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Kaj_Sotala comments on Not all signalling/status behaviors are bad - Less Wrong
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Suppose that I were a hard-working person, and you wanted to hire somebody who was hard-working. Now I do things which signal my hard-workingness, and you see this and hire me because of it. As a result, I got a job and you got a hard-working employee.
(Honest) signaling is about communicating the fact that you have (positive) qualities which aren't immediately obvious. To the extent that other people care about knowing whether you have such qualities, signaling is a fantastic thing, and we should all be doing it. It's only wasteful or dishonest signaling that's a problem.
(Obligatory caveat: If everyone is already engaged in "dishonest" signaling and the market knows this and adjusts for it, then not engaging in "dishonest" signaling yourself is itself dishonest—it misleads the market into underestimating you. So perhaps the immoral ones are those who refuse to adapt to the market and instead take a "moral" stand against negative-sum signaling games.)
Yes. If everyone who says "I'm X" is actually Y and everybody knows that and people still say that, then essentially X has come to actually mean Y, whatever its literal meaning was.
Child: But everyone's doing it.
Parent: If everyone was jumping off a bridge, you'd want to as well?
Or, "If everyone was not jumping off a bridge, you'd want to not jump off a bridge as well?"