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For many individuals in the United States, the financial landscape over the past five years has been challenging. Expenses have soared while pay remains flat. Elevated mortgage rates have made homeownership a grim prospect. The rate of unemployment has been creeping up.

Most people have stated they're delaying major life decisions, including raising children or moving to new employment, because of the instability. But for a very small group of people, the recent half-decade couldn't have been more prosperous.

Fortune Expansion

The fortune of the world's billionaires grew 54% in 2020, at the peak of the pandemic. And even during all the market volatility, the stock market has only kept rising. This increase has mostly helped just a tiny percentage of Americans: 10% of the population holds 93% of stock market wealth.

As uneven as this distribution seems, it's the economic framework working as it is currently designed.

"Rich elites have acquired their jets, they've acquired their multiple houses and mansions, but now they're securing senators and media outlets," explained inequality researcher Chuck Collins. "We're now moving into this other chapter of hyper-extraction where the wealthy are taking advantage of the system of inequality."

Mapping Economic Classes

To help others comprehend 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, envisioned the different levels of wealth as "Wealthville" villages: Affluent Town, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

To update the concept, Collins categorizes 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 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 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 flying in 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 shuts down – you're set."

Ultra-Wealth Impact

The peak in "Richistan" is Billionaireville, which is made up of about 800 American billionaires who are some of the world's richest. The influence that this group has substantially outweighs those who are simply well-off, let alone the typical citizen who doesn't inhabit "Richistan" at all.

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

"It's the distinction between individual behaviors and a structure of regulations," Collins commented. "We should be focused on 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 separates it into four parts: accumulating assets, 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 limited sum of wealth through creating or operating a successful business, which could get them residency in Affluent Town.

But getting to Billionaireville requires significant resources and strategy in those next three steps. Collins describes what he calls the "asset protection sector": the tax lawyers, accountants and wealth managers who use their skills to ensure that the super rich are being strategic about their taxes.

"Wealth defense professionals use a extensive selection of tools such as trusts, international accounts, secret corporations, charitable foundations and other mechanisms to hold assets," he writes.

Political Influence and Hyper-Extraction

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

The ultimate step is a different kind of wealth accumulation, one that Collins calls "hyper extraction" 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 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 parked in so few hands, and they can basically shift 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 raise their rents."

Actual Impacts

The consequences 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 substantial income improvement. And Collins said the pain and frustration of this kind of society can lead to deep discontent.

"The most powerful oligarchs understand people are being marginalized [and] are economically suffering," Collins said, adding that conservative politicians have been good at connecting with a potent "phony populism".

Policy Situation

The paradox, Collins points out in his book, is that government officials have appointed a series of billionaires to government roles. Along with affluent innovators who had brief but powerful roles overseeing substantial reductions to the federal workforce, other crucial appointments for commerce, treasury, education and the interior are also all billionaires.

This government structure, along with help from congressional allies, helped pass major tax legislation, which will make enduring decreases for the wealthy and corporations.

The Path Forward

While government groups continue to argue that border policies and poor economic deals are the source of everyone's economic problems, "the challenge is: Will the alternative political group, which has also been captured by the billionaires and big money, be able to seriously confront 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, increasing the minimum wage and empowering worker groups.

"It was so, so close, and the law really did embody the will of the bulk of people who really want lawmakers to solve some of these pressing issues," Collins said. "Wealthy influence is not about developing so much as stopping. 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 positive that there can be change, but said it would require continuous government action.

"It may be sooner than expected that the pendulum swings back, and then it really is about preserving a ongoing grassroots effort to make progress on this severe disparity we're living in," he said. "We can address this. It is addressable."