Luxury Beliefs

September 26, 2022

We just traded my wife’s giant Yukon XL Denali for a Sienna Hybrid. We went from 14 mpg on premium gas to 36 mpg on regular. It feels good! We’re helping the environment!

That self-congratulation lasted about five seconds. We didn’t get the Sienna to help the damn environment, even though there’s no doubt that the environment needs helping. We got it because it was cheaper and better for our family. It’s easier to maneuver around school parking lots. It has more space and better features. And it sips gas at an amazingly low rate.

Helping the environment is a luxury belief. It’s one of many in a pantheon of (usually progressive) ideas that we in the rich West try to convince ourselves are important by working to convince everyone else that they’re important too. Luxury beliefs are held only by those that can afford to hold them. If you’re just trying to make sure you can afford the groceries every week you aren’t going to worry much about what might happen to the ocean acid level in a few decades. Of course you should, and the rich are going to try to convince you of that. But eating enough calories is a more acute problem.

Groceries is an especially clear example, but it’s just the same as my Sienna. It saves us something like $300 a month and it’s easier with the kids. It wins because it’s better for my family and my pocketbook. Being better for the environment (nominally, let’s not talk about complexities like cobalt mining or manufacturing right now) is a “feel good” benefit, but it’s distinctly secondary.

The rich and powerful work too hard to be do-gooders or to convince those striving to survive that they should be do-gooders. The better angels of our nature fly only when Maslow’s hierarchy is well satisfied. This is why subsidies suck. After a certain point of speculation and investment, new and better products need to win of their own accord. Solar and wind need to provide lower cost per kilowatt/hour. Electric cars need to be better because they’re cheaper and easier to maintain. The whole goal of these technologies is to rectify global externalities that aren’t otherwise captured in the markets. All subsidies do is absorb and hide the effects behind government funding. Instead of convincing people to be better, more altruistic, and to sacrifice for their fellow man, we need to rely on people’s own self-interests and build systems that make selfish choices better for society.

Luxury beliefs are a normative Keynesian beauty contest. In a Keynesian beauty contest, you don’t select the contestant you think is the most beautiful, you select the one you think everyone else will select as the most beautiful. Luxury beliefs are the norms and goals we want everyone to work to achieve. We can’t subsidize our way there. We have to lift everyone up so that we’re all rich enough to seek these goods.

To some, especially the right, luxury beliefs become a stick to poke at the elite, rich, and powerful. It’s easy to give them a bad rap when so many people have day to day struggles. The solution isn’t to dismiss the beliefs, it’s to make everyone rich enough to afford the same luxuries. This is a game of absolutes. 19th century Londoners were nowhere near rich enough to care about CO2 emissions, despite being the richest city in the world at the time. The GDP per capita in a lot of the West has reached a point where we can iteratively care about some of these global externalities. Our goal for places like China, southeast Asia, and India should be for them to get as rich as possible so that they can inherent the same beliefs. The rich will care about protecting their waterfront property anywhere in the world. They’ll want clean air for their children, forests for them to walk in, and animals to see on safari. We’re starting to see some of these trends in China. For instance, the air pollutant levels in Beijing are less than half what they were 10 years ago and they’ve committed to moving most of their coal power over to nuclear in the coming decades.

Building systems that rely on self-interest is the way to make luxury beliefs happen. Instead of convincing poorer people that they should care about these beliefs, we should focus on making them richer so that they’ll care about them of their own volition.

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