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To numerous Americans, the financial landscape over the recent five-year span has been challenging. Costs have skyrocketed while pay remains flat. High mortgage rates have made homeownership a bleak prospect. The jobless rate has been slowly rising.

The majority of individuals have reported they're postponing major life decisions, including having kids or moving to new employment, because of financial volatility. But for a tiny fraction of people, the recent half-decade couldn't have been more prosperous.

The Billionaire Boom

The fortune of the world's billionaires expanded 54% in 2020, at the climax of the pandemic. And even amid all the market volatility, the stock market has only kept rising. This increase has largely benefited just a limited group of Americans: 10% of the population holds 93% of stock market wealth.

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

"Affluent individuals have acquired their jets, they've bought their multiple houses and mansions, but now they're acquiring senators and media outlets," explained economic inequality analyst Chuck Collins. "We're now moving into this other chapter of hyper-extraction 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 borrows a concept from journalist Robert Frank who, in a 2007 book on the rich, conceptualized the different levels of wealth as "Richistan" villages: Wealth Borough, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

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

• At the foundation, 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 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 lifestyles 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 using a private jet. That's a really distinct lifestyle. You fly private, you have no stakes in the commercial aviation system. You don't care if the whole system shuts down – you're set."

The Billionaireville Effect

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 wealthy, let alone the ordinary person who doesn't inhabit "Richistan" at all.

But Collins thinks the activist mantra "end extreme wealth" misses the point and has a "suggestion of eradication" to it.

"It's the difference between individual behaviors and a structure of regulations," Collins explained. "We should be concerned 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 breaks it down into four parts: accumulating assets, securing fortune, policy control and extreme wealth removal.

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 starting or running a successful business, which could get them residency in Affluent Town.

But getting to Billionaireville requires substantial commitment 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 knowledge 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, undisclosed businesses, non-profit organizations and other vehicles to hold assets," he details.

Government Power and Extreme Wealth Removal

To advance a wealth defense strategy, a family needs government backing. Wealth of over $40m converts to political power, Collins says, and can be used to secure fortune and maintain expansion.

The last stage is a different kind of wealth accumulation, one that Collins calls "maximum taking" to describe how the wealthy have come to touch nearly every single part of an Americans' routine activities largely through investment firms, which allows wealthy individuals to support private companies.

"Private equity is seeking those areas of the economy where they can increase profits 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 essentially pivot 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 increase their costs."

Tangible Effects

The effects of this inequality go beyond the wealth getting wealthier. It's about people spending additional funds for their healthcare, rent and vet bills without seeing any substantial income improvement. 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 monetarily hurting," Collins said, adding that right-leaning leaders have been good at connecting with a potent "false common-man appeal".

Policy Situation

The contradiction, Collins points out in his book, is that political leaders have appointed a series of billionaires to cabinet positions. Along with tech billionaires who had brief but powerful roles overseeing significant decreases 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 lasting reductions for the wealthy and corporations.

The Path Forward

While government groups continue to argue that foreign entry and bad trade agreements are the source of everyone's economic problems, "the issue remains: Will the opposing party, which has also been influenced by the billionaires and big money, be able to meaningfully address 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 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 critical challenges," Collins said. "Oligarchic power is not about creating so much as blocking. It's easier to block than it is to make something substantial take place, 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 quickly that the balance shifts, and then it really is about sustaining a ongoing grassroots effort to make progress on this severe disparity we're living in," he said. "We can solve this. It is fixable."