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Among countless Americans, the economic climate over the past five years has been tough. Costs have escalated while salaries remains unchanged. Steep mortgage rates have made homeownership a grim prospect. The jobless rate has been slowly rising.

The majority of individuals have reported they're postponing major life decisions, including starting a family or switching jobs, because of the instability. But for a tiny fraction of people, the recent half-decade couldn't have been more successful.

Wealth Explosion

The wealth of the world's billionaires increased 54% in 2020, at the peak of the pandemic. And even throughout all the financial uncertainty, the stock market has only continued to grow. This increase has mostly helped just a tiny percentage of Americans: 10% of the population owns 93% of stock market wealth.

Despite the imbalance as this distribution seems, it's the financial structure working as it is currently designed.

"The wealthy have purchased their jets, they've purchased their multiple houses and mansions, but now they're buying senators and media outlets," commented economic inequality analyst Chuck Collins. "We're now stepping into this other chapter of hyper-extraction where the wealthy are exploiting the system of inequality."

Mapping Economic Classes

To help others grasp what exactly it means to be "affluent" 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 "Richistan" villages: Affluent Town, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

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

• At the lowest tier, Affluent Town, are the 10 million Americans who have a annual salary of at least $110,000 and an total assets 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 comprise 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 noted. "Whereas in Upper Richistan, you're flying in 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 shuts down – you're set."

Extreme Affluence Consequences

The peak in "Richistan" is Billionaireville, which is made up of about 800 American billionaires who are some of the world's wealthiest. The influence that this group has greatly exceeds those who are simply wealthy, let alone the ordinary person who doesn't reside in "Richistan" at all.

But Collins thinks the progressive slogan "end extreme wealth" doesn't capture the real problem and has a "suggestion of eradication" to it.

"It's the separation between individual behaviors and a system of rules," Collins said. "We should be worried 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 divides it into four parts: acquiring fortune, securing fortune, 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 reasonable quantity of wealth through creating or operating a successful business, which could get them admission 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 knowledge to ensure that the super rich are being deliberate about their taxes.

"Wealth defense professionals use a wide variety of tools such as legal entities, international accounts, undisclosed businesses, philanthropic entities and other methods to hold assets," he explains.

Political Influence and Hyper-Extraction

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

The final phase is a different kind of wealth accumulation, one that Collins calls "maximum taking" to describe how the wealthy have come to affect 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 corners 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 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."

Actual Impacts

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

"The most powerful affluent rulers understand people are being left behind [and] are economically suffering," Collins said, adding that right-leaning leaders have been good at tapping into a potent "phony populism".

Government Truth

The paradox, Collins points out in his book, is that government officials have appointed a series of billionaires to administrative posts. Along with wealthy entrepreneurs who had brief but powerful roles overseeing massive cuts to the federal workforce, other important roles for commerce, treasury, education and the interior are also all billionaires.

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

The Path Forward

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 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 deep changes to the tax system, raising the minimum wage and strengthening unions.

"It was so, so close, and the law really did embody the will of the most of people who really want lawmakers to address some of these critical challenges," Collins said. "Elite control is not about developing so much as blocking. It's easier to block than it is to make something meaningful happen, but the institutional knowledge is there. We know what that looks like."

Collins is optimistic that there can be change, but said it would require ongoing legislative effort.

"It may be sooner than expected that the balance shifts, and then it really is about sustaining a continuous public campaign to make progress on this extreme inequality we're living in," he said. "We can solve this. It is solvable."