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For many Americans, the economic climate over the past five years has been tough. Costs have soared while wages remains unchanged. High mortgage rates have made purchasing property a bleak prospect. The unemployment rate has been creeping up.

The majority of individuals have stated they're putting off major life decisions, including raising children or changing careers, because of financial volatility. But for a very small group of people, the recent half-decade couldn't have been any better.

Wealth Explosion

The assets of the world's billionaires expanded 54% in 2020, at the climax of the pandemic. And even during all the economic instability, the stock market has only continued to grow. This expansion has largely benefited just a limited group of Americans: 10% of the population controls 93% of stock market wealth.

Despite the imbalance as this division seems, it's the economic framework working as it is existing today.

"The wealthy have acquired their jets, they've purchased their multiple houses and mansions, but now they're buying senators and media outlets," stated inequality researcher Chuck Collins. "We're now moving into this other chapter of extreme wealth extraction where the wealthy are preying on the system of inequality."

Mapping Economic Classes

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

To update the concept, Collins classifies 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 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.

Altogether, the residents of these villages constitute 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 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."

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 control that this group has far surpasses those who are simply well-off, let alone the ordinary person who doesn't live in "Richistan" at all.

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

"It's the separation between private conduct and a system of rules," Collins commented. "We should be worried 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 divides it into four parts: getting the wealth, defending the wealth, government influence and maximum resource extraction.

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

But getting to Billionaireville requires substantial commitment and strategy 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 strategic about their taxes.

"Wealth defense professionals use a extensive selection of tools such as legal entities, foreign deposits, secret corporations, non-profit organizations and other mechanisms to hold assets," he writes.

Political Influence and Hyper-Extraction

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

The final phase 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' everyday life largely through capital management, which allows wealthy individuals to invest in private companies.

"Private equity is looking for those corners of the economy where they can squeeze things 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 accumulated in so few hands, and they can essentially pivot 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 increase their costs."

The Real Consequences

The effects 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 significant salary growth. And Collins said the pain and frustration of this kind of society can lead to serious unrest.

"The most powerful oligarchs understand people are being left behind [and] are economically suffering," Collins said, adding that conservative politicians have been good at accessing a potent "fake grassroots movement".

Policy Situation

The paradox, Collins points out in his book, is that elected representatives have appointed a string of billionaires to government roles. Along with affluent innovators who had temporary but significant roles overseeing substantial reductions to the federal workforce, other important roles for commerce, treasury, education and the interior are also all billionaires.

This administrative framework, along with help from congressional allies, helped pass significant fiscal policies, which will make enduring decreases for the wealthy and corporations.

Future Solutions

While legislative bodies continue to argue that border policies and bad trade agreements are the source of everyone's economic problems, "the issue remains: Will the other major party, which has also been controlled by the billionaires and big money, be able to effectively tackle the underlying harms?" Collins said.

Left-leaning officials, he argues, know what policies are needed to "change wealth distribution", including substantial modifications to the tax system, raising the minimum wage and strengthening unions.

"It was so, so close, and the bill really did reflect the will of the bulk of people who really want lawmakers to solve some of these urgent problems," Collins said. "Wealthy influence is not about creating so much as stopping. It's easier to block than it is to make something significant occur, but the muscle memory is there. We know what that looks like."

Collins is hopeful that there can be change, but said it would require sustained political momentum.

"It may be sooner than expected that the balance shifts, and then it really is about maintaining a continuous public campaign to make progress on this profound imbalance we're living in," he said. "We can fix this. It is fixable."