The Right Questions

Responding to John Nye, Will Wilkinson:

John [Nye] points out a striking paradox of modern economic growth: decreasing real economic inequality creates the illusion of its opposite. … As access to manufacturable goods becomes increasingly widespread, the status-signaling value of these goods declines relative to essentially scarce positional goods.  Meanwhile, as incomes rise, a rising portion of the population finds itself with money to spend on status games. … Our society has become more economically egalitarian, in one profoundly importance sense at least, but it sure doesn’t seem like it.

One question I’ve been asking myself how it is that John’s story can sound so similar to a story Robert Frank tells (in Status Fever, for example), while the lesson each draws from his story seems so different. I think much of the difference is explained by the fact that Frank sees little but waste (too many people competing to be rock stars!) and emotional harm (your BMW makes me feel worse about my Honda!) in positional competition, while John understands status-seeking more along the lines of Adam Smith and David Hume — as an engine of the efforts that drive growth and raise standards of living. …

When our institutions and norms focus the energy of status-seeking into the right kinds of activities, it tends to leave almost all of us economically better off even if it leaves the most status-obsessed feeling wretched.

See also Rob Wiblin on why “the best status games for society … would be enjoyable for the participants, productive for society and as egalitarian as possible.”  I don’t know who is right, but I’m pretty sure these are the important questions.

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