Well Nye Correct

by Don Boudreaux on May 10, 2004

in The Economy

I thank a reader for reminding me that John Nye is another economist who emphasizes the fact that economic growth gives poor and middle-class people greater access to most material goods and services that, without such growth, would be enjoyed exclusively by the rich. In this way, market-driven economic growth promotes greater material equality.

But in another column Nye makes the further point that this same economic growth increases competition for positional goods, which Nye defines as

those products and services which are inherently impossible to mass produce because their value is mostly, if not exclusively, a function of their relative desirability.

A good example of a positional good is admission to an Ivy League college.

Because nearly everyone in market societies has ready access to inexpensive, high-quality clothing; an endless feast of food; automobiles; and many other amenities that only the rich in non-market societies enjoy, competition in market societies is channeled toward positional goods. Unequal access to positional goods persists, and looms larger in people’s concerns.

But perspective is vital: poor and middle-class Americans are mighty fortunate to worry as intensely as many of them do about the difficulties their children encounter in seeking admission to Harvard, Dartmouth, and Stanford.


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