One of the very best analyses of the argument made by Robert Frank (and some others) that people waste too many resources competing for status and other "positional goods" is offered by the always-insightful John Nye. I especially like this point:
Thus the spending by the wealthy on many positional goods acts as a curious sort of natural taxation. The richest (or most ambitious) must work harder and pay more for virtually the same goods as yesteryear while their productive investments (necessary to stay on top of the income distribution) benefit the entire economy.
The entire essay is available here.