The Velvet Rope Economy | Nelson D. Schwartz

Summary of: The Velvet Rope Economy: How Inequality Became Big Business
By: Nelson D. Schwartz


Welcome to a fascinating exploration of ‘The Velvet Rope Economy,’ where we dive into the growing divide in experiences between the ultra-wealthy and everyone else. In this summary, you will learn how a myriad of perks are funneled to an exclusive few while creating frustrating barriers for the majority. Through engaging examples about airports, amusement parks, schools, and healthcare systems, we’ll unravel how catering to the elite erodes the foundations of a fair society. Wealth inequality and the impact it has on people of different income brackets will also be examined, providing a comprehensive understanding of this new economic landscape.

The Velvet Rope Economy

In “The Velvet Rope Economy,” author Nelson Schwartz exposes how the wealthy enjoy frictionless experiences while the poor have limited choices and shabbier ones. As the public sector gives way to private services catering to the elite, income inequality has grown. The top 1% has seen a massive rise in income since the 1970s due to constant growth demanded by Wall Street. To cater to big spenders, companies use artificial intelligence to target them with perks, leading to higher profits per unit and no need for scaling. The book argues that this trend is eroding the foundation of the republic.

Marketing Strategies that Exploit Envy

Marketers utilize both “benign” and “malicious” envy to manipulate customer behavior. “Soft benefits” like separate entrances and personalized attention denote higher status, creating a caste system. They also calculate your “customer life value” to provide differentiated services based on your worth. To exploit envy, marketers limit the size of the elite level and create a secondary elite tier to heighten status perceptions and provoke envy in lower levels. The top level only pays attention to the secondary tier. This illuminating book examines how envy plays a role in marketing strategies and the resulting social implications.

The Rise of Exclusive Stadium Seating

In the mid-1980s, sports stadiums began selling premium seats and adopting tiered marketing strategies. Personal seat licenses (PSLs), offering perks such as exclusive entrances and viewing spaces, have made attending certain games unaffordable for many fans. Founders and Owners Club members pay well to exploit the “us and them” mentality. Studies suggest that humans are born with a need to keep certain individuals close while driving others away. Festivals like Coachella balance a collective experience with exclusivity by offering unobtrusive VIP areas while leaving general admission areas untouched.

The Privilege of Wealth

The wealthy are now enjoying luxurious experiences with exclusive tiers and privileges. Disney Parks, for instance, allow guests to reserve rides and have fast lines for those who can afford it. Similarly, Blade helicopter service offers a faster alternative to traveling to exclusive locations. These services come at a high cost, with tickets ranging from $365 to $1,425. In comparison, people in poor neighborhoods have lifelong consequences, with limited access to resources and opportunities to succeed. The privileged avoid social rules, causing a decline in public order and affecting the trust of people in the community. Despite the traffic jams caused by inadequate transit systems, the wealthy can pay a fee to use high-occupancy vehicle lanes, which further widens the social divide. Hence, it’s essential to reconsider these privileges and the impact they have on society.

The High Cost of Health Care and Education for the Wealthy

Wealthy individuals in Silicon Valley and San Francisco are willing to pay as much as $100,000 per year for “concierge” medical care that provides personalized attention, quick access to top specialists, and even house calls. For some patients, this can make the difference between life and death. Similarly, affluent parents are now hiring college admissions counselors from IvyWise, with fees ranging from $1,350 to $150,000, to help their children get into the most prestigious schools. The acceptance rates are becoming increasingly competitive with only a 5.3% acceptance rate in top schools such as Harvard. This reinforces the have/have-not split by giving the wealthy students lifelong connections through alumni networks, further isolating them from the rest. As a result, the wealthiest 1% of Americans live 15 years longer than the poorest, and a child born into the top 1% is 77 times more likely to attend an Ivy League college than a child born into the bottom fifth of American households.

California’s Two-Tiered System

Affluent homeowners hire private firefighters while the poor suffer from public budget cuts. Meanwhile, the rich enjoy luxury airport terminals while the rest face longer lines and chaos. Inequality reigns supreme.

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