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Among countless Americans, the economic climate over the past five years has been difficult. Costs have escalated while salaries remains stagnant. Steep mortgage rates have made purchasing property a bleak prospect. The unemployment rate has been slowly rising.

Many Americans have reported they're postponing major life decisions, including having kids or switching jobs, because of financial volatility. But for a tiny fraction of people, the past five-year period couldn't have been more successful.

The Billionaire Boom

The fortune of the world's billionaires grew 54% in 2020, at the climax of the pandemic. And even during all the market volatility, the stock market has only continued to grow. This increase has primarily advantaged just a limited group of Americans: 10% of the population owns 93% of stock market wealth.

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

"Affluent individuals have purchased their jets, they've acquired their multiple houses and mansions, but now they're securing senators and media outlets," stated wealth disparity expert 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 understand what exactly it means to be "affluent" 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: Prosperity Village, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

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

• At the lowest tier, Affluent Town, are the 10 million Americans who have a household income of at least $110,000 and an overall wealth 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 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 traveling via a private jet. That's a really different cultural experience. You fly private, you have no investment in the commercial aviation system. You don't care if the whole system collapses – you're set."

Extreme Affluence Consequences

The highest hill in "Richistan" is Billionaireville, which is made up of about 800 American billionaires who are some of the world's wealthiest. The control that this group has far surpasses those who are simply well-off, let alone the typical citizen who doesn't inhabit "Richistan" at all.

But Collins thinks the political catchphrase "billionaires shouldn't exist" fails to address the core issue and has a "suggestion of eradication" to it.

"It's the difference between individual behaviors and a structure of regulations," Collins said. "We should be focused on an economic system that channels so much wealth upward to the billionaires."

Fortune Building Strategies

To understand how wealth at the billionaire level works, Collins separates it into four parts: getting the wealth, securing fortune, policy control and maximum resource extraction.

When many Americans think about wealth, they usually think solely about the first step, Collins said. People can create a modest amount of wealth through establishing or managing a successful business, which could get them residency in Affluent Town.

But getting to Billionaireville requires serious investment and planning 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 deliberate about their taxes.

"Wealth defense professionals use a broad range of tools such as trusts, offshore bank accounts, secret corporations, philanthropic entities and other methods to hold assets," he explains.

Political Influence and Hyper-Extraction

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 protect assets 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 touch nearly every single part of an Americans' everyday life largely through capital management, which allows wealthy individuals to fund private companies.

"Private equity is looking for those areas 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 accumulated 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 boost their expenses."

The Real Consequences

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 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 excluded [and] are monetarily hurting," Collins said, adding that conservative politicians have been good at tapping into a potent "phony populism".

Political Reality

The contradiction, Collins points out in his book, is that government officials have appointed a succession of billionaires to government roles. 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 government structure, along with help from political partners, helped pass huge tax bills, which will make permanent tax cuts for the wealthy and corporations.

Potential Changes

While legislative bodies continue to argue that immigration and bad trade agreements are the source of everyone's economic problems, "the question becomes: Will the other major party, which has also been captured 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 "change wealth distribution", including significant reforms to the tax system, raising the minimum wage and supporting labor organizations.

"It was so, so close, and the legislation really did represent the will of the majority of people who really want lawmakers to fix some of these urgent problems," Collins said. "Oligarchic power is not about developing so much as stopping. It's easier to block than it is to make something substantial take place, but the muscle memory is there. We know what that looks like."

Collins is optimistic that there can be change, but said it would require continuous government action.

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