🔗 Share this article

For many US citizens, the economic climate over the recent five-year span has been tough. Costs have soared while salaries remains stagnant. Steep mortgage rates have made buying a home a bleak prospect. The jobless rate has been creeping up.

Most people have stated they're putting off major life decisions, including raising children or moving to new employment, because of the instability. But for a tiny fraction of people, the past five-year period couldn't have been any better.

Fortune Expansion

The wealth of the world's billionaires expanded 54% in 2020, at the peak of the pandemic. And even amid all the economic instability, the stock market has only persisted in expanding. This increase has primarily advantaged just a small number of Americans: 10% of the population controls 93% of stock market wealth.

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

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

Understanding Wealth Tiers

To help others comprehend what exactly it means to be "affluent" 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 "Wealthville" villages: Prosperity Village, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

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

• At the base level, 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 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.

Altogether, the residents of these villages comprise 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 different cultural experience. You fly private, you have no stakes in the commercial aviation system. You don't care if the whole system fails – you're set."

Extreme Affluence Consequences

The highest hill 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 greatly exceeds those who are simply wealthy, let alone the average American who doesn't reside in "Richistan" at all.

But Collins thinks the progressive slogan "end extreme wealth" fails to address the core issue and has a "suggestion of eradication" to it.

"It's the distinction between personal actions and a framework of policies," Collins commented. "We should be focused on 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 breaks it down into four parts: getting the wealth, defending the wealth, government influence and extreme wealth removal.

When many Americans think about wealth, they usually think exclusively 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 residency in Affluent Town.

But getting to Billionaireville requires significant resources 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 knowledge to ensure that the super rich are being calculated about their taxes.

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

Government Power and Extreme Wealth Removal

To enhance a wealth defense strategy, a family needs political support. Wealth of over $40m converts to political power, Collins says, and can be used to defend wealth 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 affect nearly every single part of an Americans' everyday life largely through investment firms, which allows wealthy individuals to support private companies.

"Private equity is looking for those areas of the economy where they can extract value a little bit harder," Collins said. "One thing I don't think people realize 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 generate returns out of the economy?' Healthcare? Great. Mobile home parks? These people can't go anywhere, [so] you can boost their expenses."

Actual Impacts

The consequences of this inequality go beyond the wealth getting wealthier. It's about people spending additional funds for their healthcare, rent and vet bills without seeing any significant salary growth. And Collins said the suffering and anger of this kind of society can lead to profound dissatisfaction.

"The most powerful affluent rulers understand people are being marginalized [and] are financially struggling," Collins said, adding that conservative politicians have been good at connecting with a potent "phony populism".

Government Truth

The contradiction, Collins points out in his book, is that government officials have appointed a series of billionaires to administrative posts. Along with tech billionaires who had short yet influential roles overseeing significant decreases 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 congressional allies, helped pass significant fiscal policies, which will make lasting reductions for the wealthy and corporations.

The Path Forward

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

Progressive politicians, he argues, know what policies are needed to "change wealth distribution", including deep changes to the tax system, increasing the minimum wage and supporting labor organizations.

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

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

"It may be before we know it that the pendulum swings back, and then it really is about sustaining a continuous public campaign to make progress on this profound imbalance we're living in," he said. "We can solve this. It is solvable."