🔗 Share this article

To numerous Americans, the economy over the past five years has been challenging. Expenses have soared while wages remains unchanged. Elevated mortgage rates have made purchasing property a bleak prospect. The jobless rate has been gradually increasing.

The majority of individuals have stated they're putting off major life decisions, including starting a family or moving to new employment, because of economic uncertainty. But for a very small group of people, the last five years couldn't have been more prosperous.

The Billionaire Boom

The fortune of the world's billionaires increased 54% in 2020, at the peak of the pandemic. And even amid all the economic instability, the stock market has only kept rising. This expansion has largely benefited just a small number of Americans: 10% of the population holds 93% of stock market wealth.

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

"The wealthy have bought their jets, they've bought their multiple houses and mansions, but now they're acquiring senators and media outlets," stated wealth disparity expert Chuck Collins. "We're now moving into this other chapter of maximum resource removal where the wealthy are taking advantage of the system of inequality."

Analyzing Income Brackets

To help others understand what exactly it means to be "rich" in the US, Collins borrows a concept from journalist Robert Frank who, in a 2007 book on the rich, conceptualized the different levels of wealth as "Affluencia" villages: Prosperity Village, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

To modernize the concept, Collins categorizes these "wealth villages" based on income levels:

• At the foundation, Affluent Town, are the 10 million Americans who have a annual salary of at least $110,000 and an net worth 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 lifestyles vary dramatically.

"You could be in Lower Richistan, and you're still traveling in the coach section of a commercial plane," Collins noted. "Whereas in Upper Richistan, you're flying in a private jet. That's a really distinct lifestyle. You fly private, you have no stakes in the commercial aviation system. You don't care if the whole system shuts down – 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 control that this group has greatly exceeds those who are simply well-off, let alone the ordinary person who doesn't live in "Richistan" at all.

But Collins thinks the progressive slogan "abolish billionaires" fails to address the core issue and has a "hint of elimination" to it.

"It's the distinction between personal actions and a system of rules," Collins commented. "We should be focused on an economic system that funnels so much wealth upward to the billionaires."

Fortune Building Strategies

To understand how wealth at the billionaire level works, Collins divides it into four parts: acquiring fortune, defending the wealth, policy control and hyper-extraction.

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

But getting to Billionaireville requires serious investment and strategy in those next three steps. Collins describes what he calls the "asset protection sector": the tax lawyers, accountants and wealth managers who use their expertise to ensure that the super rich are being calculated about their taxes.

"Wealth defense professionals use a broad range of tools such as legal entities, foreign deposits, undisclosed businesses, charitable foundations and other vehicles to hold assets," he details.

Government Power and Extreme Wealth Removal

To further a wealth defense strategy, a family needs government backing. Wealth of over $40m translates to political power, Collins says, and can be used to secure fortune and protect its accumulation.

The last stage 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' routine activities largely through private equity, which allows wealthy individuals to fund private companies.

"Private equity is seeking those corners of the economy where they can squeeze things a little bit harder," Collins said. "One thing I don't think people comprehend 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 extract profits out of the economy?' Healthcare? Great. Mobile home parks? These people can't go anywhere, [so] you can raise their rents."

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

"The most powerful wealthy elites understand people are being excluded [and] are economically suffering," Collins said, adding that Republicans have been good at connecting with a potent "phony populism".

Policy Situation

The irony, Collins points out in his book, is that elected representatives have appointed a series of billionaires to cabinet positions. Along with affluent innovators who had short yet influential roles overseeing significant decreases to the federal workforce, other key positions 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 enduring decreases for the wealthy and corporations.

Future Solutions

While political parties continue to argue that foreign entry 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 meaningfully address the underlying harms?" Collins said.

Liberal leaders, he argues, know what policies are needed to "reverse the updraft of wealth", including significant reforms to the tax system, raising the minimum wage and empowering worker groups.

"It was so, so close, and the legislation really did embody the will of the most of people who really want lawmakers to fix some of these critical challenges," Collins said. "Wealthy influence is not about building 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 continuous government action.

"It may be sooner than expected that the pendulum swings back, and then it really is about maintaining a sustained really popular movement to make progress on this profound imbalance we're living in," he said. "We can solve this. It is fixable."