reverse the updraft of wealth", including deep changes to the tax system, increasing the minimum wage and strengthening unions.
"It was so, so close, and the law really did represent the will of the bulk of people who really want lawmakers to address some of these pressing issues," Collins said. "Oligarchic power is not about developing so much as stopping. 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 hopeful that there can be change, but said it would require ongoing legislative effort.
"It may be quickly that the tide turns, and then it really is about maintaining a ongoing grassroots effort to make progress on this extreme inequality we're living in," he said. "We can fix this. It is addressable."
