Nelson D. Schwartz

The Velvet Rope Economy is an eye opener. One thing I learned: based on an algorithm called a Customer Lifetime Value (CLV), a company might not bother to answer your phone call if your projected lifetime profitability is too low. So much for “the customer is always right.”

Schwartz describes how U.S. corporations are chasing all the wealth that has accrued to and (contrary to trickle-down economic theory) has been firmly locked up in the richest 1% of the population. Companies are providing elite services, which are then stratifying into elite and mega-elite, and then mega-mega elite. These services occur on the privileged side of the Velvet Rope, sometimes a literal rope or wall or locked door, and sometimes an invisible barrier, separating the elite who have paid a premium from the rest of us.

The Velvet Rope divide applies to entertainment, sports (at every level from elementary school to professional), travel, education, and medical care. Stratification begets stratification and keeps the poor from becoming middle class, much less crossing to the other side of the Velvet Rope.

Services such as public hospitals that used to be the same for everyone and serve as equalizers in society become stigmatized, neglected, and sometimes eliminated, Schwartz points out, as everyone yearns for the elite and rarified world of the wealthy, or, in the case of the wealthy themselves, luxuriate in their pampered bubble and lose touch with the majority of the populace. Schwartz blames both Left and the Right for this—both those who demand special treatment at sky-high prices, and those who provide it.

Companies needn’t worry about the vanishing middle class, once a behemoth of purchasing power. The middle class will either pony up for the elite treatment, or suffer with the herd. While it’s not covered in the book, information is increasingly roped off for the well-heeled as well, who can afford hefty prices for subscriptions--and we wonder why the poor are not more well-informed.

The conclusions of the book are weak, although I enjoyed the examples of more egalitarian business initiatives. Schwartz overlooks the fact that the middle class and poor in the U.S. can’t entirely blame the rich and corporations for this sad state of affairs, since many non-wealthy citizens resist paying taxes for funding public services. Schwartz suggests redistributing wealth and rebuilding our social infrastructure through fairer tax laws, which I would call unlikely. What side of the Velvet Rope, after all, is Congress on?… (más)