Nelson D. Schwartz’s The Velvet Rope Economy exposes how 1980s cruise ships and Yankee Stadium’s elite access evolved into today’s data-driven tiered society—from Disney’s app-based fast passes to pay-to-skip lines—where inequality fuels $X billion in premium margins. COVID-19 widened the divide as remote work shielded elites while crushing service jobs, yet even conservatives fear pre-revolutionary Russia-style resentment. Schwartz rejects Bernie Sanders-style critiques but warns that unchecked segmentation erodes shared experiences, from public schools to communal events, while government subsidies often inflate elite services like concierge healthcare. The paradox? Airlines like Southwest prove culture—not just policy—can resist class fragmentation, leaving the question: Can capitalism ever reconcile profit with cohesion? [Automatically generated summary]
So, there's a book that's been around for a little while, but it's actually an idea that's kind of seeping into the culture because a lot of people have been asking me about this now.
It's a book called The Velvet Rope Economy: How Inequality Became Big Business.
It's by Nelson D. Schwartz.
He has more than 25 years' experience as a business journalist at Fortune and the New York Times, covering everything from energy and economics to inequality in America and business in Europe.
He now works as a communications and strategy consultant.
Welcome, Nelson D. Schwartz.
Thank you for coming on.
Great to be here.
Thank you for having me and discussing one of my favorite topics.
Let's start with the title.
What is the velvet rope economy?
The velvet rope economy is this idea that there's tiering everywhere and kind of a new sort of caste system emerging in American society for us as consumers.
So that could be nine different lines to board a plane.
It could be paying to skip the line at Disney.
It could be a separate entrance at the ballpark or the football game.
It could be seeing a concierge doctor that enables you to skip the weight for a specialist.
It could be kind of a fast lane for college admissions, which everyone thinks of as, you know, somewhat meritocratic.
I mean, you know, I think there's been some even criminal cases with college admissions, you know, just as I was finishing the book.
But all of these areas that at least there was a pretension to fairness, or at least you might get better service if you paid more, but everyone would be treated decently.
That began to kind of break down.
And we got this emergence of, yeah, of what I call a velvet rope economy, where some people are waiting behind the velvet rope and some are flying by.
When do you see this as having begun?
When did this start happening?
You know, you know, in fairness, some people said to me, well, hasn't it always been this way?
Well, that is a good question.
You know, but the truth is, you know, obviously, you know, first and second class and third class existed on the Titanic more than 100 years ago.
And, you know, the rich in the Great Depression, you know, in the movies were living lives like in the clouds.
And, you know, so obviously class differences aren't new.
But I think, you know, beginning in the 1980s, there was a greater comfort with segregating consumers.
And you began to see sort of much more defined groupings and barriers.
I mean, when I went to Six Flags in New Jersey as a kid in the 1980s, everyone waited on the line.
And now you can pay and go right to the front.
And even in the, if you watch The Love Boat, basically some people had bigger rooms than others on the boat or, you know, portholes, but everybody kind of interacted together on cruise ships in the 60s and 70s.
Now you have ships within a ship on these on the big cruise lines.
You have areas where if you don't have a gold card, you can't go.
And, you know, that's new.
And same with ball games at Yankee Stadium.
I write about this in the book.
When I went with my grandfather as a kid in the Bronx in the 70s or 80s, you could walk down to the field to get autographs from the players before the game or after the game.
You can't do that now.
There's the legends section at Yankee Stadium, and the access to the field is only for elite ticket holders.
So those are all new examples.
And like I said, I think it began sort of in the 80s, and technology, which we can talk about, has only made it easier to kind of segregate and tier markets as consumer types like to say.
You say inequality became big business.
Yeah.
The idea, I guess, is that this is a way that you can give people something for their money to get more money.
Is that the basic?
Yes, yes.
I mean, the margins are better.
And a lot of the growth has occurred in people who have money to spend and people with more disposable income, by definition, have more money to spend.
And that's where a lot of the growth has been in the economy, you know, at the high end.
And you see that in the market for luxury goods, in the market for luxury homes, you know, just in sort of people who are, you know, dependent, you know, on the stock market for big, you know, gains in wealth.
They've got the money in this economy, and companies want to go after that.
And segregating their markets and tiering their markets is the way to do it.
Companies Sensing Inequality00:12:33
So, you know, as you said, people are going to say, well, the rich have always been rich and the poor have always been poor.
And there's always been this kind of separation.
What's the problem?
Why is this a problem or is it a problem?
Well, you know, the book is not a Bernie Sanders kind of like screed against capitalism.
You know, I'm not against capitalism.
And I actually, you know, what made the book better is that a lot of companies kind of opened up to me and they, you know, sort of how they thread the needle and how they walk the balance.
And companies are sensitive to providing a decent experience to everyone and maybe a sort of a richer experience to some whilst making sure it's still reasonable for everyone.
And, you know, that's something I write about.
I think the issue is for us as a society, when we don't come into contact with one another and we're so segregated from one another by class, we don't have shared experiences like all going to a baseball game or all playing for the sports team in our public schools.
You know, now there are a lot of these travel teams or club teams, which are private for certain sports that, you know, it's not like everybody in the town gathers on Friday night for the football game.
And, you know, you lose these common experiences, or, you know, you don't even come into contact with the people who board the plane before you, and you're so mad by the time you get on, you're like the eighth or ninth group to board, and there's no room for your luggage.
I feel like that contributes to some of the divisiveness and partisanship and just venom in our public dialogue and debate.
So, you know, I feel like it's a loss when there aren't more shared experiences.
That's my concern.
You know, it's a funny thing.
I mean, this is a conservative site.
And on the right, people have this kind of dual feeling about things like this, because on the one hand, we're kind of sick and tired of elites, you know, basically setting the agenda.
The idea of guys from the World Economic Forum flying around on private jets to tell us how much gas we can put in our Toyotas really sticks on our crawl.
But at the same time, every time we hear words like inequality, we immediately think the government is coming after our paycheck.
We immediately think the government is going to seize on inequality and seize on anger to take more control of the economy.
Is that what you're looking for?
Or do you have some other?
No, I mean, I do think, you know, government investment in certain areas like aid for education, you know, infrastructure, you know, would help some of these issues.
But, you know, even look, I went to the University of Chicago, which is sort of a undergrad, not for economics, but is a bastion of conservative economic thinking.
And, you know, even for conservatives, there are issues of how capitalism and unfettered capitalism affects traditions and affects sort of how we live in this sort of society.
And I think even conservatives worry that if we don't have a sense of common things in the common wheel, something's lost.
And that fairness and the perception that everyone has a fair shot is important for a functioning society.
I think conservatives get that as well as liberals.
So, yeah.
No, I mean, I think you're absolutely right.
And obviously, if you have too much inequality and it's too flagrant, it causes anger on both sides.
You talk in the book about how this makes socialism appealing to people, that people think that socialism is going to even things out.
I'm always interested in the fact that all of the socialists who are in government are supported by some of the richest corporations in the country.
I'm not sure you can illuminate why that happens, but I'm interested in why socialism becomes appealing to people and why corporations basically sign on to that.
Well, I don't know if corporations are signing on to socialism.
I think when there's a sense that the playing field isn't level and you don't have a fair shot at things, you're supposed to have a fair shot, like healthcare.
By that, I mean, if you have one of these concierge docs and you get to see the heart surgeon and I have these examples in my book, if you get to see the cardiologist in two days and other people are waiting two months or the oncologist or these kind of specialists, I think that really offends people's basic sense of fairness.
Same, and even the college or the high school sports things or the college admissions, these are, you know, conservatives sort of see these kind of traditions and activities and kind of social bonds.
You know, social bonds are important in a functioning democracy.
You know, I studied Russian history in college and you don't want a situation like before the Russian Revolution where the elites and the ruling classes had no legitimacy.
And I think we run this risk if the elites in our country and the wealthy are so cut off and they're kind of in the fast lane that it runs a real risk of the rest of the population kind of being embittered.
Yeah, no, I agree.
I think it can just go too far.
Has COVID, this book came out just before COVID or just as COVID, has that made it worse or better?
You know, I think it's kind of made it worse.
You know, there were cases where people used connections to get shots ahead of the rest.
But I think it's an issue because if you're a knowledge worker, a white collar worker, you know, upper middle class, you can just take your laptop and work from home and abandon the city, move to the country, all that kind of thing.
If you're a working class person, you're a truck driver, you're a restaurant worker, you're in a customer service facing position, you can't do that.
You have to show up at work.
So you were at risk.
And I think a lot of the restrictions on activity fell harder on working class people because they didn't have the option of working remotely.
What about one of the things you say this starts vaguely in the 80s?
The 80s is when the internet really starts to come into its own.
I mean, I feel the internet is the biggest thing since the invention of the printing press.
And I feel that this is big.
Yeah.
It's big.
So what effect has that had on this?
You know, I think it makes it much easier to segment your markets and to do tiering.
I mean, just, you know, the speed at which you can gather data and, you know, things like when you call the bank or call the insurance company, they know what kind of customer you are.
I mean, they know what your balance is.
And if you're a high wealth, you know, high net worth individual or you have, you know, a more elite account, you'll get service faster and you can do all this kind of stuff.
And even since the book came out, Disney, which I write about, you know, Walt Disney kind of envisioned everybody being the same in the park.
You know, class differences were something that existed outside this fantasy land.
And even since the book came out, Disney has moved in the direction of doing more kind of fast pass type, you know, segmentation and skipping the line.
And it's very easy to do with apps and phones and technology and all that, much easier than when you were literally, you know, had two or three lines.
You can camouflage, you know, people cutting much more easily with technology.
So we're talking about the book, The Velvet Rope Economy, How Inequality Became Big Business by Nelson D. Schwartz.
So it seems that all the motivating factors are on the side of inequality.
They're on the side of this kind of privilege.
I know that being on the lower end of the privilege scale, I enjoy getting on the plane first.
I enjoy being in first class, especially because I feel that flying has become so much worse for everybody than it used to be.
How do you motivate business without government becoming just obnoxiously powerful?
How do you motivate business to bring us together?
I think there are social rituals which come into play and culture.
And in certain parts of the country, I think there's more of an ethic of everyone in it together and not being quite so separated.
For example, in Minnesota and Wisconsin and those kind of states, there's more of this sense.
Maybe it's the Scandinavian roots of some of the society, but there's a sense of kind of a sense of populism and equality.
And the Green Bay Packers actually are fan-owned and they've sort of designed the stadium.
They have boxes and they have more elite areas, but Scandinavia has a socialist tradition.
That's why I mentioned it.
So I'm not saying it's socialist in those part of the country, that part of the country.
But in Green Bay, the stadium, when they remodeled it, they made sure that like a lot of the regular seats were good ones.
And it wasn't such a kind of dystopian, you know, some people way up in the bleachers and some people enjoying over-the-top luxury boxes.
So, you know, that's there are examples where the culture kind of influences things.
I also think, you know, there's companies that have really emphasized more of an egalitarian kind of approach, like Southwest.
Southwest doesn't have, you know, first class.
And Southwest has done extremely well.
I mean, it's one of the only airlines that never went bankrupt and has consistently made profits.
So you can do well.
I think the culture informs this as much as the government does.
You know, during the Great Recession after 2008, a lot of these businesses, these incredibly big businesses were bailed out by the government.
Some of them were forced to be bailed out by the government to take government aid that they didn't necessarily want.
And it did seem, it seemed to me that the same people who might complain about the welfare state and people who are out of work getting government funds were actually taking government funds to keep these tremendous businesses alive.
I can't help but feel that everything the government touches becomes more unequal, that, for instance, a television set, no, the government doesn't give you a television set.
One day a TV comes out and it costs $10,000.
The next year, that same TV costs $600.
Is there some way that the government has kind of fed inequality by getting involved?
That's a tough one.
I mean, I think I would say, you know, one issue is when the government intervenes in the market, you can get huge distortions.
So let's say the government decided tomorrow to radically increase, you know, aid for education and college students.
I mean, I wouldn't be surprised to see college tuition go up a lot.
You know, so, I mean, I think that's the danger.
And I think, you know, if we went to a nationalized healthcare service, you'd probably have even more demand for elite concierge care.
You know, so though, I mean, everything cuts both ways, I think, when the government intervenes.
Doesn't mean there's not a place for government, but I think that's a danger that sometimes people don't recognize when they're planning these kind of programs.
Yeah, yeah, good point.
The Velvet Rope Economy, How Inequality Became Big Business by Nelson D. Schwartz, a really interesting subject and a very fair take on it.
I really appreciate you coming on.
Yeah, no, it's nice talking to you.
I hope you come back.
Great.
Good luck.
Please keep in touch and happy to come on anytime.