🔗 Share this article

For many individuals in the United States, the financial landscape over the last half-decade has been tough. Costs have soared while wages remains flat. Steep mortgage rates have made purchasing property a dismal prospect. The unemployment rate has been gradually increasing.

The majority of individuals have stated they're delaying major life decisions, including raising children or moving to new employment, because of financial volatility. But for a select few of people, the recent half-decade couldn't have been more successful.

Wealth Explosion

The fortune of the world's billionaires expanded 54% in 2020, at the peak of the pandemic. And even during all the financial uncertainty, the stock market has only kept rising. This expansion has mostly helped just a tiny percentage of Americans: 10% of the population holds 93% of stock market wealth.

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

"Affluent individuals have acquired their jets, they've purchased their multiple houses and mansions, but now they're acquiring senators and media outlets," stated economic inequality analyst Chuck Collins. "We're now entering this other chapter of extreme wealth extraction where the wealthy are taking advantage of the system of inequality."

Mapping Economic Classes

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, imagined the different levels of wealth as "Affluencia" villages: Affluent Town, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

To contemporize the concept, Collins classifies these "wealth villages" 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.

Altogether, the residents of these villages constitute 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 flying in the coach section of a commercial plane," Collins said. "Whereas in Upper Richistan, you're using 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 summit 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 average American who doesn't reside in "Richistan" at all.

But Collins thinks the activist mantra "abolish billionaires" misses the point and has a "whiff of exterminism" to it.

"It's the separation between private conduct and a framework of policies," Collins explained. "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 divides it into four parts: acquiring fortune, defending the wealth, political capture 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 admission in Affluent Town.

But getting to Billionaireville requires serious investment and planning 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 strategic about their taxes.

"Wealth defense professionals use a wide variety of tools such as trusts, international accounts, undisclosed businesses, non-profit organizations and other vehicles to hold assets," he writes.

Political Influence and Hyper-Extraction

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

The final phase is a different kind of wealth accumulation, one that Collins calls "extreme removal" 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 invest in private companies.

"Private equity is seeking 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 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 increase their costs."

Tangible Effects

The effects of this inequality go beyond the wealth getting wealthier. It's about people facing higher costs 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 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 tapping into a potent "false common-man appeal".

Policy Situation

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

This administrative framework, 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 border policies and poor economic deals are the source of everyone's economic problems, "the challenge is: 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 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 most of people who really want lawmakers to solve some of these pressing issues," Collins said. "Oligarchic power is not about creating so much as preventing. It's easier to block than it is to make something substantial take place, 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 balance shifts, and then it really is about preserving a continuous public campaign to make progress on this severe disparity we're living in," he said. "We can address this. It is addressable."