Frank-inspired

by Don Boudreaux on February 16, 2005

in Standard of Living

Cornell University economist Robert Frank – a very creative and interesting economist – believes that too much consumption in modern society is harmful. It’s harmful because, Frank thinks, many of the things that we work hard to buy are bought ultimately only for the status they accord to us. Because not everyone can enjoy above-average social status, we are all on a treadmill, working and spending feverishly to impress others, to keep up with the Joneses. With everyone doing the same, we all work too much and spend too much on things that we really don’t want (or that we don’t want except insofar as they enhance our status in the eyes of others).

 

One cure for this destructive “luxury fever” as Frank calls it is higher taxes, especially on the wealthy.

 

As reported in The Ithaca Journal, Frank rehearsed his views at a teach-in held this past Saturday in Ithaca. (Thanks to my friend Marshall Stocker for the pointer.)

 

I could write a very long post on what I believe is wrong with the economics of Frank’s thesis.

 

Doing my part not to tempt others into wasting their time outperforming me in the blogosphere, I limit myself here to one point.

 

Let’s grant, for the sake of argument, Frank’s assertion that too many of the goods and services that we consume aren’t bought really for any intrinsic use they have for us but, rather, principally because they raise our status.

 

I drive a 2003 Lexus GS300. According to Frank, I would likely be almost just as happy with a reliable 1993 Honda Civic were it not for my desire to be seen in a luxury automobile – a desire to impress others with my high status. I can’t deny that there’s something to his argument. If I were single, I know that I’d be more self-confident driving a beautiful and desired woman to dinner in my Lexus than I would be if I drove her to dinner in a twelve-year old compact car. And, I suppose, if no other man drove a nicer automobile than my 12-year-old compact, my desire for the Lexus would be muted.

 

(Interesting, though, I hesitated before writing the above paragraph. I’m a bit embarrassed admitting publicly that I drive a Lexus. Why? I don’t really know why. Whatever the reason, clearly my demand for status isn’t as straightforward as Frank seems to think.)

 

Anyway, people demand status and will spend time, energy, and resources to get it. Suppose that the government taxes or regulates the economy very cleverly so that it succeeds both in equalizing incomes and in severely dampening the mad rush to buy goods whose real purpose is to enhance their owners’ status.

 

Does the scramble for status end? Put aside the inevitable scramble for political office and appointments – and the status enjoyed by those who occupy such positions.

 

Will ordinary men and women just kick back and relax? Will men unable to buy Rolexes or Lexuses not find other ways to signal higher status in their quest to intimidate other men and to win the favor of desirable women? Will women unable to get botox treatments and to buy YSL handbags not discover other ways to win the envy of other women and the attention of desirable men?

 

I’m confident that other treadmills will emerge. What these might be, I can’t say. Perhaps a chief avenue for seeking status would be literary. With commercial and industrial energies thwarted by Frank-inspired government policies, many more men might turn their effort toward writing poetry or drama or novels. Bookstores (if such would exist in Frank’s world) would overflow with many more works of literature. “I wrote ten books last year, baby! How many did your boyfriend write?!” “Oh yeah!” retorts the threatened boyfriend, “I plan to write twelve books this year. So there!”

 

Or maybe men will take to physical combat. Or excelling in sports. Or much larger muscles.  Or achieving greatness in cooking.

 

It’s intriguing (for men, at least) to imagine the ways that women might compete for status in Frank’s de-consumerized world.

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