Status Competition & the Political Class

In his 1999 review of Robert Frank's Luxury Fever, a book that worries itself to death about competitition for status and relative position, Jack Hirshleifer, quoting Adam Smith to good effect, aptly points out that taxes meant to supress competition over income level is probably just a case of pushing the lump around the rug.

Overall, however, the biggest status game in town is not big spending but acquiring power over other people. In short, politics. So a likely consequence of sumptuary legislation would be more and more intense contests over the perennial question, “Who shall be king?” As usual, Adam Smith said it best, in The Wealth of Nations: “It is of the highest impertinence and presumption…in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense, either by sumptuary laws, or by prohibiting the importation of foreign luxuries. They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will.”

Earlier on, Hirshleifer makes the excellent point that advocates of higher taxes and bigger government, who are appalled by economic inequality, are well-nigh blind to the rather more objectionable inqequalities in political power that are a necessary part of their schemes. If the objection is that consumers have irrational preferences, so that they are lead into self-defeating, utility minimizing status competitions, then the objection applies equally to the political class:

In fact, one could well argue–Adam Smith certainly did–that those charged with public spending are likely to be even more interested in conspicuous spending than private persons. Think of the tax-financed white-elephant ballparks, the ornate federal office buildings that have sprung up not only in Washington, D.C., but just about everywhere, the hypertrophied public transit systems lacking nothing but riders, the Agriculture Department's wildly wasteful irrigation schemes. Simple corruption is very likely the major explanation, true, but politicians' desires for “monuments” (Hoover Dam, J.F. Kennedy Airport, the Sam Rayburn Office Building) are a big part of the story behind such travesties.

Arguments for new or bigger government initiatives driven by a charge of irrational or self-defeating preferences almost always make an implicit, arbitrary, exception for the ruling class. There's no good justification for invidious comparisons between ideal coercion and non-ideal agency, and vice versa. If you think the pattern of voluntary interaction “fails” according to some standard due to some psychological foible, you've taken on a burden to demonstrate that the same foible does not imply that state action will lead to an even more serious failure. This is the burden the Frank/Layard-style statist rarely carries, explaining why their conclusion is so often a destination that can be reached only by a leap of faith.

Author: Will Wilkinson

Vice President for Research at the Niskanen Center

12 thoughts

  1. except that Stewart was BANG ON about crossfire. I’ll take CNN’s new show GPS, over it for “public good”, any day.

  2. Why do I get the feeling that I could “shorter” most of the critiques aimed at Stewart here as “Jon doesn’t share my point of view, therefore he’s a dick?” Some folks dress it up as “he’s not funny!” – but that manifestly untrue assertion is a pretty flimsy basis for a substantive criticism. Carlson’s opinion is obviously tainted, and really ought not be the basis for any sort of opinion regarding Stewart.
    It seems pretty obvious to me that Stewart was expressing a sincere opinion, both in the case of CNBC/Cramer, and of Crossfire. I happen to think he was right on both counts – and I think that that’s really what ought to the topic of a debate like this, instead of these weird, ham-handed swipes at his comedy chops or his seriousness.

  3. Did anyone catch Stewart’s coverage of the burmese pythons either last night or the night before? It wasn’t the funniest thing ever on the show, but it was quite funny and does not hinge on political viewpoint. This is true of much of the content of the show.
    The show is liberal-left-ish in its bias. I’m sure this riles people. It doesn’t make it unfunny.
    In any case, Jon Stewart has never been The Funny Thing About The Daily Show. Nor was Craig Killborn before him. The correspondent segments have always made the show what it was — Stewart’s bits rise and fall, and his interviews are often painful to watch.
    The Colbert Report is another animal. It does, of course, hinge on how funny you find Colbert’s persona. It’s completely about him — that’s the joke, which you either like or don’t, which either works or doesn’t.
    I understand “sanctimony is death to satire,” but we’re talking about a very fine line, are we not? Think of Swift or Twain. Or think of the best South Park episodes. Or think of Colbert savaging the DC journalist set (and Bush-Cheney) at the Correspondents Cotillion a few years back. The line between these and earnest, shrieking sanctimony is extremely thin — as it needs to be, or we’re just in the realm of insult comedy rather than satire. It’s one thing to ridicule someone’s folly, quite another to issue the insult on behalf of a better (tacit) alternative. The latter is satire.
    And whoever said sanctimony and earnestness are antonyms at the top of this thread is wrong. No they aren’t! Both denote a person clutching tightly to a set of beliefs devoutly held.

  4. i agree with certain commenter that Carlson’s show was canceled soon after the Stewart exchange, and he hasn’t had as good a gig since, yes he is worse off for Stewart’s antics.

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