There are actually two issues there: the distribution of the status itself, and the cost in other goods and resources expended in pursuing and maintaining it. An arms race in pursuing status (e.g. by expensive signaling, or by costly efforts to keep others down) is indeed a problem of collective action that leads to awful negative-sum games, and a social change that prevents this arms race may be beneficial for everyone if it leads to a similar status distribution, only without the cost. But in contrast, it’s unclear whether a Pareto-improvement in status itself is possible.
In the boss-employee example, the change may benefit both parties by eliminating the negative-sum game in which they’re stuck. It may also benefit everyone else by a tiny amount by making the economy slightly more productive. But if both the boss and the worker raise their status in the society at large as a result, that will come at the expense of others’ status—even if it means an infinitesimal reduction of status for each person in a great mass of people who are now below each of them in the status hierarchy, rather than a large reduction for some clearly identifiable party. (It’s roughly analogous to how successfully passing a small amount of perfectly forged money represents an infinitesimal taking from everyone else by making their money slightly less valuable.)
There are actually two issues there: the distribution of the status itself, and the cost in other goods and resources expended in pursuing and maintaining it. An arms race in pursuing status (e.g. by expensive signaling, or by costly efforts to keep others down) is indeed a problem of collective action that leads to awful negative-sum games, and a social change that prevents this arms race may be beneficial for everyone if it leads to a similar status distribution, only without the cost. But in contrast, it’s unclear whether a Pareto-improvement in status itself is possible.
In the boss-employee example, the change may benefit both parties by eliminating the negative-sum game in which they’re stuck. It may also benefit everyone else by a tiny amount by making the economy slightly more productive. But if both the boss and the worker raise their status in the society at large as a result, that will come at the expense of others’ status—even if it means an infinitesimal reduction of status for each person in a great mass of people who are now below each of them in the status hierarchy, rather than a large reduction for some clearly identifiable party. (It’s roughly analogous to how successfully passing a small amount of perfectly forged money represents an infinitesimal taking from everyone else by making their money slightly less valuable.)