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  • Dan Connors

The Velvet Rope Economy- As the rich get richer, where do the rest of us go?

Updated: Aug 5, 2020

The Velvet Rope Economy: How Inequality Became Big Business

There has always been an upper class in America. It's unavoidable in any large industrialized nation. In my youth we had private country clubs and resorts, but now things have gotten much more stratified. Income inequality has risen in the past 50 years and those at the top have many more resources at their disposal. Businesses have seen where the growth is, and found lucrative and innovative new ways to cater to the super-rich.

The problem, as detailed in this eye-opening book by Nelson Schwartz, is that the rich are creating an entirely separate world for themselves, to such an extent that their ideas and decisions, the ones that affect the rest of us, are based on their limited experiences, and not ours. When once the rich traveled the same roads, went to the same stores, and rode the same airplanes as we did, there were some shared experiences that created social bonds. Now the rich increasingly have privatized everything, with the result that the rest of us are left with a neglected public arena of crumbling schools, infrastructure, health care, and public services.

Schwartz looks at both sides of the velvet rope that increasingly divides us. He takes us on board a cruise ship to show how envy is being utilized to drive aspirational spending, with special restaurants off-limits to all but the richest passengers. Companies are creating special experiences for those who can afford it, and the rest of us get to look in the window and dream that someday we could have that too. The problem is that most of us will never have that kind of money, and at some point malicious envy takes over and threatens to take down the entire system.

The author takes us on a tour of Yankee Stadium and its new luxury suites, and the drive to provide exclusivity to the richest fans. Stadiums all over America have been re-imagined to include new suites and exclusive foods for the richest of the rich. Regular fans aren't even allowed to come near the field for photos or autographs. Even worse, even the opportunity to buy tickets has been monetized with the advent of personal seat licenses- huge fees for the "rights" to buy tickets to see your favorite sports team.

I identified with this part the most as I've seen huge changes with the St. Louis Cardinals stadiums. In the old stadium, tickets were affordable and suites were limited to one nosebleed section up high. In the new stadium that opened in 2007, suites are everywhere and all-inclusive with food and drinks. But instead of tickets costing $10-$20, now the suite tickets go for $100- $500 per seat per game. I had to give up my season tickets because of the costs, which now are inflated for weekends and series with close rivals like the Chicago Cubs. It's entirely possible to go to a game now and barely even notice what goes on down on the field- the amenities in the suites are that much better.

Schwartz takes a look at the theme park business, another one close to my heart, and shows how those who want to lay out the big bucks can have much better experiences than the rest of us. VIP tours costing $400-$600 and hour get you exclusive access and front of the line treatment. Express passes cost extra, but they mean separate lines, one for the hot, sweaty poor people who have to wait an hour or more, and one for the elite, who breeze right through and onto the rides and shows.

The book takes a look at concierge medicine, where more and more doctors are giving up private practice for this expensive alternative where fewer patients are being seen but given more access to the doctors and best research. Getting appointments with specialists these days can take months, and in cases like cancer where time is critical, timely appointments can mean life or death. With the concierge system and the right connections, the wealthy can get in with specialists in a much shorter time period.

There is a group known as Ivy Wise that helps high school students prepare for they competitive application process for the best schools. If you have the money, they will use their extensive expertise from a pool of ex-admissions officials to tell you exactly what the schools are looking for that year and how best to get your child admitted. No need to go the Laurie Laughlin route of bribing coaches. Or you can take the Jared Kushner way and have your parents donate millions to a school and then they will take you in, even with mediocre grades.

On the other side of the velvet rope, the book examines how public schools are struggling. Not only are academics struggling, but sports and activities have become privatized with the advent of club teams and activity fees. Where once participation in teams was open to all with the desire and ability, now school sports are highly stratified with middle-class parents struggling to figure out how to pay heavy fees so that their kid can be on a team, in band, or even go on a field trip. The wealthy can supplement their school's offerings through generous PTA donations, which the richest public schools utilize on top of their budget. Mind you, this is for public school systems- don't forget that the rich have a large system of private schools that provide superior teachers, class sizes, and facilities.

Schwartz takes a much needed look at the world of shopping and malls. While many middle-class department stores like Sears, Penneys, and Macy's are struggling, malls that cater to the rich are doing quite well, as are dollar stores. With the decline of malls comes a decline in social capital and community feel as shoppers mingle less and less. Dollar stores are a big threat in smaller communities because their cheap prices undercut those of local grocery stores. (With the main problem being that all food at dollar stores is packaged and processed- no fresh produce or meat.) Dollar stores have half the employees as grocery stores and give very little back to the communities in which they operate.

He also takes a look at the restaurant industry, and how moderately priced chains like Ruby Tuesday have suffered since the great recession of 2008 when their customers switched down to fast food. Moderate chains like IHOP, Cracker Barrel, Applebees, are all hurting while higher priced restaurants like Ruths Chris Steakhouse is thriving. We are headed towards a world where McDonalds and Five-Star reservation-only restaurants are the only options.

The book details something I'd never heard of called the pretrial diversion program, where justice is basically for sale. For those who can afford to pay, trials are called off and remedies are assessed such as community service or classes. Much has been written about the unfairness of our legal system, and the velvet rope economy runs through jails as well.

Unless you are lucky enough to be in the 1%, this book is a depressing read. We all know the rich get special treatment, but this book shows how coddled they truly are. If you are one of the lucky few, you get the best doctors, schools, neighborhoods, stores, and vacation spots- where everybody caters to you and never tells you anything bad. You can get private fire protection for your mountain home, private airplanes and helicopters to avoid traffic and TSA screenings, exclusive seats for music and sporting events where there are no lines for anything, and for enough money you can hobnob with celebrities and politicians. My God, no wonder these people become so out of touch with reality. This kind of imbalance often doesn't end well- only a major depression or revolution shakes up a system like this. In fact- the 1% are preparing for the worst by building shelters and setting up secure sites in places like New Zealand to wait out any global calamities that might happen in the next few years.

Luckily the final chapter tries to go into the few areas where there is still resistance to the velvet rope economy. Schwartz highlights Southwest Airlines, where all passengers are treated roughly the same. He heaps praise on the Green Bay Packers, a football team in a small market that has resisted the mania for expensive suites that sap the fun out of games and fans. There are some hopeful spots the author points out, but the trend definitely seems to be headed the other way.

This book is a good step towards recognizing what we're losing when the public space is being privatized for profit with the wealthiest 1% being the primary beneficiary. Capitalism exists with the consent of the people doing the buying, selling, and creating. If people took more time to think about what we're willing to give up by letting the velvet rope divide us, perhaps there would be fewer ropes and more community. Only when the 99% can see hope that their world is getting better does having a velvet rope make sense. When things are falling apart like they are today, visions of Ivanka Trump and Marie Antoinette show a elite on a precarious perch.

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