Many people have a dream. With the continuous development of productivity, we will usher in an era of great material abundance. By then, everyone will be equal and a world of great harmony will be created. This dream is very reasonable. The economic development trend we see seems to be like this. Things like private cars and air travel that only a few people could enjoy before are now available to ordinary people.
Things that were scarce before will become less scarce in the future. Economics can completely explain this trend: Since there is scarcity, more people want it, and more people are willing to produce it. If there is more production, of course there will be no scarcity.
However, some things will always be scarce no matter how rich the society as a whole is. And it may be that the more abundant a substance is, the scarcer it becomes.
For example, the winner of the World Cup. No matter how many people play, there is only one champion. In terms of competition bonuses, appearance fees, advertising and endorsement fees, etc., the value of the championship will only get higher and higher. The position of champion, even from a theoretical perspective, cannot become abundant; it will always be scarce.
Alex, a technology blogger who works for Social Capital, recently proposed an interesting concept called “ranked scarcity.”
The so-called scarcity of ranking is a factor that can make you stand out among others and move your position to the front row. The richer the society, the more people queue up, and the scarcer it will become. What participates in ranking is not a physical commodity that can be mass-produced. It only exists in people’s minds, but it can be operated and often purchased.
If you mention things like top academic journals and Harvard Business School with just reverence, I hope you’ll look at it differently. The reason why they are great is because they have ranked scarcity. This perspective allows you to have a clearer understanding of modern society, identify good things, and perhaps seize business opportunities.
There are three types of ranking scarcity, which we call “superiority”, “right of entry” and “guidance”.
A sense of superiority is something that allows you to demonstrate a higher “status” than others. For example, there are cars all over the street. If you want to stand out from others, you may need a high-end car. The value of luxury goods does not lie in use, but in sending the right signal: I have money, I am not an ordinary person. Therefore, luxury goods must be “limited” to ensure their scarcity status. Sometimes merchants will sell them to you even if you are not wealthy.
The right of entry is something that allows you to enjoy some kind of “privilege” among the bustling crowd. For example, because you hold a first-class ticket or are a gold card member, you can board the plane before ordinary passengers. This is a privilege. For another example, there is a busy highway with a special toll lane next to the regular lane. Because there are few people willing to spend money, the passage speed of this lane is very fast when others are stuck in traffic jams. This is also a privilege. .
Search engine advertising bidding rankings are essentially selling the right to enter. No matter how convenient it is to obtain information, the position ranked first on the search results page will always be scarce.
If a lot of superiority and access rights can be bought with money, then leadership is a rare ability that must be managed by oneself.
Guidance is the ability to recommend something to others and have others accept it with sincerity. China’s newly popular “Internet celebrities bring goods” is a representative of leadership. Traditional guidance also includes shopping guides, recommendation engines, music playlist customization, and reviews of cars or other items.
Guidance helps people make choices. The richer the material, the more goods there are, and the more people need help choosing.
What’s even more powerful is the product of the combination of these three scarce rankings. And this combination may lead to more unfairness in society.
Sense of superiority + right of entry
Although luxury cars, watches, and brand-name bags are expensive, they still cannot be compared with houses in good locations. The value of buying a good house is not only to enjoy the sense of superiority brought by the house, but also to enter a good community circle. The quality of your neighbor is very high, the quality of your neighbor’s children is also very high, and your children can go to good schools.
The combination of superiority and access exacerbates social inequality. In the past, it was enough to be smart if you went to a prestigious school, but now you may have to be both smart and rich. If prestigious schools become a club for the rich and elite, knowledge may become a luxury.
However, the inequality of superiority and access rights can only be regarded as mild inequality. Combined with guiding forces, they are more likely to form expansionary and aggressive inequality.
Guidance + sense of superiority
”Internet celebrities” can only bring goods, rich people and celebrities can only attract attention, but if you are both eye-catching and can persuade others to listen to you, you are the leader of fashion trends. Maybe society didn’t approve of a certain outfit, a certain style, or even a certain behavior in the past, but when celebrities do it, society recognizes it and they are proud of it. For example, Hawking and “The Big Bang Theory” made talking about physics fashionable.
If you have more money than you can afford to buy a house or a car, you may want to be a “venture investor.” This means that not only do you have money, but you also understand the latest technology, and – please note, this is the most critical one – you can use your influence to promote the companies in which you invest. Maybe a technology was unknown to everyone, but because you invested in it, it became popular.
If the advice you give is particularly reliable and you have a position of authority, you represent the so-called “orthodoxy.” Why are consulting companies so profitable now? Why don’t the management of those big companies make good decisions themselves and have to ask consulting companies to come up with ideas? Because the ideas provided by consulting firms have a certain “legitimacy”: the CEO can tell the board of directors that McKinsey & Company has suggested this, so what’s wrong with me taking this step? To put it bluntly, consulting companies can “take the blame” for your decisions at critical moments.
If the paper is published in the journal “Nature”, professors from famous universities are helping to promote it, and the largest TV stations report it, how can this new drug be bad? Institutions with “legitimacy” will carefully maintain their reputation, but they don’t mind monetizing it occasionally.
Guidance + right of entry
Buffett once talked about a “toll bridge” theory. There is a river in the middle of the city. There is only one bridge on the river. People in the city have to cross this bridge every day. If you own this bridge and you can still charge a fee, how much is this bridge worth?
Websites like Google and Facebook are, in a sense, equivalent to owning toll bridges on the Internet. If they just provide search services and connect consumers and merchants, then there is nothing wrong with them. I want to eat Lanzhou Beef Noodles but I don’t know where to get them. I can find them by opening an app and searching for them, which is great.
However, if you combine the power of guidance with the right of entry, these companies with “toll bridges” can be powerful. For example, Hulu is a large online video website in the United States. If you search for the keyword Hulu on Google, the first place in the search results is the advertisement that Hulu spent money to buy for itself, and the second place is Hulu’s official website, and the addresses pointed to by these two results are exactly the same. of.
Why is this? Since your official website is already ranked first, why spend money on advertising space? The answer is that if Hulu does not buy this advertising space, this advertising space may be bought by others, and the first result that searchers see will not be Hulu’s official website.
Merchants are extremely dissatisfied with Google’s approach, but they must spend the money.
Google not only allows consumers to find you, but also determines where you appear, so Google can “blackmail” you. For another example, if you go to a bookstore now, some books will be placed in the most eye-catching position at the entrance, and there are many books in one place. This is not a genuine recommendation from the bookstore—at least not a free recommendation—but may be the result of a deal between the bookstore and the publisher.
Today’s shopping websites do not always put the most popular and best-selling products on the homepage. They will use ranking rights to “blackmail” merchants.
You may think that the word “blackmail” is not a good word, but I think “kidnapping” may be a better word. For example, for a magazine, if you want your content to be published on Facebook, you must meet Facebook’s requirements for you, including how to write the content. The food delivery software will require the restaurant to prepare the food according to its specifications.
According to some statistics, about half of Google searches do not result in users clicking on other websites: because Google directly displays the answers to the questions searched by users in the search results.
If you add up the three ranking scarcity factors of superiority, right of entry and leadership, what kind of business will it be?
Alex believes that this business is “loyalty membership”. For example, if you are a loyal member of a certain airline, you have three kinds of ranking scarcity at the same time.
Separate “gold cards” and “silver cards” and set up various “distinguished” titles to show your status. This is to create a sense of superiority.
Boarding earlier than other passengers and getting better seats at a discounted price is the right of entry.
And your loyalty to the airline, only flying with this airline and buying products on the plane, is its guiding force.
High-end credit card companies do this, luxury stores do this, and many companies may do this in the future.
I hope these concepts can inspire you. Because of the scarcity of rankings, I really cannot agree that an era of great material abundance should be a beautiful era where everyone is equal and has no disputes.