America has always known haves and have-nots. But what was a tiered system is morphing into a caste system.
A $1,000 seat at Yankee Stadium, in the first few rows along the baseline, is known as a Legends ticket. Holders bypass the long lines of fans waiting to enter the park by conventional means, whisked in by security guards who greet them like family. They enjoy a private dining room and concierge access, and they are separated from lesser fans by a concrete moat.
It has been a long time since sporting events were essentially communal experiences, and it’s no secret that the industry caters to the wealthy. But what struck me about the Legends experience, when I shelled out for a pair of seats one autumn Sunday, was something called the Harman Lounge.
It’s a club within the Legends club, and there’s nothing particularly unique about it — just more gray suede couches, another bar and some TVs. The only thing that makes the Harman Lounge special is that it is restricted to fans sitting in the first row and only the first row. It exists solely to exclude fans who are not at the absolute top.
I had gone to Yankee Stadium in search of what I call the Velvet Rope Economy, and in the Harman Lounge I found something like its apotheosis. Whatever the arena — health care, education, work, leisure — on one side of the velvet rope is a friction-free existence. Red tape is cut, appointments are secured, doors are opened. On the other side, friction is practically the defining characteristic, with middle- and working-class Americans facing an increasingly zero-sum fight for a decent seat on the plane, a college scholarship, even a doctor’s appointment.
There has always been a gap between the haves and have-nots, but what was a tiered system in America is morphing into a caste system. As the rich get richer and more businesses focus exclusively on serving them, there is less attention and shabbier service for everybody who’s not at the pinnacle.
[This article is adapted from Nelson D. Schwartz’s new book, “The Velvet Rope Economy: How Inequality Became Big Business,” published by Doubleday.]
This trend doesn’t merely delight the wealthy — it also exacerbates the isolation and abandonment of everyone else. Anger and resentment are hardening into permanent features of our politics. President Trump regularly inveighs against the elite, and the Democratic front-runner, Senator Bernie Sanders of Vermont, makes attacks on “millionaires and billionaires” a hallmark of his campaign. Consumer dissatisfaction is high despite low unemployment and steady hiring gains.
Among the purveyors of elite experiences, however, business has never been better. The creation of products like Yankee Stadium’s Harman Lounge is driven by straightforward economics: As more money accumulates in fewer hands, attracting this contingent is essential if profits are to grow.
“By definition, the 1 percent is always just 1 percent, but that group has gotten much wealthier and their purchasing power is bigger,” said Geoff Yang, a co-founder of Redpoint Ventures and one of Silicon Valley’s most successful venture capitalists.
Meanwhile, ordinary experiences deteriorate in quality, and the motivation to pay more for an upgrade and better treatment becomes more urgent, even for Americans who don’t consider themselves part of the elite.
The political and social repercussions go beyond symbolism — they have a real impact on government policies and fiscal priorities. For instance, when corporate decision makers, members of Congress and especially the political donor class routinely bypass traffic jams and deteriorating trains and buses and get to the airport via a luxury helicopter service like Blade, the political impetus to improve public transit fades.
The ease of catching a commercial flight at the deluxe new private terminal at Los Angeles International Airport — the first of its kind in the country, with a $4,500 annual membership plus a $3,000 fee per trip — makes it that much easier for those who can afford it to forget about the decrepit main terminal, with its claustrophobic hallways and overcrowded waiting areas.
Similarly, if wealthier consumers can hack the hospital game and see specialists before everyone else, or employ high-priced counselors to gain special access to the Ivy League, health care and education reform become much less pressing.
Nowhere is the segmentation worse, or anger more evident, than up in the air. With nine different groups to board a plane, flying has explicitly become an exercise in class distinction. The frustration isn’t confined to rhetoric. A 2016 study on air rage by Katherine A. DeCelles of the University of Toronto and Michael I. Norton of Harvard Business School found a surprisingly robust link between onboard incidents and what they call “physical and situational inequality.”
What the researchers discovered as they sifted through the data was remarkable. When passengers boarded at the front of the aircraft and had to walk through the premium cabin to get to coach, the odds of an outburst in economy doubled. Nor was the anger limited to the back of the plane. On those flights where coach passengers traipsed their way through first class upon boarding, unruly behavior among elite passengers was nearly 12 times as likely.
The extremely rich don’t see even first-class fliers, let alone those in coach. Take Nick Hanauer, a Seattle entrepreneur worth hundreds of millions of dollars. As an early investor in Amazon, Mr. Hanauer gets around in his personal Dassault Falcon 900LX jet, which retails for $43 million. Money provides him with a kind of all-encompassing E-ZPass, enabling him to zip past the everyday obstacles the rest of us have to contend with.
“This is my life — I see it everywhere,” Mr. Hanauer said. “I haven’t waited in a line in 10 years.”
But for all his wealth, Mr. Hanauer said, he has a gnawing fear that the widening gulf between economic winners like himself and ordinary Americans is unsustainable. “If you’re not genuinely concerned about the future of the United States, you are not paying attention,” he said.
In some cases, money can mean the difference between life and death. In California, private firefighters sent by insurers saved the vineyards and estates of a fortunate few during the recent spate of wildfires, even as neighboring homes were reduced to ashes. For $50,000, private health care consultants can steer cancer patients into potentially lifesaving clinical trials.
The evidence of this trend isn’t merely anecdotal, either. The richest 1 percent of Americans live nearly 15 years longer on average than the poorest 1 percent, according to a 2016 study in JAMA. And that disparity is increasing.
It’s getting impossible to imagine that we’re all in it together as a society. Because the hard truth is we’re not. On the other side of the velvet rope, millions of Americans are going about their daily lives, paying their taxes and trying to make ends meet, even as they wait longer to see a doctor or to get through security at the airport because richer Americans are jumping the line.
“If this continues unabated, we’re done,” said Mr. Hanauer, who in 2013 started Civic Ventures, a think tank aimed at creating a more level playing field. “This won’t be a capitalist system — it’ll be a feudal system. You can’t shred the norms of reciprocity that make social cohesion possible and expect to have a functioning democracy. It’s just not going to work.”
Nelson D. Schwartz has covered economics since 2012. Previously, he wrote about Wall Street and banking, and also served as European economic correspondent in Paris. He joined The Times in 2007 as a feature writer for the Sunday Business section. @NelsonSchwartz