THE VELVET ROPE ECONOMY by Nelson D. Schwartz was originally published in March 2020, and therefore probably did not get as much attention as it would have had at other times. Schwartz, a business reporter at The New York Times with close to two decades of experience, discusses "How Inequality Became Big Business," a topic which certainly features in analyses of voting patterns and reactions to candidates. In fact, Schwartz concludes the text by writing "it's up to all of us -- including those well ensconced inside the velvet rope -- to create a less segmented society, where Americans from different walks of life actually meet one another and find common ground." His chapters look at experiences inside (envy, exclusivity, ease, access, and security) and outside (exclusion, division, and isolation) by sharing numerous examples across industries. Perhaps one of the most vivid is the literal separation at sporting venues like the new Yankee Stadium which limits access and getting autographs to certain ticket holders. While looking at product differentiation and capacity constraints, Schwartz points to travel, healthcare, and education, saying, "as the public sector is replaced by private services aimed at the elite, the very foundation of the republic is eroded." THE VELVET ROPE ECONOMY is well-researched, and notes represent roughly ten percent of the text. Schwartz's examples tend to be domestic ones, but they could apply internationally, too, as was stated more recently on The Conversation web site: "Globally, inequality is so extreme that the world's 10 richest men possess more wealth than the 3.1 billion poorest people, Oxfam has calculated." Think about it.

The bad news is that there is a hidden (and not so hidden) Velvet Rope Economy in the United States right now. The author explains that the rich top one-percenters are different. They essentially coast down an EZPass paid express lane through life’s difficulties. Meanwhile, the losers below them struggle with lines at amusement parks and proposed Standing-Room-Only “seats” in coach air travel.

So what’s the good news? According to the author, I’m in the Upper Middle Class, which may explain why I’m thinking of purchasing the $500 an hour VIP tour at Disneyland despite thinking it was a waste of money only twenty years ago. YOLO, am I right? But truly in California, where a million dollar is a starter condo, I feel closer to the bottom than the top earners.

Some of the services available on the other side of the rope are pretty incredible. Access to clinical trials, a hidden park at Seaworld, private firefighters that will save your house but let your neighbor’s burn, and a private Porsche ride to your connecting flight are just a few of the surprising (and probably surprisingly expensive) options.

So how will this increasingly large difference between the rich and everyone else end? Per the man smart enough to invest in Amazon at the beginning, “civil disorder or even revolution.” However, according to the author, there is a simpler solution. Vote with your feet. Resist purchasing the Velvet Rope Economy’s premium options. Use egalitarian Southwest Airlines that has only one seat class. I guess there goes my VIP tour idea. I enjoyed this short class in economics and human behavior. If you are interested in topic, the author keeps it entertaining. He also shows both the pros and cons of premium pricing. 4 stars!

Thanks to Doubleday Books and NetGalley for a copy in exchange for my honest review.

“The rise of the Velvet Rope Economy marks an end to the great democratization of American life in the post-World War II era.”

What is the Velvet Rope Economy? The Velvet Rope uses class segregation based on your socioeconomic status to help businesses profit. Think of the fast pass systems at theme parks that only certain family groups can afford. Or the better seats at a sporting event. Or even private education. Why are businesses profiting from class segregation? How did we get here?

There are tons of examples for everything this book states. You will be familiar with most of them if you have lived in the U.S. for most of your life. If you have not, this might be a big eye opener. Different treatment, benefits, and price discrimination due to socioeconomic status is proven in airline services, theme parks, sporting events, health care, and education to name a few that are used as examples in this book. “It favors the people who have the money…”

The first part of the book is about the super elite that are “inside” of the Velvet Rope (5%-54% on a Kindle), and the second half is about those “outside” of the Velvet Rope (54%-83% on a Kindle). Exclusivity, social brain hypothesis, soft benefits vs. hard benefits, situational inequality, Pareto optimality, and class segregation are used to support the ideology behind the Velvet Rope Economy.

“…people will be left out of the economic system as more and more information accumulates.”

It only focuses on the present and what that looks like right now. It does explain that we are headed to a caste system but goes no further.
This is a well researched book that is accessible to the average reader.
Thank you to NetGalley and the publisher for an advance copy.

The Velvet Rope Economy is an eye opener. One thing I learned: based on an algorithm called a Customer Lifetime Value (CLV), a company might not bother to answer your phone call if your projected lifetime profitability is too low. So much for “the customer is always right.”

Schwartz describes how U.S. corporations are chasing all the wealth that has accrued to and (contrary to trickle-down economic theory) has been firmly locked up in the richest 1% of the population. Companies are providing elite services, which are then stratifying into elite and mega-elite, and then mega-mega elite. These services occur on the privileged side of the Velvet Rope, sometimes a literal rope or wall or locked door, and sometimes an invisible barrier, separating the elite who have paid a premium from the rest of us.

The Velvet Rope divide applies to entertainment, sports (at every level from elementary school to professional), travel, education, and medical care. Stratification begets stratification and keeps the poor from becoming middle class, much less crossing to the other side of the Velvet Rope.

Services such as public hospitals that used to be the same for everyone and serve as equalizers in society become stigmatized, neglected, and sometimes eliminated, Schwartz points out, as everyone yearns for the elite and rarified world of the wealthy, or, in the case of the wealthy themselves, luxuriate in their pampered bubble and lose touch with the majority of the populace. Schwartz blames both Left and the Right for this—both those who demand special treatment at sky-high prices, and those who provide it.

Companies needn’t worry about the vanishing middle class, once a behemoth of purchasing power. The middle class will either pony up for the elite treatment, or suffer with the herd. While it’s not covered in the book, information is increasingly roped off for the well-heeled as well, who can afford hefty prices for subscriptions--and we wonder why the poor are not more well-informed.

The conclusions of the book are weak, although I enjoyed the examples of more egalitarian business initiatives. Schwartz overlooks the fact that the middle class and poor in the U.S. can’t entirely blame the rich and corporations for this sad state of affairs, since many non-wealthy citizens resist paying taxes for funding public services. Schwartz suggests redistributing wealth and rebuilding our social infrastructure through fairer tax laws, which I would call unlikely. What side of the Velvet Rope, after all, is Congress on?

I received an advanced readers copy of this book from the publisher and was encouraged to submit a review.

I was expecting a book mildly relevant to my middle-class life, but this is about the experience of all of us. Schwartz opens with cruise ship passengers pressed up against each other waiting for a buffet, as more elite classes relax nearby.... then pans out to elite stadium seating, tiers of ever-more elite frequent flier lounges, concierge access to good doctors, schools that depend on parent fundraising for music and art, and a thousand other ways our lives are segregated by ability to pay. His journalistic style is engaging and relatable, and he describes social change in small towns and big cities I know well, from heartland to the coasts. I was pleased that it stays broad enough in appeal that I could suggest to friends across political and demographic divides.
The concise ending suggests ways for business, citizens, and city leaders to come together in creating better experiences for everyone. Highly recommend.

Thank you to NetGalley and Doubleday Books for advance copy of this book in exchange for my honest review. I'd thought I'd start a non-fiction book so I wasn't up too late. This ended up keeping me up! It reads smoothly, transitioning and segueing into different areas without effort. I won't say this book didn't trouble me...a lot. Just this morning we were discussing how Disney has now fallen into this and they are offering "VIP" seating for the parades, "plaid" shirt treatment for a price, etc. The book delves into how this came about and how it creeps into areas we wouldn't expect, such as medical care. I'll be thinking about this book for some time to come. Highly recommended.