Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

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Monday, July 07, 2008

ANCYL vs. Veblen

Posted by Simon Halliday | Monday, July 07, 2008 | Category: , , , |

Thorstein VeblenThe ANCYL leaders are all into conspicuous consumption, according to the article 'Bling on the ANC ivy league' from the Mail & Guardian.

For those of you unfamiliar with the concept, Thorstein Veblen came up with the idea some time ago in his Theory of the Leisure Class. Veblen used the term to highlight the behaviour of the nouveau riche, i.e. they buy new and expensive stuff to show everyone how rich and powerful they now are. With respect to a game theoretic understanding of the concept, it should be understood as something that is rather like an arms race in terms of the theory of positional goods. If I consume conspicuously, it implies that I am in a position above you, which implies that you are consuming a 'negative' amount of reputation/position hierarchically speaking. What is the solution? You feel a need to consume more conspicuously, to spend more and more money to get yourself above me. What does this mean? I must do the same! Hence the arms race analogy.
Veblen: Turning in his Grave

Youth leaderAnother way to think about it is that my consumption and your consumption are strategic complements, i.e. my consumption of the good is increasing in yours and vice versa (i.e. my consumption of x would enter into your utility function and the derivative of your marginal utility with respect to my consumption of x would be positive, to get technical on you). Moreover, we would say that there are negative externality effects, because the effect of my consumption on your utility is negative! So what do we see? You will consume more to attenuate your status anxiety (Bowles, 2004). Poor little you...

What makes all of this so laughable is that the ANCYL discusses empowering the worker, speaking up for the little man. Julius Malema, in reference to ANCYL business concerns, commented (reported in the article) that "if you do away with these activities,
people will understand that being in the youth league does not mean you
are going to be rich". Um, well. Ok. You want to make sure people know that being in the ANCYL won't get you rich, but there you all are arriving in expensive vehicles, with your parades of bodyguards a
nd you want us to believe such empty rhetoric? Try again please.

You may recall that I blogged on Malema recently, along with Zwelinzima Vavi.

The Theory of the Leisure Class (Dover Thrift Editions)Julius Malema: worried about his lexus...


Why, oh why, can't we have better youth politics?

Bowles, S (2004), Microeconomics and Behavior, Russell Sage, New York.

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