The Status of the Politics of Status

Here's what happens when you wait a day to publicize your new article in the Australian Centre for Independent Studies' magazine Policy, “Out of Position: Against the Politics of Relative Standing“: David Friedman goes and writes an excellent blog post about the same subject:

It seems obvious that, if one's concern is status rather than real income, we are in a zero sum game. If my status increases relative to yours, yours has decreased relative to mine. So this point of view seems to support the approach to politics that sees it mainly as a question of who gets to benefit at the expense of whom, of which side who is on.

Like many things that seem obvious, this one is false. It is true that my status is relative to yours. It does not, oddly enough, follow that if my status is higher than yours, yours must be lower than mine, or that if my status increases someone else's must decrease. Status is not, in fact, a zero sum game.

This point was originally made clear to me when I was an undergraduate at Harvard and realized that Harvard had, in at least one interesting way, the perfect social system: Everyone at the top of his own ladder. The small minority of students passionately interested in drama knew perfectly well that they were the most important people at the university; everyone else was there to provide them with an audience. The small minority passionately interested in politics knew that they were the most important ones; their friends were there to be herded into meetings of the Young Republicans and Young Democrats in order to get them elected to positions in those organizations that were the stepping stones to further political success. The small minority….

Right on! Indeed, I talked with David about exactly this for about a half-hour in Vegas this April, though I claim no influence whatsoever. Nevertheless, I claim comprehensiveness! Here's a taste of my 3600 words… (footnotes omitted)

Crucially, there is no limit to the possible forms of excellence. So, while the number of positions on any single dimension of status may be fixed, there is no reason why dimensions of status cannot be multiplied indefinitely. It does not in fact require a violation of mathematical law to produce more high-status positions, for it is possible to produce new status dimensions.

New dimensions of excellence and status often open up due to technological innovation. It was impossible to be a chart-topping pop star or a champion triathalete before there were radios and bikes. Liberal market societies not only create new technologies, they create proliferating forms of association, affiliation, expression, and identity at a sometimes alarming rate. Each musical genre, each hobby, each committee, each church, each club, each ideology, each lifestyle provides a new dimension—a new frame of reference—for positional competition. Environmental purists can compete with one another to conspicuously consume eco-friendly products (or conspicuously refuse to consume much at all), while punk rockers duke it out on grounds of anti-establishment authenticity, and economics professors knock themselves dead trying to get articles into esoteric journals no one else cares about.

The cultural fragmentation some critics lament is precisely what liberates us from unavoidable zero-sum positional conflict. Surfer dudes don’t compete with Star Trek geeks for status. Dynamic market liberal societies create higher-order positive-sum games (for example, the ‘create a new status dimension’ game, or the ‘find the status dimension on which you rank highest’ game) that have lower-order zero-sum games as parts.

Once we recognise the anarchic multi-dimensionality of status, the frequent supposition of Frank, Layard, Cassidy, and others that the distribution of income—whether within the office or within the nation—is the the main dimension of positional competition begins to look bizarre. Struggling artists do not doubt their superiority in the face of successful accountants. And it should not need pointing out that many of us simply don’t know how much our friends make, and don’t much care.

[…]

We are not destined to want fancier cars, bigger houses, and more upscale outfits, nor are we helpless to feel diminished by those who out-consume us. We can opt out by opting in to competing narratives about the composition of a good life. And we do it all the time. We can, like Gauguin, quit law and family to paint naked natives in Tahiti. Or, better, we can move the family to a quieter place where houses are cheap and schools are good. (‘Is this heaven?’ ‘No, Iowa.’) If we are aggrieved by the rigours of the rat race, the answer is not the clumsy guidance of a paternal state. The answer is simply to stop being a rat.

There is, of course, much more. Please check it out.

  • someguy

    That will hand another $5k of my income to Uncle Sam. It will also likely cause the destruction of the private real estate market and mortgage banking.

    Just in case you missed it – oh yeah, that’s right, you probably were still shitting your pants back then – the S&L crisis of the 80’s was caused by the elimination of the commercial mortgage deduction. Many of those who owned commercial properties simply walked away from them, leaving banks holding huge mortgages on properties of now trivial value. S&Ls, having lower cash reserve requirements than normal banks (a permanent liquidity crisis, if you will) were left holding the bag and went bankrupt by the hundreds.

    Eliminating the mortgage interest deduction at this point would likely wipe out a generation of homeowners, plus any banks with any substantial mortgage holdings, never mind the affect on securitized mortgages, which are heavily leveraged to begin with and the source of our current liquidity crisis.

    Hey, I’m beginning to like this liberaltarianism stuff Will. It’s just like being a bomb chucking leftist revolutionary, except without all the boring Marxist cant.

    • So, in a nutshell, you love government subsidies as long as you are the beneficiary.

  • A reduction in taxes is the same thing as a subsidy?

    The mortgage deduction is no different than food stamps?

    Interesting.

    • Yup. What’s the difference between $x off one’s taxes for a buying a house and a $x government check for buying a house? Poor people don’t pay taxes, so you can’t really pretend transfers to them are a reduction in taxes, but the mortgage deduction really is in fact the equivalent of food stamps for the middle and upper-classes. The difference is, they don’t need it and it hurts poor people.

      • As a homeowner, I pay a lot of local property taxes that renters don’t have to pay.

        I always saw the mortgage deduction as a way to balance that out.

        Who knew I’ve been on the doll the past 25 years (yeah, my mortgage deduction is pretty close to zero lately)?

        • Landlords pay property taxes and pass it on to renters.

          Look, we’re all on the dole in one way or another. And that’s the trick. Everybody has a strong incentive to protect the subsidies they get (a concentrated benefit) and a weak incentive to oppose the subsidies other people get (a diffuse cost).

          • Aaah, but renters can always easily move to avoid those taxes if they get too high.

            As I said, my mortgage deduction is virtually zero these days, but it sure was a lifesaver back when I was starting my family 20-25 years ago.

            Houses are expensive things to keep up.

            I vote we keep the deduction.

  • Paul G. Brown

    Although I doubt he’s still following along …

    someguy – there’s no reason that eliminating the mortgage deduction can’t be neutralized with another reduction to (say) payroll tax, or income tax.

    Or how about this – turn it into a deduction from interest income earned. Create incentives to save, rather than to borrow and build.

  • Alex

    I should point out that Canada doesn’t have a mortgage tax deduction and has the same home ownership rate as the US.

  • someguy

    >>>Yup. What’s the difference between $x off one’s taxes for a buying a house and a $x government check for buying a house?

    People on welfare didn’t earn the money they receive. It’s taken from others and given to them. A deduction lets me keep more of my personal property. My money is not presumptively government property, on which I bear the burden to prove entitlement to retain it. The expectation value of my property is among the property interests that I own. I wouldn’t feel happy to have that blithely taken away.

    You seem to be operating under the presumption that Uncle Sam is entitled to take more of my money, and it’s just not fair that the law should favor ownership of private property. That’s a funny assumption coming from a guy who works at Cato. There is a word describing people who favor diminished property rights, higher taxation and social liberalism. The word is “liberal.” You should stick to that and drop the ‘tarian’ portion of your fusion project’s name; it would save some typing time.

  • JB

    What liberals support getting rid of the deduction? Are these mythical beasts that live in your closet?

    I’ve heard conservative pundits and the rank-and-file talk about getting rid of the deduction, but I have never heard any sort of liberal say that. I’m sure one or two are out there, but they are a very, very small number.

  • John Thacker

    And of course the proposal to limit the mortgage deduction among the rich met massive resistance among the Democrats in Congress, and Obama’s indicating a willingness to drop or modify it (along with the proposal to limit charity deductions.

  • wilfred71drapeau

    every where I found Obama with the change, at least in slogans, where as what I see in his policy not a change but a shift in approach because all other options are closed already. I do not feel an independant change but a change that is Karls Mortgage Calculator compromised already.

  • Some people who owned properties that are commercial simply walked away from them. This is truth. Also they area leaving banks.

  • Mortgage fraud is a type of real estate fraud that most often hurts the financial institutions that lend money for purchasing property. The most common form of mortgage fraud involves fraudsters acquiring property and then artificially increasing the property’s value through a series of sales and resales between the fraudster and someone in cooperation with them..

  • Thanks for sharing this information I guess this crisis of mortgages are being solve. Most of them failed and being bankrupt..