For many individuals in the United States, the economic climate over the past five years has been difficult. Expenses have soared while wages remains unchanged. Steep mortgage rates have made purchasing property a dismal prospect. The jobless rate has been creeping up.
Many Americans have reported they're postponing major life decisions, including raising children or moving to new employment, because of financial volatility. But for a very small group of people, the last five years couldn't have been any better.
The fortune of the world's billionaires grew 54% in 2020, at the climax of the pandemic. And even throughout all the economic instability, the stock market has only persisted in expanding. This growth has primarily advantaged just a tiny percentage of Americans: 10% of the population owns 93% of stock market wealth.
However unequal as this distribution seems, it's the system working as it is presently configured.
"Affluent individuals have bought their jets, they've bought their multiple houses and mansions, but now they're securing senators and media outlets," commented economic inequality analyst Chuck Collins. "We're now stepping into this other chapter of maximum resource removal where the wealthy are preying on the system of inequality."
To help others grasp what exactly it means to be "rich" 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 "Wealthville" villages: Wealth Borough, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.
To modernize the concept, Collins organizes these "wealth villages" based on income levels:
Altogether, 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 traveling in the coach section of a commercial plane," Collins said. "Whereas in Upper Richistan, you're using 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 collapses – you're set."
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 control that this group has greatly exceeds those who are simply well-off, let alone the typical citizen who doesn't inhabit "Richistan" at all.
But Collins thinks the political catchphrase "abolish billionaires" misses the point and has a "hint of elimination" to it.
"It's the distinction between private conduct and a framework of policies," Collins commented. "We should be concerned about an economic system that channels so much wealth upward to the billionaires."
To understand how wealth at the billionaire level works, Collins breaks it down into four parts: acquiring fortune, securing fortune, policy control and hyper-extraction.
When many Americans think about wealth, they usually think only 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 admission in Affluent Town.
But getting to Billionaireville requires serious investment and tactics in those next three steps. Collins describes what he calls the "asset protection sector": the tax lawyers, accountants and wealth managers who use their knowledge to ensure that the super rich are being calculated about their taxes.
"Wealth defense professionals use a extensive selection of tools such as legal entities, international accounts, secret corporations, non-profit organizations and other vehicles to hold assets," he writes.
To enhance a wealth defense strategy, a family needs government backing. Wealth of over $40m becomes political power, Collins says, and can be used to defend wealth and maintain expansion.
The last stage is a different kind of wealth accumulation, one that Collins calls "hyper extraction" 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 invest in private companies.
"Private equity is searching for those corners of the economy where they can extract value a little bit harder," Collins said. "One thing I don't think people comprehend is these billionaire private-equity funds are what happens when so much wealth is stored in so few hands, and they can kind of turn around and say, 'Where else can we generate returns out of the economy?' Healthcare? Great. Mobile home parks? These people can't go anywhere, [so] you can boost their expenses."
The effects of this inequality go beyond the wealth getting wealthier. It's about people facing higher costs for their healthcare, rent and vet bills without seeing any substantial income improvement. And Collins said the suffering and anger of this kind of society can lead to serious unrest.
"The most powerful affluent rulers understand people are being excluded [and] are economically suffering," Collins said, adding that conservative politicians have been good at accessing a potent "false common-man appeal".
The paradox, Collins points out in his book, is that political leaders have appointed a series of billionaires to government roles. Along with tech billionaires who had brief but powerful roles overseeing substantial reductions to the federal workforce, other key positions for commerce, treasury, education and the interior are also all billionaires.
This government structure, along with help from political partners, helped pass significant fiscal policies, which will make enduring decreases for the wealthy and corporations.
While political parties continue to argue that foreign entry and unfavorable commercial treaties are the source of everyone's economic problems, "the question becomes: Will the alternative political group, which has also been controlled by the billionaires and big money, be able to effectively tackle the underlying harms?" Collins said.
Liberal leaders, he argues, know what policies are needed to "alter economic flow", including significant reforms to the tax system, raising 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 address some of these critical challenges," Collins said. "Wealthy influence is not about developing so much as stopping. 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 sooner than expected that the tide turns, and then it really is about preserving a continuous public campaign to make progress on this profound imbalance we're living in," he said. "We can solve this. It is addressable."
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