The Price of Prestige

In modern conversation; we exchange words like fans might exchange collectibles:  eagerly, and without much grasp of their true value as symbols.  Generally, we seem not even to have a vague sense of the true meaning of words.  In our worship of the utilitarian, we have taken what we have needed from our ancestors’ languages, and we have dispensed with the rest.  However, ideas and the words we use to express them have consequences, and our not pausing to apprehend this has cost us.

Consider the word ‘prestige.’  The word, to us, means generally a high status one might hold in society.   Perhaps more accurately, it can be said to refer to how society views something.  To have prestige or to be prestigious means to be held in high esteem, to stand on something of a pedestal above the rest.  That is, at least, what it means to us, but it is not what it would have meant to our wiser ancestors.

In his brilliant book on the colossal Battle of Verdun, author Paul Jankowski wrote that even though the struggle was clearly a stalemate after a few months, neither the French nor the Germans would countenance the idea of a withdrawal to more advantageous positions, or to preserve manpower and resources for more decisive encounters later on in the war.  They had fallen into what Jankowski termed the “prestige trap.”  Each side wasted tens of thousands of lives and innumerable resources at a futile attempt to maintain prestige in the eyes of the world.  Their vanity cost them dearly, and all for something that is fleeting, if it has any value at all.

I suppose it would have been impossible for two nations trapped in a death struggle to take a step back and engage in a bit of etymology, but it might have spared them unnecessary carnage if indeed prestige was their motivation.  The word prestige, after all, writes Jankowski, comes from the Latin praestigium, “meaning artifice or illusion.”  Only by the seventeenth century (after a long process of corruption, I’m sure) had the word “acquired its modern sense, suggesting reputation rather than sorcery.”  If only the combatants had reminded themselves that prestige is, quite literally, ephemeral if not illusory, they might have deployed their men and resources in pursuit of more important military goals, and thus perhaps have shortened the war and avoided unnecessary deaths and costs.

Though this is a very stark example of the very real price to be paid for prestige, there are countless others in our everyday lives.  In a very thoughtful post titled “Growth Without Goals,” my friend Patrick O’Shaughnessy described his youthful ambition to have a book published before the age at which his father had had his own published:

The mistake to which Patrick is admitting here is not to have had the ambition to write a book, but to have had it for the wrong reasons.  Perhaps the experience would have been more rewarding to him or more lasting had he instead set out to explore, as he says, or learn throughout, with the occasion for it being the writing of a book.  After all, what is the point to all of the effort if it has come at the cost of missed opportunities to develop further or gain more understanding, which of course should be our true goals anyway?

There is a practical costs to the pursuit of prestige, too.  In my many years in the financial industry, I have seen several fellow advisers fall by the wayside after loading up on debt to have all the luxury items they thought their clients would expect to see them have before doing business with them.  In another instance, a former client had nearly bankrupted himself writing handsome tuition checks for his two children to attend prestigious universities.  It perhaps never occurred to him that their educations were probably not worth the 300% difference between where they attended and more affordable state universities.  I am certain he would have been shocked at my contention that the object of sending his children to university was to get an education, not so that he could brag at the gym about where they received it.

The same futile search for prestige costs investors who see value in investing with hedge fund managers or other financial celebrities who have by one way or another ‘achieved’ cult hero status within the financial community.  The evidence is overwhelming that their expensive and complex portfolios have very little chance of delivering excess returns; the HFRX Global Hedge Fund Index lagged the S&P 500 in nine out of ten years through 2014, trailing by 8.1% a year on average.*  Even more damning, perhaps, is that according to data available through Morningstar, the Deutsche Bank Hedge Fund Total Return index has lagged even the Barclays Aggregate Bond Index since inception (February 2003) through July.  Despite poor performance, though, investors seem happy to pay up for these celebrity managers perhaps just for the ability to say they do so.

It is only fair to say, though, that we are all chasing an illusion of some kind, whether it is prestige or something else.  Maybe it is because we have more free time than our ancestors or because we are over-stimulated by material wealth around us, we feel a need to pursue material things or the admiration of others, and the realization that this will not satisfy us is a lesson we have to learn for ourselves, and re-learn countless times over.  The irony of it all is that these vain pursuits will likely leave us even further from our true objectives, whether it be financially or developmentally as human beings.

*Source – Heads I Win, Tails I Win by Spencer Jakab (2016)