🔗 Share this article

Among countless individuals in the United States, the economic climate over the past five years has been tough. Expenses have soared while wages remains stagnant. High mortgage rates have made buying a home a dismal prospect. The rate of unemployment has been slowly rising.

Many Americans have indicated they're postponing major life decisions, including having kids or changing careers, because of economic uncertainty. But for a tiny fraction of people, the recent half-decade 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 throughout all the economic instability, the stock market has only kept rising. This expansion has mostly helped just a small number of Americans: 10% of the population owns 93% of stock market wealth.

As uneven as this allocation seems, it's the economic framework working as it is existing today.

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

Analyzing Income Brackets

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

To update the concept, Collins organizes these "economic communities" based on income levels:

• At the foundation, 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 restricted 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 constitute 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 flying 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 fails – you're set."

The Billionaireville Effect

The highest hill in "Richistan" is Billionaireville, which is made up of about 800 American billionaires who are some of the world's richest. The influence that this group has far surpasses those who are simply affluent, 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 "suggestion of eradication" to it.

"It's the separation between private conduct and a system of rules," Collins commented. "We should be worried about 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 breaks it down into four parts: getting the wealth, protecting assets, policy control and extreme wealth removal.

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 significant resources and strategy in those next three steps. Collins describes what he calls the "fortune security field": the tax lawyers, accountants and wealth managers who use their expertise to ensure that the super rich are being deliberate about their taxes.

"Wealth defense professionals use a wide variety of tools such as financial instruments, offshore bank accounts, undisclosed businesses, philanthropic entities and other mechanisms to hold assets," he details.

Political Influence and Hyper-Extraction

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 maintain expansion.

The last stage is a different kind of wealth accumulation, one that Collins calls "maximum taking" to describe how the wealthy have come to influence nearly every single part of an Americans' everyday life largely through private equity, which allows wealthy individuals to support private companies.

"Private equity is looking for those sectors 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 parked in so few hands, and they can essentially pivot 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 increase their costs."

The Real Consequences

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 meaningful wage increases. And Collins said the pain and frustration of this kind of society can lead to profound dissatisfaction.

"The most powerful wealthy elites understand people are being marginalized [and] are monetarily hurting," Collins said, adding that conservative politicians have been good at accessing a potent "false common-man appeal".

Policy Situation

The paradox, Collins points out in his book, is that political leaders have appointed a series of billionaires to cabinet positions. Along with wealthy entrepreneurs who had short yet influential 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 political partners, helped pass significant fiscal policies, which will make lasting reductions for the wealthy and corporations.

Potential Changes

While legislative bodies continue to argue that foreign entry and unfavorable commercial treaties are the source of everyone's economic problems, "the issue remains: Will the alternative political group, which has also been captured by the billionaires and big money, be able to meaningfully address the underlying harms?" Collins said.

Progressive politicians, he argues, know what policies are needed to "reverse the updraft of wealth", including significant reforms to the tax system, increasing the minimum wage and supporting labor organizations.

"It was so, so close, and the legislation really did reflect the will of the majority of people who really want lawmakers to solve some of these pressing issues," Collins said. "Oligarchic power is not about building so much as stopping. It's easier to block than it is to make something significant occur, 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 continuous government action.

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