The Velvet Rope Economy

December 9, 2019
New York Times economics reporter Schwartz explores the “Versailles-like world” that corporations, universities, and the health-care industry have built for wealthy Americans, leaving everyone else to “scramble for basic service,” in this sharp and illuminating debut. Tracing the phenomenon to economic principles including “product differentiation” and “capacity constraints,” Schwartz argues that rising income inequality and data-driven marketing are creating “a zero-sum game” that pampers the rich and punishes the middle-class and poor. His examples of the “velvet rope economy” include IvyWise, a consulting company that charges up to $150,000 to help high school students apply to college; Private Suite at LAX, a standalone airport terminal with its own TSA agents and freeway access; and medical care “navigators” who arrange for clients to participate in clinical trials and see top specialists. Though companies can maximize profits by catering to the rich, such stratification threatens the “egalitarian impulse that once characterized American life,” Schwartz argues. He praises Southwest Airlines, which has no first-class seating, and entrepreneurs such as Nick Hanauer, an Amazon investor whose philanthropic endeavors aim to close the wealth gap. Schwartz explains economic concepts clearly and succinctly, and avoids anticapitalist dogma in making his case for reform. Entertaining and infuriating, this carefully balanced inquiry strikes the right chord.

January 1, 2020

This illuminating book by Schwartz, business reporter at The New York Times, presents convincing evidence of how companies are increasing profits and expanding by identifying wealthy clients, and then marketing and providing tiered products and services to these elite clients. Schwartz explains how these customers are willing to pay premium prices because of exclusivity, ease, envy, access, or security, or a combination of these factors. Each of the five factors is given equal treatment in dedicated chapters. The author discusses these compelling trends across multiple industries, such as airlines, education, entertainment, healthcare, and tourism. These business models are in turn creating a further stratified society, Schwartz maintains, with exclusion, division, and isolation as natural byproducts of these financial strategies. He tackles these subjects in the final three chapters, and explains how inequalities are deeply ingrained across economies worldwide and cannot easily be remedied by governments. VERDICT Economists and business professionals will be well-served by this insightful analysis, as will social activists and all those concerned by the growing separation between rich and poor.--Caroline Geck, Somerset, NJ

Copyright 2020 Library Journal, LLC Used with permission.

January 1, 2020
New York Times reporter Schwartz uses what he has learned covering business and economics to present an intriguing examination of income inequality. The velvet rope metaphor will be familiar to any reader who has felt the sting of waiting in line while more privileged individuals gain entrance to a theater or night club or amusement park ride. "The rise of the Velvet Rope Economy," writes the author, "threatens to worsen the divisiveness that plagues our politics and culture today. After all, if you never actually encounter people from a different class or social background, it's much easier to demonize them." In the first section of the book, Schwartz focuses on the privileged portion of the U.S. population, those men and women who can spend money to realize privileges that the majority of Americans could only dream about. The author's chapter titles consist of just one word each, but those words speak volumes--e.g., "Envy," "Exclusivity," "Ease," "Access," and "Security." The second section of the book, "Outside the Velvet Rope," examines those individuals left behind, including those who used to be considered "middle class" in terms of income. While Schwartz expresses dismay about how so many owners of the businesses offering these discriminatory services seem to lack a moral compass--a sentiment that will resonate with nonwealthy readers--he does understand that the profit motive driving expensive privilege is unlikely to disappear in this ultracapitalist nation. Refreshingly, the author also discusses businesses that treat individuals of all income levels more or less equally, including Southwest Airlines, Starbucks, Best Buy, Target, and the Green Bay Packers NFL franchise, which is publicly held. Schwartz opens the book with a Bob Dylan lyric: "Money doesn't talk, it swears." Some readers may swear at the compelling yet maddening examples the author uses to illuminate the privileges reserved for the ultrawealthy. While Schwartz doesn't offer many solutions, his description of the problem is well rendered. An original entry in the growing literature on income inequality.

COPYRIGHT(2020) Kirkus Reviews, ALL RIGHTS RESERVED.