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For many individuals in the United States, the economy over the past five years has been difficult. Expenses have skyrocketed while wages remains flat. Elevated mortgage rates have made purchasing property a bleak prospect. The unemployment rate has been creeping up.

Many Americans have stated they're postponing major life decisions, including starting a family or moving to new employment, because of the instability. But for a very small group of people, the last five years couldn't have been more prosperous.

The Billionaire Boom

The wealth of the world's billionaires expanded 54% in 2020, at the climax of the pandemic. And even during all the market volatility, the stock market has only persisted in expanding. This expansion has primarily advantaged just a limited group of Americans: 10% of the population holds 93% of stock market wealth.

Despite the imbalance as this allocation seems, it's the financial structure working as it is presently configured.

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

Analyzing Income Brackets

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

To contemporize the concept, Collins categorizes these "economic communities" based on income levels:

• At the base level, Affluent Town, are the 10 million Americans who have a family earnings 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.

Altogether, the residents of these villages constitute 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 flying in the coach section of a commercial plane," Collins explained. "Whereas in Upper Richistan, you're traveling via a private jet. That's a really distinct lifestyle. You fly private, you have no interest in the commercial aviation system. You don't care if the whole system fails – you're set."

Ultra-Wealth Impact

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 influence that this group has substantially outweighs those who are simply wealthy, let alone the average American who doesn't inhabit "Richistan" at all.

But Collins thinks the activist mantra "abolish billionaires" doesn't capture the real problem and has a "whiff of exterminism" to it.

"It's the difference between individual behaviors and a structure of regulations," Collins said. "We should be concerned 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 separates it into four parts: getting the wealth, defending the wealth, political capture and hyper-extraction.

When many Americans think about wealth, they usually think exclusively 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 "fortune security field": the tax lawyers, accountants and wealth managers who use their knowledge to ensure that the super rich are being strategic about their taxes.

"Wealth defense professionals use a broad range of tools such as legal entities, foreign deposits, anonymous shell companies, philanthropic entities and other methods to hold assets," he writes.

Political Influence and Hyper-Extraction

To enhance a wealth defense strategy, a family needs policy assistance. 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 "extreme removal" to describe how the wealthy have come to influence nearly every single part of an Americans' routine activities largely through investment firms, 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 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 increase their costs."

Actual Impacts

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 meaningful wage increases. And Collins said the suffering and anger of this kind of society can lead to deep discontent.

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

Policy Situation

The paradox, Collins points out in his book, is that political leaders have appointed a succession of billionaires to government roles. Along with tech billionaires who had brief but powerful roles overseeing significant decreases to the federal workforce, other crucial appointments for commerce, treasury, education and the interior are also all billionaires.

This political landscape, along with help from congressional allies, helped pass huge tax bills, which will make lasting reductions for the wealthy and corporations.

The Path Forward

While government groups continue to argue that immigration and unfavorable commercial treaties are the source of everyone's economic problems, "the issue remains: Will the other major party, which has also been influenced 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 "change wealth distribution", including deep changes to the tax system, increasing 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 solve some of these critical challenges," Collins said. "Elite control is not about creating so much as blocking. It's easier to block than it is to make something meaningful happen, but the muscle memory 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 before we know it that the tide turns, and then it really is about maintaining a ongoing grassroots effort to make progress on this profound imbalance we're living in," he said. "We can address this. It is addressable."