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Among countless Americans, the financial landscape over the last half-decade has been tough. Expenses have skyrocketed while pay remains stagnant. High mortgage rates have made buying a home a dismal prospect. The unemployment rate has been creeping up.

The majority of individuals have reported they're postponing major life decisions, including having kids or changing careers, because of financial volatility. But for a tiny fraction of people, the recent half-decade couldn't have been any better.

The Billionaire Boom

The wealth of the world's billionaires grew 54% in 2020, at the height of the pandemic. And even amid all the market volatility, the stock market has only persisted in expanding. This increase has primarily advantaged just a tiny percentage of Americans: 10% of the population holds 93% of stock market wealth.

Despite the imbalance 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 buying 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 preying on the system of inequality."

Analyzing Income Brackets

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

To contemporize the concept, Collins classifies these "affluence districts" based on income levels:

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

Altogether, the residents of these villages make up 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 said. "Whereas in Upper Richistan, you're traveling via a private jet. That's a really separate reality. 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 summit in "Richistan" is Billionaireville, which is made up of about 800 American billionaires who are some of the world's most affluent. The power that this group has greatly exceeds those who are simply affluent, let alone the average American who doesn't inhabit "Richistan" at all.

But Collins thinks the progressive slogan "billionaires shouldn't exist" fails to address the core issue and has a "suggestion of eradication" to it.

"It's the distinction between personal actions and a framework of policies," Collins commented. "We should be worried about an economic system that directs 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: acquiring fortune, securing fortune, political capture 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 creating or operating a successful business, which could get them membership 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 skills to ensure that the super rich are being calculated about their taxes.

"Wealth defense professionals use a broad range of tools such as trusts, offshore bank accounts, undisclosed businesses, philanthropic entities and other methods to hold assets," he details.

Government Power and Extreme Wealth Removal

To further a wealth defense strategy, a family needs political support. Wealth of over $40m translates to political power, Collins says, and can be used to defend wealth and ensure continued growth.

The ultimate step is a different kind of wealth accumulation, one that Collins calls "extreme removal" to describe how the wealthy have come to touch nearly every single part of an Americans' daily existence largely through investment firms, which allows wealthy individuals to fund private companies.

"Private equity is looking for those areas 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 stored in so few hands, and they can basically shift 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 effects 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 hardship and discontent of this kind of society can lead to serious unrest.

"The most powerful oligarchs understand people are being left behind [and] are economically suffering," Collins said, adding that conservative politicians have been good at tapping into a potent "false common-man appeal".

Political Reality

The paradox, Collins points out in his book, is that elected representatives have appointed a succession of billionaires to administrative posts. Along with tech billionaires who had short yet influential roles overseeing substantial reductions 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 huge tax bills, which will make enduring decreases for the wealthy and corporations.

Future Solutions

While political parties continue to argue that border policies and bad trade agreements are the source of everyone's economic problems, "the issue remains: Will the opposing party, 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 "change wealth distribution", including significant reforms to the tax system, raising the minimum wage and supporting labor organizations.

"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. "Oligarchic power is not about creating 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 hopeful that there can be change, but said it would require ongoing legislative effort.

"It may be quickly that the balance shifts, and then it really is about sustaining a sustained really popular movement to make progress on this severe disparity we're living in," he said. "We can fix this. It is solvable."