Gongol.com Archives: September 2024

September 19, 2024

In the course of critiquing the behavior of certain newsmakers, economist Daron Acemoglu offers an interesting two-fold analysis of behavior at the extremes, noting: "[S]tatus is largely zero-sum. More status for somebody means less for another. A steeper status hierarchy makes some people happy, and others unhappy and dissatisfied. Investment in zero-sum activities is often inefficient and excessive, as compared to investment in non-zero-sum activities." ■ It's an observation worth applying to the world where ordinary people live, too. At the extremes, some people try to gain status over others by buying expensive things and showing them off. This is the classic folly of "conspicuous consumption". ■ But who hasn't heard the argument that it's better to buy experiences rather than goods? And is there anyone for whom is it not generally true? ■ Acemoglu's follow-up to that material/immaterial divide is important, too: "Compare, for example, the social value of spending money on pure gold multi-million-dollar Rolex watches versus spending time to learn some new skills [...] The second type of investment, on the other hand, increases your human capital [and] also contributes to society." ■ Goods, though, are easier to mass-produce than experiences -- especially ones that "increase human capital" (by developing new skills). Perhaps one of those people with lots of resources could chase some of that zero-sum status by investing in the creation of the kinds of tools and institutions that make it easier for others to access new human capital. Carnegie's libraries did something just like that a century ago. The innovation ought to continue.