A recent New York Times op-ed by Anand Giridharadas dubbed 2020 “the Billionaire Election,” with the U.S. presidential race essentially serving as a referendum on elite wealth. The debate over the gap between the 1 per cent and everyone else is dominating much of the current cultural and political conversation, not just south of the border, but in Canada, too, where the Liberals have moved to phase in tax cuts for the middle class, starting this year. The trouble with the income inequality discussion, both in the United States and here at home, is that its data and public policy tend to be complex – and often read as dry and academic. But a new book from Nelson D. Schwartz is about to change that.
In The Velvet Rope Economy: How Inequality Became Big Business, Schwartz paints an unforgettable picture of how this all plays out on the ground. Schwartz details how, as income inequality in North America becomes ever-more glaring, business is busy dividing the haves and have-nots in every sphere of public life, from airplanes to sports arenas, shopping malls to cruise ships, education to medicine. During a chat at Barney Greengrass, an iconic deli on Manhattan’s Upper West Side, where everyone still waits in line, no matter who they are, Schwartz talks about uncovering this fast lane through life – and what it means for modern society.
The Velvet Rope Economy started with pieces you wrote for The New York Times. What was it about those initial stories that let you know you had a book?
It started with two articles. The first one was looking at how on cruise ships, you’d have the restaurant for elite suite passengers literally next door to the restaurant for everyone else. That created a marker to lure people to the more elite bookings, to encourage people to trade up. In other cases, you’d have a ship within a ship, like on the Titanic. It’s a throwback to that era of Gilded Age inequality that we think of before the First World War. … Things were much more egalitarian in the seventies and eighties. If you watch The Love Boat, people might have had different-sized rooms. Some might have a view, some might be below decks. But everyone mixed together. Now you have different sections reserved for elite passengers. And that sorting seemed to me a metaphor for how income inequality had grown in our society, and how things had changed in the last 25 years in fundamental areas of American life and Canadian life, too.
Income inequality is a massive story. But it can often seem academic, dry. Why do you think the cruise ship story resonated?
I think readers felt like it pulled back the curtain. It’s something that everybody senses is out there, but this puts it on paper and articulates it. … I think it really explains why people are so mad. Basically, 98 per cent of people are getting poor customer service a lot of the time.
Canada has seen conservative populist movements not unlike that which swept Donald Trump to power in 2016, including the rise of Doug Ford, the current Premier of Ontario, and his brother, Rob Ford, the late mayor of Toronto. How much of this kind of populism do you attribute to the velvet rope phenomenon?
I think that even though resentment of the rich – and resentment of business – seems like it would be a left-wing thing, the prevalence of the velvet rope economy, and the way people find themselves stratified and almost turned into a caste system, it can boost the right as well as the left. You just get this resentment of the elite, and it doesn’t break along right-left lines.
In the book, you write about how corporations deliberately manipulate our sense of envy.
There’s benign envy versus malignant envy. Benign envy says, “Wow, that looks pretty good, I could have a shot at that.” Malignant envy feels unfair. And I think the unfairness really eats away at people. Think of the airlines. You’ve always had first class, but [now] it is so brutal in coach. Meanwhile, up in first, it’s like Versailles. It’s like something out of prerevolutionary France. I think that really contributes to that anger.
Reporting this book, how difficult was it to get information on the companies you were covering?
I was pleasantly surprised. I feel like companies are open about this. What we think of as the velvet rope economy, or envy, they would call segmenting their markets, product differentiation. To them, this is business.
There’s a lot of surprising details here. One was that many corporations assign us scores.
A customer lifetime value. This is a rating that individual customers have with the companies they deal with. It can be based on your income, how often you spend, the number of transactions you make on your credit card. They use this to calculate your value as a customer. It really determines how you are treated.
Another surprising detail was corporations’ use of intermittent reinforcement. That’s a psychological principle that often shows up in abusive relationships. Can you explain how Delta Airlines uses it?
Delta has something called “Surprise and Delight.” If you are a Delta super-frequent flyer – I mean, beyond platinum – and you have a very tight connection, they will show up in a Porsche and drive you from one airplane to another. You don’t have to schlep your luggage through the terminal. But you can’t book it in advance. The idea that you don’t know if you are going to get it is intermittent reinforcement. It’s very powerful. When people don’t know if they are going to get it, they really want it. When they do get it, they feel incredibly grateful.
What surprised you most reporting this book?
I was shocked by the high-occupancy toll lanes. Just the idea that you could have a high-occupancy vehicle lane occupied by one person who was willing to pay more. Literally, you could have people with money speed by everyone else. And then, if the roads fall apart, or the infrastructure is overwhelmed, you don’t care because you can bypass it. Same with the [luxury helicopter service] Blade. If you can get to the airport in 10 minutes, while everybody else is stuck in traffic, it’s going to reduce the public impetus to address these things.
You wrote about the wealthy building bomb shelters. It’s expensive to build a shelter in your basement. Why not just pay higher taxes to redistribute wealth, so you don’t have to worry?
The root of the word republic is res publica, public things. I think there’s fewer public things out there in this velvet rope world. People don’t trust government. People don’t trust public institutions. They feel like, “I don’t know where my tax money is going. But if I spend 10 or 20 thousand to build a bomb shelter, I know I’ve got that.” … Again, it diminishes faith in public institutions.
Does what you learned writing this book keep you up at night?
I think it makes me feel pessimistic about the future of the country. It makes me feel less and less like we are all in it together as Americans. It makes me treasure those places where we do come together, like this restaurant.
Do you see this trend everywhere now?
I’m surprised when I don’t see it … the velvet rope is really seductive. I think that’s part of the appeal. For all the anger out there, for the people who are inside, it’s pretty good. I think that’s one of the reasons that you won’t see it disappearing any time soon.
This interview has been edited and condensed.
Tara Henley is the author of Lean Out: A Meditation on the Madness of Modern Life.
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