What must it be like, I wonder, to be the parent of an Olympic athlete, watching your kid accomplish magnificent feats of almost no social value? When your kid is a taxi driver or a shoe salesman or a carpenter, you can take pride every day in knowing that he or she has taken someone home, or helped someone walk, or given someone shelter. When your kid is an Olympic gold medalist, mustn’t you feel a little sheepish about all the superhuman effort that went into nothing more than taking a gold medal away from someone else?
There are two paths to success in this world. One is to create things of value. The other is to take things of value away from other people. There is more honor in the former.
Most occupations have at least some aspects of both. Even Olympic athletes add some social value when they improve the quality of the competition and therefore improve the spectators’ experience. But the incremental value of a given athlete is almost always very small compared to the alternatives. The Gold, Silver and Bronze medalists all spend ten years in training; if one of them spent those ten years driving a cab, the competition would be almost as exciting, and the world would have ten years’ worth of additional cab rides.
Of course a cab driver can displace other cab drivers, just as one potential gold medalist can displace another. But here’s the key difference: A displaced cab driver quickly finds something else useful to do, whereas the Olympic loser has still wasted ten years of training. [This is all a matter of standard economic theory, usually taught under headings like "Theory of Tournaments" or "Economics of Superstars", and you can read a bit more about it in Chapter 18 of The Big Questions.]
Most people, I think, want their kids to get ahead by making the world a better place, not a worse one. That’s why parents usually glow with pride when they talk about “my son the doctor” or “my daughter the engineer” but look a little sheepish when they mention “my kid the lawyer”, and change the conversation completely if the best they can come up with is “my kid the Ponzi schemer”. So it should be for “my kid the Gold Medalist”. In terms of social value, a competitor in tournaments is roughly the equivalent of Bernie Madoff.
And what about “my kid the financial speculator”? David Friedman has an interesting post this week where he reminds us that speculators are sometimes more like socially productive cab drivers and other times more like socially wasteful Olympians. When a speculator foresees a food shortage, he hoards food, making more available in the future lean times. That’s a social service and (at least when the speculator is correct) he gets rewarded for his efforts. On the other hand, when multiple speculators compete to be the first to foresee that food shortage, a lot of effort gets wasted. There is little social value in foreseeing a shortage that somebody else was about to foresee anyway—just as there is little social value in winning a race that somebody else would have won anyway.
Authors, too, straddle both worlds. Write a book with a new and valuable idea, and you’ve enriched the world. Write a book with a new and valuable idea that somebody else was about to come up with anyway, or a book that distracts attention from another good book, and you’ve just insured that two authors have devoted a lot of effort to producing one books’ worth of value. Better for one of you to drive a cab.
I, of course, must plead guilty to writiing books. But at least I’m not running around a stupid track all day.