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To numerous US citizens, the economic climate over the last half-decade has been challenging. Expenses have soared while pay remains unchanged. Steep mortgage rates have made purchasing property a grim prospect. The unemployment rate has been slowly rising.

Many Americans have indicated they're putting off major life decisions, including having kids or changing careers, because of financial volatility. But for a tiny fraction of people, the last five years couldn't have been more successful.

Fortune Expansion

The assets of the world's billionaires expanded 54% in 2020, at the climax of the pandemic. And even amid all the financial uncertainty, the stock market has only persisted in expanding. This growth has mostly helped just a tiny percentage of Americans: 10% of the population holds 93% of stock market wealth.

However unequal as this division seems, it's the system working as it is currently designed.

"Rich elites have acquired their jets, they've purchased their multiple houses and mansions, but now they're acquiring senators and media outlets," commented economic inequality analyst 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 grasp what exactly it means to be "wealthy" in the US, Collins adopts a concept from journalist Robert Frank who, in a 2007 book on the rich, envisioned the different levels of wealth as "Richistan" villages: Prosperity Village, Lower Richistan, Middle Richistan, Upper Richistan and Billionaireville.

To contemporize the concept, Collins categorizes these "economic communities" based on income levels:

• At the base level, 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.

In total, the residents of these villages comprise 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 noted. "Whereas in Upper Richistan, you're traveling via a private jet. That's a really separate reality. You fly private, you have no stakes in the commercial aviation system. You don't care if the whole system fails – you're set."

The Billionaireville Effect

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 power that this group has substantially outweighs those who are simply affluent, let alone the typical citizen who doesn't live in "Richistan" at all.

But Collins thinks the political catchphrase "end extreme wealth" fails to address the core issue and has a "whiff of exterminism" to it.

"It's the difference between personal actions and a framework of policies," Collins explained. "We should be worried about an economic system that funnels so much wealth upward to the billionaires."

Fortune Building Strategies

To understand how wealth at the billionaire level works, Collins breaks it down into four parts: getting the wealth, protecting assets, 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 modest amount of wealth through starting or running a successful business, which could get them membership in Affluent Town.

But getting to Billionaireville requires substantial commitment 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 calculated about their taxes.

"Wealth defense professionals use a wide variety of tools such as trusts, international accounts, undisclosed businesses, philanthropic entities and other methods to hold assets," he writes.

Political Influence and Hyper-Extraction

To advance a wealth defense strategy, a family needs political support. Wealth of over $40m translates to political power, Collins says, and can be used to defend wealth 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 affect nearly every single part of an Americans' daily existence largely through capital management, 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 realize is these billionaire private-equity funds are what happens when so much wealth is parked in so few hands, and they can kind of turn around 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 raise their rents."

The Real Consequences

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 pain and frustration of this kind of society can lead to deep discontent.

"The most powerful affluent rulers understand people are being left behind [and] are financially struggling," Collins said, adding that Republicans have been good at accessing a potent "false common-man appeal".

Political Reality

The irony, Collins points out in his book, is that elected representatives have appointed a series of billionaires to government roles. Along with tech billionaires who had brief but powerful roles overseeing massive cuts 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 major tax legislation, which will make permanent tax cuts for the wealthy and corporations.

The Path Forward

While government groups continue to argue that foreign entry 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 meaningfully address the underlying harms?" Collins said.

Liberal leaders, he argues, know what policies are needed to "change wealth distribution", including substantial modifications to the tax system, raising the minimum wage and empowering worker groups.

"It was so, so close, and the law really did embody the will of the most of people who really want lawmakers to solve some of these critical challenges," Collins said. "Wealthy influence is not about creating so much as preventing. It's easier to block than it is to make something significant occur, but the historical precedent is there. We know what that looks like."

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

"It may be quickly that the tide turns, and then it really is about preserving a continuous public campaign to make progress on this severe disparity we're living in," he said. "We can fix this. It is addressable."