While I’ve not read Robert Frank’s most recent book, The Darwin Economy: Liberty, Competition, and the Common Good, based on reviews it seems to be an elaboration of an argument that Frank has been making for thirty years: That competition for positional goods (status goods which are valuable only as evidence to show that you are keeping up with the Joneses) is both wasteful and does not improve human well-being. I did read Frank’s Choosing the Right Pond, which makes the same case, when I was in graduate school and agreed with his thesis then. While I might read The Darwin Economy, I don’t need to be convinced by his thesis. It was obvious to me before reading Choosing the Right Pond, and more elaboration of the same thesis doesn’t change anything for me.
In The Darwin Economy apparently breaks new ground by focusing his argument specifically on “the rational libertarian” whom he hopes to convince. He wants to convince “rational libertarians” of two theses:
1. That competition for positional goods is wasteful and does not increase human happiness or well-being.
2. That this fact therefore justifies a “progressive consumption tax,” a tax on consumption that increases the more one consumes.
As mentioned above, I’m already on board with his first thesis and have been for as long as I can remember. Status competition based on conspicuous consumption has always struck me as silly and wasteful. Done.
But while I understand his theoretical argument for a “progressive consumption tax,” and am mildly sympathetic in theory, I’m not convinced it would actually do much to solve the issue if implemented in an ideal manner, and in any real world situation it would actually open the door to even more rent-seeking as every purveyor of consumer goods would jockey to get their competitors’ goods taxed while exempting their own.
Meanwhile, there is a far more profound and satisfying way to address Frank’s concerns: The expansion of subcultures that do not participate in materialistic status competition. I’ve mentioned this path to Frank, and he agreed in a private communication that it is an important path, but I’ve not yet tried to convince him that it is a full-blown alternative to his consumption tax.
Frank came to his ideas after living simply in a poor nation and then realizing that he was just as happy without material possessions as he was with them. Of course, many of us have had this experience. In addition, I see Frank’s thesis as the natural projection of an academic: At universities status is determined more by scholarly success than by material possessions. Meanwhile, professors tend to be especially prone to despise business people who are, in general, more financially successful than are the professors. One could read Frank’s “progressive consumption tax” as a manifestation of Frank’s class interest as an academic.
But there are many communities with status hierarchies that are not determined strictly by material wealth, including some religious communities, some bohemian communities, indeed any group of human beings who judge human beings by something other than material wealth. I’ve lived most of my life among diverse manifestations of such communities, so much so that I’m always surprised by people who feel anxious about their status based on their relative lack of wealth.
And I find that as people who were previously anxious about their status due to a lack of relative wealth discover and are introduced into other communities with status hierarchies based on other criteria, they gradually become less anxious about it and often begin to compete based on the criteria for status in the new community (artistic or athletic excellence, religious purity or spiritual evolution, kindness and decency, intellectual ability, etc.)
The most formative years for our identity typically take place within schools and universities, from the age of four or so to the age of twenty or more). All of the educational institutions that I’ve loved or created have been communities where material status hierarchies were not primary. In my experience, when one starts a school and is able to hire, fire, and promote faculty based on their commitment to the vision and mission of the school (including the distinctive criteria for status as defined by the school), then one can create a community in which the young people do not develop identities based primarily on material status. While some of them may become addicted to material status competition when they leave the community, others stay attached to the extended community and its norms. Even those who leave to join the “rat race,” so to speak, know of an alternative moral universe, and often return.
But in order to create these communities, educators need significantly more educational freedom than is possible in government schools. If we had a system of tuition tax credits with minimal constraints on the content of “schooling,” we would see a steady growth in various forms of schooling that provided young people with not only the ability to get a good job (nothing said here should imply that we should not educate young people to earn as much as they please), but with a sense of confidence and personal purpose that will increase their lifelong happiness – and decrease the extent to which they are vulnerable to shallow status competitions that may not be in their best interest, whether those status competitions are based on binge drinking, thuggish gang behavior, outrageous sexual promiscuity, conspicuous consumption, or whatever.
Thus I am a “rational libertarian” who shares Frank’s concerns but who believes that markets in education and community are crucial for addressing those concerns. As Arnold Kling likes to say, “Markets fail. Use more markets.” Frank is identifying a legitimate case of market failure. This is precisely why we need far more autonomy in creating educational communities – and ultimately in creating full-blown human communities with distinctive rules that support distinctive status hierarchies.