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To numerous Americans, the economy over the last half-decade has been difficult. Costs have soared while pay remains flat. Elevated mortgage rates have made buying a home a dismal prospect. The rate of unemployment has been creeping up.

The majority of individuals have indicated they're putting off major life decisions, including having kids or switching jobs, because of financial volatility. But for a very small group of people, the last five years couldn't have been more successful.

The Billionaire Boom

The fortune of the world's billionaires increased 54% in 2020, at the height of the pandemic. And even throughout all the financial uncertainty, the stock market has only kept rising. This expansion has mostly helped just a limited group of Americans: 10% of the population controls 93% of stock market wealth.

Despite the imbalance as this distribution seems, it's the system working as it is existing today.

"Rich elites have acquired their jets, they've purchased their multiple houses and mansions, but now they're acquiring senators and media outlets," commented wealth disparity expert Chuck Collins. "We're now stepping into this other chapter of extreme wealth extraction where the wealthy are taking advantage of the system of inequality."

Understanding Wealth Tiers

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

To contemporize the concept, Collins organizes these "economic communities" 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 constitute the top 10% of the wealth income distribution, about 14 million Americans altogether, though their experiences vary dramatically.

"You could be in Lower Richistan, and you're still sitting in the coach section of a commercial plane," Collins explained. "Whereas in Upper Richistan, you're using a private jet. That's a really separate reality. You fly private, you have no interest in the commercial aviation system. You don't care if the whole system collapses – 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 power that this group has greatly exceeds those who are simply affluent, let alone the typical citizen who doesn't reside in "Richistan" at all.

But Collins thinks the activist mantra "abolish billionaires" misses the point and has a "whiff of exterminism" to it.

"It's the difference between individual behaviors and a system of rules," Collins said. "We should be concerned 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, government influence 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 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 expertise to ensure that the super rich are being deliberate about their taxes.

"Wealth defense professionals use a broad range of tools such as financial instruments, international accounts, undisclosed businesses, charitable foundations and other vehicles to hold assets," he writes.

Government Power and Extreme Wealth Removal

To further a wealth defense strategy, a family needs government backing. Wealth of over $40m becomes political power, Collins says, and can be used to secure fortune and protect its accumulation.

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' routine activities largely through private equity, 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 understand is these billionaire private-equity funds are what happens when so much wealth is parked in so few hands, and they can essentially pivot 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 results 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 deep discontent.

"The most powerful wealthy elites understand people are being excluded [and] are monetarily hurting," Collins said, adding that right-leaning leaders have been good at connecting with a potent "fake grassroots movement".

Political Reality

The contradiction, Collins points out in his book, is that government officials have appointed a succession of billionaires to administrative posts. Along with affluent innovators who had temporary but significant roles overseeing substantial reductions 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 major tax legislation, which will make lasting reductions for the wealthy and corporations.

Future Solutions

While political parties continue to argue that border policies and unfavorable commercial treaties are the source of everyone's economic problems, "the issue remains: Will the other major party, which has also been captured by the billionaires and big money, be able to seriously confront the underlying harms?" Collins said.

Left-leaning officials, he argues, know what policies are needed to "reverse the updraft of wealth", including significant reforms to the tax system, boosting the minimum wage and supporting labor organizations.

"It was so, so close, and the bill really did reflect the will of the bulk of people who really want lawmakers to address some of these urgent problems," Collins said. "Oligarchic power is not about building so much as preventing. 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 positive that there can be change, but said it would require sustained political momentum.

"It may be before we know it that the tide turns, and then it really is about preserving a sustained really popular movement to make progress on this extreme inequality we're living in," he said. "We can address this. It is fixable."