For many individuals in the United States, the economy over the last half-decade has been tough. Prices have escalated while pay remains unchanged. Elevated mortgage rates have made purchasing property a dismal prospect. The unemployment rate has been slowly rising.
Many Americans have indicated they're delaying major life decisions, including having kids or switching jobs, because of financial volatility. But for a very small group of people, the past five-year period couldn't have been more successful.
The assets of the world's billionaires expanded 54% in 2020, at the height of the pandemic. And even amid all the market volatility, the stock market has only continued to grow. This growth has largely benefited just a small number of Americans: 10% of the population controls 93% of stock market wealth.
However unequal as this distribution seems, it's the economic framework working as it is currently designed.
"Rich elites have purchased their jets, they've bought their multiple houses and mansions, but now they're acquiring senators and media outlets," commented inequality researcher 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."
To help others grasp what exactly it means to be "rich" 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: Affluent Town, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.
To update the concept, Collins classifies these "affluence districts" based on income levels:
Collectively, the residents of these villages make up 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 sitting in the coach section of a commercial plane," Collins explained. "Whereas in Upper Richistan, you're using 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 fails – you're set."
The peak in "Richistan" is Billionaireville, which is made up of about 800 American billionaires who are some of the world's most affluent. The influence that this group has far surpasses 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 "whiff of exterminism" to it.
"It's the separation between personal actions and a structure of regulations," Collins explained. "We should be focused on an economic system that channels so much wealth upward to the billionaires."
To understand how wealth at the billionaire level works, Collins divides it into four parts: acquiring fortune, protecting assets, 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 reasonable quantity of wealth through establishing or managing a successful business, which could get them residency in Affluent Town.
But getting to Billionaireville requires substantial commitment and tactics 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 strategic about their taxes.
"Wealth defense professionals use a broad range of tools such as trusts, foreign deposits, anonymous shell companies, charitable foundations and other mechanisms to hold assets," he writes.
To enhance 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 ultimate step 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 investment firms, which allows wealthy individuals to support private companies.
"Private equity is searching for those sectors of the economy where they can squeeze things a little bit harder," Collins said. "One thing I don't think people understand is these billionaire private-equity funds are what happens when so much wealth is stored 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 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 hardship and discontent of this kind of society can lead to profound dissatisfaction.
"The most powerful oligarchs understand people are being marginalized [and] are monetarily hurting," Collins said, adding that Republicans have been good at accessing a potent "false common-man appeal".
The paradox, Collins points out in his book, is that elected representatives have appointed a succession of billionaires to government roles. Along with wealthy entrepreneurs who had short yet influential roles overseeing substantial reductions to the federal workforce, other crucial appointments for commerce, treasury, education and the interior are also all billionaires.
This administrative framework, along with help from political partners, helped pass huge tax bills, which will make permanent tax cuts for the wealthy and corporations.
While political parties continue to argue that immigration and poor economic deals are the source of everyone's economic problems, "the question becomes: 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.
Liberal leaders, 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 empowering worker groups.
"It was so, so close, and the bill really did represent the will of the bulk of people who really want lawmakers to fix some of these pressing issues," Collins said. "Elite control 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 positive that there can be change, but said it would require continuous government action.
"It may be quickly that the pendulum swings back, and then it really is about sustaining a ongoing grassroots effort to make progress on this extreme inequality we're living in," he said. "We can address this. It is solvable."
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