The Velvet Rope Economy: How Inequality Became Big Business

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. (Mar.)