Doubling Down On US Status

We humans are designed to not to notice how much we want and work to achieve status; we often misunderstand our behavior by ignoring underlying status drives.  Similarly, discussions of national politics too often ignore status explanations for national policies.

I recently heard an Iranian democracy activist explain that more democracy would be good for Iran because democracy is more respected by the world.  I’ve heard Russia indulges inefficient industries over exploiting its vast natural resources because resource selling nations are low status.  And I recall a famous explanation for missteps by declining empires like Spain and England is their refusing to acknowledge falling relative capabilities.

Such status stories help explain recent events here in the US:

1. We think we have the world’s largest homes and biggest homeowner fraction.  So we subsidized more folks to have more bigger homes.  Even though that went terribly wrong, we refuse to admit we went too far and are still trying hard to subsidize home ownership.

2. We think we have the world center of finance and banking.  When that badly stumbled and threatened to greatly shrink, we instead saved it at enormous expense.  When those banks and their execs then quickly bounced back, we needed to show them who’s boss.  To show we run them, they don’t run us, we are passing finance reform to “protect consumers,” though unprotected consumers had little to do with the crash.

3. We think we gave cheap cars to the world, and so can’t stand to see US auto companies collapse and be replaced by foreign ones.  So we bought and are subsidizing our still-bleeding car companies.

4. We are proud of being the only folks to send men to the Moon, and so still spend billions on a manned space program even though we have little interest in whatever it is they are doing.

5. We think we saved the world from both Nazism and Communism, and are now saving it from radical Islamists.  Even though our Iraq venture has not gone well, we are staying there, and greatly increasing our presence in Afghanistan.  We are expanding a military larger than the rest of the world’s military combined.  We are proud of our elderly, especially veterans, for helping us to save the world, and borrow to ensure they retire in comfort.

6. Many in the US are ashamed that Europe seems greener than us, and want to fix that by taxing carbon more to get closer to European green levels.  But many of us are proud of having bigger homes, cars, TVs, etc, and so aren’t actually willing to go that green.  Unstoppable force meets immovable object, here we come.

7.  We think we brought modern med to the world and lead the world in med innovation and med tech.  So we spend far more on med than anywhere else, and let others free ride on our innovation.  But many of us are ashamed that we seem less caring of our own than Europeans, who make sure everyone gets med.  So we are trying to add more regulation to ensure more med use here.  While in most nations regulation reduces medical spending, we won’t cut back on med use since we are so proud of being med leaders.

8. We are proud of being world leaders in music and movies.  Since those industries are threatened by tech induced loss of copyright, we are willing to give up lots behind the scenes to get others to help save copyright.  My guess: we will give away meaningful protections for free speech; we are proud of having the most free speech, and so don’t really mind others having less, or even us having less, as long as we still have the most.

9. We are proud that we constrain our police via civil rights, we don’t use torture as punishment, we aren’t so nosy as to care if neighbors are criminals, and yet we are “tough” on drug crimes.  We manage this via unparalleled rates of (and cost of) prison.

The pattern: each time we fail in something where we see (or want to see) ourselves as a world leader, we double down, borrowing money to gamble that we can win it all back and stay ahead in everything.  But that extra spending stresses the rest of our systems, making them more likely to fail.  It is hard to see how this ends well; pride, indeed, goeth before a fall.

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  • http://chuckross.blogspot.com Chuck

    Very interesting post.

    What kind of market inefficiency would this be? There is a binary outcome where to be anything but the best is to be nothing. It also becomes marginally more expensive to maintain high status in many critical areas. So it would be interesting to understand the true cost structure of high status.

  • wesley

    I like this post a lot. It’s interesting to me that your views about status apply not just to individuals but to institutions and nations, especially since institutions and nations presumably aren’t designed with status in mind.

  • Karl

    Is this concept useful?

    Example:
    The financial crisis scenario had to do with ‘us’ (the american people) doing whatever possible to not become poor (that was the threat). Then, the finance industry displayed that their place in the hierarchy can never be challenged no matter what.

    Note the above scenario is also a hidden status struggle but is different from the one you described. I get that you’re trying to use status as a theoretical framework – but how do you distinguish between status struggles – they’re both equally status infused?

    And also it seems like if one wanted to, they could use any type of organizing principle to develop examples as you just did.

    • staticvars

      “The financial crisis scenario had to do with ‘us’ (the american people) doing whatever possible to not become poor (that was the threat)”
      Not true- we didn’t cut back on govt spending.

      “Then, the finance industry displayed that their place in the hierarchy can never be challenged no matter what.”
      Not true- counterproof- Lehman.

      • Karl

        meh…
        you’re not actually addressing the point.
        The point is that I can come up with any number of scenarios for status. It’s about as scientific as Freud.

        And I can argue against your points (Lehman an outlier etc), and someone could argue against robin’s points. But then we’ve lost point of what robin is trying to do.

        He is using status as theoretical framework/model…but then what eventually happens is that it devolves back into the original problem. It doesn’t add any new knowledge nor does it give a new valuable perception.

  • magfrump

    We are proud of our elderly, especially veterans, for helping us to save the world, and borrow to ensure they retire in comfort.

    My impression is that veterans don’t really have it so good. I wouldn’t be surprised to find some very inefficient programs for helping them but I’m curious what programs you’re specifically talking about.

  • Granite26

    I’ll take my left eye twitching at all the ‘We thinks’ to mean you may have a point

  • Bill

    A little bit too much.

    I would argue the opposite for some items: that we delude ourselves in thinking we have some of the best things, when in fact we do not: the best medical care in the world, the best educational system, the best infrastructure, etc., and consequently DO NOT invest in them.

    On others I would agree, but on others I would argue that it is not status, but something else, that propels our conduct:

    1. Housing. We build big houses with big payments to avoid taxes with marginal tax rate deductions of interest of 35%. It’s not status, it’s tax avoidance.

    2. Finance. The absence of consumer protection allowed banks to create CDOs that included mortgages for the uncreditworthy, on the premise that the portfolio had lower risk. Uh no, the lack of consumer protection created the fuel that burned the house down.

    3. We do buy status cars. You’re right there, but we are subsidizing to create cheaper, more fuel efficient cars and to deal with what would otherwise be a severe regional employment problem.

    4. Status military. You bet. Half of the budget and growing. We don’t borrow so people retire in comfort, we take away their money in every paycheck (via SSec) and promise to pay it back with 3% interest in an annuity. Hardly a boondoggle unless you cut taxes and seek to use the SS money, then you will have problem. Which we do.

    5. Competing with Europeans to be green when we live on the same planet as status competition? More like survival. And, guess where the jobs will be when we ultimately have to convert if we do not work on getting the jobs here with our own R&D.

    6. Med status? We let Europeans purchase drugs at a lower price than the same company sells here. Not status. Think: drug company power.

    Again, I think we live in the illusion we are a leader, and consequently do not invest.

    We are number 1.

    • Noumenon

      We build big houses with big payments to avoid taxes with marginal tax rate deductions of interest of 35%. It’s not status, it’s tax avoidance.

      That can’t be the primary/only reason, as it would be stupid to spend $1 to save even 35¢, and what you actually have to do is spend $1 plus 6¢ in interest to save 2¢.

      • Bill

        Au contrar (sp), if you are going to give to the government the $1, and if what you spend on is also leveraged with debt, you stand not only to pay less taxes but also get a gain, which then will not be taxed.

  • http://akinokure.blogspot.com agnostic

    Missing on the other side of this ledger are all of the beating up of our heroes that we do. We have a very tense relationship with our big sources of pride. On the one hand, they make us look great if we can affiliate with them. On the other hand, they shouldn’t get too big for their breeches, and if they do, we’ll just have to cut them down to size.

    We like Microsoft enough to have a patent system that allows them to thrive and please consumers, but we also don’t like anything that smells like they’re abusing their size — NB, not “power,” since they live in a highly competitive industry. Our brains just equate size with power.

    Sports teams are another obvious example that you had in the back of your mind. Sports fan love them and hate them at the same time. So it seems premature to say that the love ’em side will outweigh the hate ’em side in general.

  • Aaron Denney

    2. We think we have the world center of finance and banking. When that badly stumbled and threatened to greatly shrink, we instead saved it at enormous expense. When those banks and their execs then quickly bounced back, we needed to show them who’s boss. To show we run them, they don’t run us, we are passing finance reform to “protect consumers,” though unprotected consumers had little to do with the crash.

    I mostly agree here, but “though unprotected consumers had little to do with the crash” doesn’t add much to the tale. They didn’t do much to cause the crash, but they (we!) were certainly badly affected by it. In that sense, it could be considered a new problem that should be addressed.

    • staticvars

      Didn’t the consumers (housing investors/gamblers) driive the price bubble? I would say it was the overprotected banks, due to the implicit FNMA/FDMC government backing that killed us in terms of mis-rated bonds.

      It’s certainly true that a lack of consumer protection was not the cause of the problem here, which means that adding protection is not an appropriate response.

  • user

    When you say, “We think that …”, what you really mean is, “There is a special interest group that successfully lobbied for policies that …”

    We think that the auto industry deserves government subsidies?
    We think that the housing industry deserves government subsidies?
    We think that the corn farmers deserve government subsidies?

    Actually most people don’t, but don’t care enough to get organized and fight those policy issues.

    • Buck Farmer

      Hear hear! Concentrated benefit and diffuse harm.

  • jason

    An antipodean comment:

    In Australia, we spend billions on armed forces which would be entirely incapable of defending the continent. I suspect we spend this, in large part, to preserve our proud ANZAC fighting tradition.

    The Australian New Zealand Army Corp (ANZAC)s were ‘well regarded’ in WWI and WWII – or so the story goes.

    Yet New Zealand has largely given up on its armed forces – almost ceremonial. Are New Zelanders less affected by status than other people (they were one of the first countries to give women the vote, free up domestic regulation of industries, reduce tariff protections unilaterally, deregulate banking), they seem to be ‘as a country’ more able to let go of accepted norms/positions?

    If so, why? Is it because they have a fairly equal indigenous /non-indigenous populations, so status may not so easy to define for all? Or maybe they have developed a status for not having regard to status?

    • james

      A Kiwi myself, I would assess New Zealand as a country which seeks its status in unconventional ways. With only 4 million inhabitants, we pick competitions we can win.

      The most important sports for New Zealanders are rugby and cricket – popular only among a select few of Britain’s ex-colonies. By specialising at these, we can compete internationally. We don’t emphasise soccer, because we could never be among the best.

      Politically, New Zealand inaccurately identifies itself as “clean-and-green”. Our most cherished foreign relations policy is our “nuclear-free” status. A nation rich with hydropower resources, we have the luxury of claiming to be the world’s conscience on this issue.

      New Zealand’s early and rapid deregulation is largely a function of its then constitution – we had a one-chamber legislature, and a two-party system, meaning Governments had easy and unchallenged majorities. The 1980s deregulation involved a huge, and somewhat unpopular, exercise of this unbridled ability to pass legislation.

      • jason

        It still seems wise to me (or perhaps just fortunate, or perhaps out of financial necessity) that New Zealand has narrowed down its status building objectives. You are right, the All Blacks rugby team being a beacon of New Zealand status and no doubt well funded.

        In Australia, I suspect we are spreading ourselves extremely thinly trying to hold on to all sorts of symbols. For example, we are currently having a debate around Olympic sport funding with a debate raging on whether we should target being in the top 5 of the medal count or be satisfied with being in the top 10 (remember Australia only has 20 million people). Olympic sports are generally not very popular in Australia, but yet everyone wants to see gold come Olympic time.

    • Tracy W

      As a Kiwi, my take on it is that NZers can free ride on the Australians and Americans for security. There’s no real sense of being threatened, unlike how Australians worry about Indonesia collapsing into a military dictatorship.

      I agree with James about the constitution affecting the rate of change of economic policies in NZ.

      • jason

        Right, but this suggests Hanson is wrong. Perhaps the ANZAC tradition and subsequent spending is natural experiment which says other factors dominate status spending on armies.

    • Jackson

      NZ has one of, if not the highest, male suicide rate per capita, a real problem with Beer Goggles (literally and as braoder cultural dumbing down metaphor) their universities (whilst strong in engineering) are bottom feeders, methamphetamine is a massive social evil. Unlike UK, say, virtually all flat land (exploitable land) is exploited in a rather ugly utilatarian manner with very notable lack of trees.

      Speaking of antipodeans and pop music, I believe that it’s not without relevance that AC/DC, The Bee Gees (not really antipodean) and The Split Enz, easily responsible for the best music to come out of the area, had family nucleus – i.e. Malcolm & Angus Young and Tim & Neil Finn… the significance of this is that the deeply egalitarian tendency of achieving more by undermining others, less by self improvement failed somewhat in these instances because blood is thicker than those jealous forces.

  • http://www.hopeanon.typepad.com Hopefully Anonymous

    “1. We think we have the world’s largest homes and biggest homeowner fraction. So we subsidized more folks to have more bigger homes. Even though that went terribly wrong, we refuse to admit we went too far and are still trying hard to subsidize home ownership.”

    Although I’m sympathetic to nontransparent status seeking as an explanation for a lot of social phenomena, I think you’re wrong and being a bit too promiscuous with this one.

    I think home ownership subsidization had more to do with the notion that home owners will take better care of property than renters, and also it was a type of savings paternalism we felt more comfortable with for reasons other than the United States is higher status because it has the most home owners. If we have the most home owners, if anything that might have been down-played (I’m above average literate and I didn’t know that) because that might have discincentived home ownership as a priority.

    The more commonly expressed idea now, that we shouldn’t be encouraging home ownership because it reduces workforce mobility, I didn’t see much expressed prior to the mortgage meltdown, even with your clique of econ bloggers.

    I don’t think history should be reworked because intellectuals missed the ball, and I also don’t think you should be making arguments that everything is status, but rather looking carefully at what is AND what isn’t driven by status-seeking.

  • Matthew C.

    One of your best posts in a while!

  • Douglas Knight

    How can we distinguish “doubling down” from just continuation of a trend?

    I can certainly see NASA and car bailouts as “doubling down” on US status, but housing investment seems different to me. We don’t think we have the biggest houses or the biggest ownership percentage because we don’t think about these international comparisons at all. I can certainly see it having to do with status, just not with winner-take-all rankings.

  • http://entitledtoanopinion.wordpress.com TGGP

    An interesting theory. Are there any International Relations profs at GMU you could suggest this to?

    Bill, you mention tax avoidance. But WHY does the tax system subsidize it in the first place?

    Hopefully Anonymous, I have heard the theory that owners take better care than renters before. Sailer brought up that motivation here. Of course, when down payments are low enough that removes some of the distinction between renting and owning.

    • Buck Farmer

      There’s also the idea that home ownership cultivates civic virtue. I think this is part of why initially only land-owners could vote in the U.S.

      You can trace the idea back to the Greek poleis in the West, and through Confucius (farmers are elevated above merchants) and Laozi (don’t leave your village, travel, etc.) in China. Not sure if India has a comparable bias towards identifying home-ownership = good society in their ancient history.

      Addtionally, land ownership was until the industrial revolution the only really stable form of savings since you could generate rents without doing any work. This generated a lot of Victorian calumnies against the monasteries as being ‘drones’ or parasites on the land (see Disraeli’s “Sybil, or the Two Nations.” It also birthed Georgist economics (which was designed to force landowners to make maximum productive use of their land).

      I’d argue our bias towards home-ownership is likely driven by cultural inertia as well as genetic/cognitive inertia. As our culture (both institutions and stories) adapts to the reality begun by the birth of real capitalism (in ind. rev.) I expect we will move towards greater renting vs. buying. Already we have become a much more mobile society than in the past. No longer are people expected to stay in the same company, city, or industry for life. The world is adapting to that…look at cell phone use vs. landline use.

  • Ed

    Lot of overgeneralization here no? Status is an important concept. When you have an important concept in your mind, it’s good to realize that it’s not going to explain everything.

    Try a thought experiment where people are interested in other things – money, sex, etc. Maybe consider the situation that status is a subjective thing. Would everyone consider Donald Trump high status individual for example?

    “We think…” – There is no *we*. This is just bad writing. Be explicit. Either speak for yourself or quote, or cite something. America is a large group of people, many of whom likely don’t think like you.

  • Stuart Armstrong

    A very bad post, trying to shoehorn too many things into one idea. No evidence is presented; no discussions of alternatives; no analysis of the different political factions involved in each story; no analysis of the power structures that make certain things happen while others don’t; and no definition of “we”.

    Your best posts are still incomparably good, but too many are like this one, argumental drive-by shootings.

    • http://www.hopeanon.typepad.com Hopefully Anonymous

      Stuart, so what? Didn’t someone recently write about the “garbage” method of creative production? I forget where I read it, maybe org theory? I think we come out ahead with efficient idea capture and transmission by Prof. Hanson, and other intellectual bloggers. Besides he can always clarify and articulate in follow up posts and comments.

      I like the academic blogosphere norm that folks can be quick, sloppy, and creative right now, without harm to their professional reputation as thinkers.

      I think we should protect that norm better than Vegas is protecting its “what happens in vegas stays in vegas” norm these days.

  • Buck Farmer

    Robin, this sounds more like people trying to maintain their identity than status-grubbing.

    For many of your examples, I’m left wondering ‘what makes these activities/qualities high status?’ For example, in India producing the cheapest car available does not connotate high status, yet you think we in the U.S. are proud for bringing cheap cars to the world. Clearly status markers are being driven by divergent forces across cultures.

    Since there are so many ways of signalling sexual desirability, we need a more robust theory to help us determine which set of signals will become norms in any given society. Otherwise ‘status-grubbing’ is too easily applicable to almost any behavior to yield tight behavioral predictions for testing.

  • Constant

    Self-comparison with people living in far-away lands does not strike me as playing a significant role in the decisions that Americans make. Or with our neighbors. How much on the mind of Americans is one-upmanship with Canada? Very little, I think.

    • Buck Farmer

      Mostly agreed, Constant. American’s famously can’t find the countries we’re supposedly trying to keep ahead of.

      In reality, I think what happens is that interest groups (whether in favor of universal healthcare, auto or financial bailouts, or anything else) use our desire to be better than the other tribe without us having to know what tribe that is or whether what they’re telling us is true. It’s a very knee-jerk reaction, us vs. them.

      The bigger question I think though is why are these things associated with high as opposed to low status? I don’t think any single answer will cover all of them but I suspect a fairly consistent picture could be drawn to explain how all of these could be high status in the same country/world.

    • http://hanson.gmu.edu Robin Hanson

      Most individuals also usually deny they do things to look good to others.

      • Constant

        Robin,

        I’m not sure how that is an answer to my point. My point is more along the lines of Dunbar’s number and the monkeysphere and evolutionary psychology. We are adapted to socialize with a certain number of people, and this adaptation includes status seeking within that group. There has been relatively little opportunity (nor does it make much adaptive sense) for individuals to develop a strong sense of competition with people on the other side of the planet.

      • Buck Farmer

        I wish I had the paper at hand, but I remember seeing that self-reported happiness across countries has gone from being uncorrelated to positively correlated with GDP per capita.

        Constant, Robin, what if instead of looking at this as me an individual wanting my country to be better than another country, but instead as me an individual wanting to signal to my small local tribe that I am the sort of person who identifies strongly with the group.

        This signaling could be taken advantage of by framing questions as a competition between nations when you want people to care about them.

  • Alexei Turchin

    I have translated your article “Catastrophe, Social Collapse, and Human Extinction” into Russian
    http://www.scribd.com/doc/10310965/-
    http://www.proza.ru/2009/01/14/773

    When I translate artciles I better understand small details and logic. And I hope it will beb usefull for someone.

  • jb

    very insightful. It is very frustrating to see the breakneck pace at which the US is hurtling towards the abyss. “Sustainable” isn’t just a concern for environments.

  • Jackson

    Unstoppable force meets immovable object, here we come.

    May I have the copyright to that – I think I’m going to have some T-shirts done up… Lemming and Proud!

    People almost always know when they’re been short changed in terms of social interaction, education etc most of the economy is about buying their complicity with their own demise.

    He was a highly intelligent man and what is more a very good one: he was one of those rare men, much less common than their opposite, from whom goodness radiated almost as a physical quality. No one ever met him without sensing his goodness of heart, his generosity of spirit.

    But he was deeply inarticulate. His thoughts were too complex for the words and the syntax available to him. All through my childhood and beyond, I saw him struggle, like a man wrestling with an invisible boa constrictor, to express his far from foolish thoughts—thoughts of a complexity that my father expressed effortlessly.

    Beginning in the 1950s, Basil Bernstein, a London University researcher, demonstrated the difference between the speech of middle- and working-class children, controlling for whatever it is that IQ measures. Working-class speech, tethered closely to the here and now, lacked the very aspects of standard English needed to express abstract or general ideas and to place personal experience in temporal or any other perspective. Thus, unless Pinker’s despised schoolmarms were to take the working-class children in hand and deliberately teach them another speech code, they were doomed to remain where they were, at the bottom of a society that was itself much the poorer for not taking full advantage of their abilities, and that indeed would pay a steep penalty for not doing so. An intelligent man who can make no constructive use of his intelligence is likely to make a destructive, and self-destructive, use of it.

    http://www.city-journal.org/html/16_4_urbanities-language.html

  • Jake

    I would question the notion that striving to be the best is a problem, as i feel such competition is ultimately the best thing for bringing about advancement. At the same time, i can’t help but agree that it is a drive easily abused by short-term fixes, that get you ahead of the competition but not in a manner which promotes advancement.

    I think the key here is an understanding that competition is not a bad thing, or that losing a competition is not a bad thing if it promotes a desire to come back and win that competition later. I think the problem is that most people are likely to see losing the competition as a “final” result, as though to lose it once is to always be a loser in it. I dont know why that mentality has arisen. Maybe its because we’ve occupied the top of the global food chain for enough generations that it’s just part of our mentality now. Maybe its because our situation has been relatively “easy” compared with other nations over the past few decades, and the general populace has grown afraid of a true challenge? I dont know, all i can do is speculate on this point.

  • Steven Schreiber

    I think your arguments on status have become akin to Marxist class theory. You are using them to explain everything, even when other, simpler explanations exist and the argument’s infinite stretchiness tends to indicate that it is not actually a useful line of analysis, gratifying though it may be.

  • http://hanson.gmu.edu Robin Hanson

    I just added item 9 to the list.

  • http://meteuphoric.wordpress.com/ Katja Grace

    Interesting idea, but I’d like to see examples of activities of a similar size that America (or anyone) isn’t especially proud of and is getting worse at, and to know whether they are propped up less.

  • Matt N

    I can’t agree with #4. Science helps everyone. The first time we went to the Moon was to say we did it, but we went many times after that to study its geology and it sparked exploration of our solar system and beyond. Understanding how the universe works helps us to understand how the Earth works. Using social and economic injustice as an excuse to halt science doesn’t improve anything. Just because you don’t understand the science or don’t care about the science doesn’t mean it hasn’t improved your life.

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  • mike

    Just as a datapoint, I remember a lot of supporters of then-candidate Obama talking about how electing him would “redeem” us in the eyes of the world. Don’t hear so much about it now, but they sure seemed to care about it then.

  • brendan_r

    This is explains a lot and I hadn’t much internalized it until I read this post awhile back but I have two criticisms.

    First, I think people nowadays identify more strongly with their political cluster than their nation. Sure, they don’t admit that, so they re-write American history so what’s special about America is entirely free-markets and the constitution; or it’s entirely about diversity, ellis island, and triumphs over bigotry. But you get my point. Concretely, you can be a fan of Jewish people and still notice that lots of what the USA is proud of and doubling down on today are things that many influential Jewish people see as very important and distinctive about what America should really be proud of.

    (The only area that I see almost uniform gut level pride and support – tied very concretely to past victories often involving family members – is with the idea that we saved the world from Nazi’s and commies and should keep up that good work.)

    Second, is this just a more abstract way of saying that what people believe is deeply informed by how they see their own ancestry? i.e. Irish Catholic Americans tend to be more inspired by the USA Civil Rights narrative than their WASP cousins?

    (Also point #2 on finance and banking seems forced. Most people’s intuitions have almost always been excessively anti-finance if anything. If policy is too pro-bank that seems better explained by corruption, and sincere – and understandable – precaution about what bad things might happen with a major financial disturbance.)