I suspect there is a combination of mismeasured well-being and variance in well-being that is largely played out in status seeking services. Thus, measured inequality seems high even though most households can purchase basic goods at real costs that are far below what they were in 1970.
If you earn $100,000 and spend $60,000 on status-producing services (rent in an expensive city and/or tuition for your child at a brand-name college) and I earn $50,000 and spend nothing on those services, then the raw income data say that you are twice as well off as I am. But are you that much better off, or are you even better off at all?
Those whom capitalism has bestowed riches upon clamor for the ability to deploy that capital on status-linked services. If we conclude that capital is poorly-spent, what must we conclude about capitalism?
This is millionaire-next-door stuff. Don’t lease a Lexus, just keep your 10 year old Crown Vic. Five hundred a month, pretty soon you are talking real money.
Healthcare, housing, and education all went up in price. Not cars.
It’s wrong to call these status goods. Healthcare is an obvious necessity. Housing near good jobs is expensive…so are you proposing people give up on good jobs and move to some dying rural town and not work all day? Education is expensive, but without that degree odds are your not ending up middle class. And don’t tell me how much your plumber friend makes, what would happen to him if all those college kids entered his industry and drove down his wage.
If a good is necessary to maintaining a thriving middle class life, we shouldn’t call it a status good which has all the implications of wasting money on fancy sports cars.
I think there is a weird case of signalling that occurs in end-of-life healthcare decisions. Adult children want to signal how much they care about their ailing parents. Ailing parents want to signal that they haven’t lost hope.
I’m afraid that I can’t agree with the proposition that “health care is an obvious necessity”.
When we bewail the unavailability of affordable health care, the examples offered are invariably those of someone who suffers serious and lasting consequences that could’ve been averted with a high degree of certainty, using a treatment whose marginal cost is low.
But the demand for health care doesn’t stop there. It includes treatments of dubious or near-nil effectiveness (think of all the people who demand antibiotics for their colds), and treatments of trivial or even imaginary ailments (that nasty-looking but in no way debilitating toenail fungus, or my insistence on seeing a dermatologist monthly because of my unfounded fear of skin cancer).
The high price of goods and services which signal (zero-sum) high social status is a feature, not a bug. There has to be some mechanism to discriminate and exclude most people, aligned with the personal features we associate with influence and prestige. Prices don’t perfectly correlate with merit, but have the advantage of performing this sorting function with plausible deniability regarding intent.
The person earning $100k is better off, because at any moment they can stop wasting their money on the fancy college and move to a more affordable city, and their salary will still be much higher than $50k. You see it happen all the time in the Sunbelt.