🔗 Share this article

Among countless individuals in the United States, the economic climate over the last half-decade has been difficult. Costs have soared while salaries remains stagnant. Elevated mortgage rates have made purchasing property a bleak prospect. The rate of unemployment has been creeping up.

Many Americans have indicated they're postponing major life decisions, including raising children or switching jobs, because of the instability. But for a tiny fraction of people, the past five-year period couldn't have been more prosperous.

Wealth Explosion

The assets of the world's billionaires increased 54% in 2020, at the peak of the pandemic. And even during all the economic instability, the stock market has only kept rising. This growth has mostly helped just a small number of Americans: 10% of the population controls 93% of stock market wealth.

As uneven as this distribution seems, it's the financial structure working as it is currently designed.

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

Analyzing Income Brackets

To help others comprehend 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, conceptualized the different levels of wealth as "Wealthville" villages: Wealth Borough, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

To modernize the concept, Collins categorizes these "economic communities" 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 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.

In total, 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 explained. "Whereas in Upper Richistan, you're flying in 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."

Ultra-Wealth Impact

The peak 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 substantially outweighs those who are simply wealthy, let alone the average American who doesn't reside in "Richistan" at all.

But Collins thinks the political catchphrase "end extreme wealth" fails to address the core issue and has a "hint of elimination" to it.

"It's the separation between personal actions and a framework of policies," Collins explained. "We should be focused on 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: accumulating assets, securing fortune, policy control 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 creating or operating a successful business, which could get them admission in Affluent Town.

But getting to Billionaireville requires substantial commitment and tactics in those next three steps. Collins describes what he calls the "wealth defense industry": the tax lawyers, accountants and wealth managers who use their skills to ensure that the super rich are being strategic about their taxes.

"Wealth defense professionals use a broad range of tools such as legal entities, offshore bank accounts, undisclosed businesses, philanthropic entities and other mechanisms to hold assets," he writes.

Political Influence and Hyper-Extraction

To further a wealth defense strategy, a family needs policy assistance. Wealth of over $40m translates to political power, Collins says, and can be used to secure fortune and ensure continued growth.

The ultimate step is a different kind of wealth accumulation, one that Collins calls "maximum taking" to describe how the wealthy have come to touch nearly every single part of an Americans' daily existence largely through capital management, which allows wealthy individuals to invest in private companies.

"Private equity is searching for those areas of the economy where they can squeeze things 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 basically shift 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 boost their expenses."

The Real Consequences

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 substantial income improvement. And Collins said the suffering and anger of this kind of society can lead to serious unrest.

"The most powerful oligarchs understand people are being excluded [and] are monetarily hurting," Collins said, adding that Republicans have been good at tapping into a potent "phony populism".

Policy Situation

The irony, Collins points out in his book, is that government officials have appointed a series of billionaires to cabinet positions. Along with tech billionaires who had brief but powerful roles overseeing significant decreases 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 legislative supporters, helped pass major tax legislation, which will make permanent tax cuts for the wealthy and corporations.

Future Solutions

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 influenced by the billionaires and big money, be able to meaningfully address the underlying harms?" Collins said.

Left-leaning officials, he argues, know what policies are needed to "change wealth distribution", including substantial modifications to the tax system, boosting the minimum wage and strengthening unions.

"It was so, so close, and the bill really did reflect 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 preventing. It's easier to block than it is to make something significant occur, but the institutional knowledge 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 before we know it that the tide turns, and then it really is about maintaining a sustained really popular movement to make progress on this extreme inequality we're living in," he said. "We can fix this. It is solvable."