It's about design, and design is inherently about quality and value. It's the reason you might choose to pay more for a handmade Italian shirt made in a small workshop that has been running forever compared to a mass-produced one made with the cheapest labour in Myanmar (though functionally equivalent at a basic level). The Italian shirt will have better fabric, stitching, a more expensive split-yoke that hangs better on your body - real tangible things. Design only denotes status via knowledge of this value, not by having the money to afford it per se. So it's more a marker of education and sophistication. That does mean moving up Maslow's hierarchy so there is an economic element but that's not the essence of it. Sure I would need more money to buy the handmade shirt from the Tuscan workshop, but I would also need to know about it in the first place and why it might be worth paying more - it's really more about knowledge than money. So are Adidas any better than low cost no-name trainers or knockoffs? For a kid the answer is unequivocal and you are socially dead without the original; I hover between the two personally.

Design is not about 1%er luxury or fashion fads - it's really important at a national level. Obviously there is soft power with its indirect effects, but there is also the direct economy. Good design eventually tends to become commoditised and so there is economic value in being able to create new design - this is actually a vital process for every developed economy not to be crushed by whichever country is offering the cheapest labour.

An example is suitcase manufacturer Rimowa. If you look at their website it's a history of innovation in their field for the last 100 years, from aluminium trunks in the 1930s, to watertight luggage in the 70s. Still if you want a super expensive very high quality aluminium suitcase, they don't have competition, I guess due to that requiring pretty specialised production and expensive raw materials. If you buy one from them, they will repair it and knock dents out for free for lifetime (likewise Hermes will clean and press their ties for free, a difficult job which can easily ruin a silk tie) - so very high quality and standards. Maybe one day you will be able to buy a near-enough Asian copy for very cheap, but until then, this German company has the whole world's business for really nice aluminium cases. Rimowa also made a materials innovation in 2000 with polycarbonate suitcases - extremely lightweight, flexible, and near unbreakable from impact. For quite a while they were the only ones to make them. Recently however, that's been commoditised and you can buy cheap knockoffs which are fairly close to the original at a functional level. So now Rimowa have to find the next innovation as the cycle repeats to find a new USP for their products (e.g. now they are starting to get into trackable luggage with electronic airline tags).

That's Rimowa, but each company in a developed country within a global economy cannot compete on being cheapest, and instead needs to follow this process of competing on intellectual capital to stay in business. It requires at least a society with high levels of education in design, and a functioning legal system covering IP. China are now also starting to face this reality as they cease to provide the cheapest labour globally and have a growing middle class to support - and you'll therefore see increasing focus on design, innovation, quality, and finally IP even.

To your original complaint, you do sometimes hear of flashy gaudy things which are supposed to signal status via cost (tacos made with gold leaf and caviar, diamond-encrusted phones, gold-plated ferraris etc) - but you'll notice that those are considered poor design, never get taken up and commoditised, and only have economic value as marketing tools to get gawpers in for lower price items. They don't ever represent real IP in the way that the ipad, or high quality luxury goods do, but are instead held up as anti-patterns (which is why we hear about them).