🔗 Share this article

To numerous Americans, the financial landscape over the recent five-year span has been tough. Costs have escalated while pay remains stagnant. High mortgage rates have made purchasing property a bleak prospect. The jobless rate has been gradually increasing.

Most people have stated they're postponing major life decisions, including raising children or changing careers, because of financial volatility. But for a select few of people, the past five-year period couldn't have been any better.

The Billionaire Boom

The fortune of the world's billionaires expanded 54% in 2020, at the height of the pandemic. And even amid all the financial uncertainty, 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.

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

"Affluent individuals have acquired their jets, they've bought their multiple houses and mansions, but now they're securing senators and media outlets," explained wealth disparity expert Chuck Collins. "We're now stepping into this other chapter of hyper-extraction where the wealthy are exploiting the system of inequality."

Analyzing Income Brackets

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

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

• At the base level, 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.

Collectively, 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 traveling in the coach section of a commercial plane," Collins said. "Whereas in Upper Richistan, you're flying in a private jet. That's a really distinct lifestyle. You fly private, you have no investment 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 richest. The power that this group has greatly exceeds those who are simply wealthy, let alone the ordinary person who doesn't live in "Richistan" at all.

But Collins thinks the political catchphrase "abolish billionaires" doesn't capture the real problem and has a "hint of elimination" to it.

"It's the difference between individual behaviors and a structure of regulations," Collins explained. "We should be concerned about an economic system that funnels so much wealth upward to the billionaires."

The Four Pillars of Billionaire Wealth

To understand how wealth at the billionaire level works, Collins divides it into four parts: acquiring fortune, protecting assets, political capture and hyper-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 starting or running a successful business, which could get them membership in Affluent Town.

But getting to Billionaireville requires significant resources and planning 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 calculated about their taxes.

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

Government Power and Extreme Wealth Removal

To enhance a wealth defense strategy, a family needs policy assistance. Wealth of over $40m converts to political power, Collins says, and can be used to defend wealth and protect its accumulation.

The final phase 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' routine activities largely through capital management, which allows wealthy individuals to fund private companies.

"Private equity is looking for those sectors of the economy where they can increase profits 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 boost their expenses."

The Real Consequences

The results 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 meaningful wage increases. 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 conservative politicians have been good at accessing a potent "false common-man appeal".

Policy Situation

The irony, Collins points out in his book, is that government officials have appointed a series of billionaires to government roles. Along with affluent innovators who had temporary but significant 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 political parties continue to argue that border policies and poor economic deals 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 seriously confront the underlying harms?" Collins said.

Progressive politicians, he argues, know what policies are needed to "reverse the updraft of wealth", including substantial modifications to the tax system, boosting the minimum wage and empowering worker groups.

"It was so, so close, and the bill really did represent the will of the most of people who really want lawmakers to solve some of these critical challenges," Collins said. "Oligarchic power is not about creating so much as preventing. It's easier to block than it is to make something significant occur, but the historical precedent is there. We know what that looks like."

Collins is hopeful 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 maintaining a continuous public campaign to make progress on this severe disparity we're living in," he said. "We can fix this. It is addressable."