I would not be at all surprised if someone told me that the deadweight losses from signaling swallowed 10% of society’s productive capacity.

I was surprised to see such a low figure. I would put the number much, much higher.

I'd bet than, at a typical randomly selected company, they could achieve their objectives for close to an order of magnitude less cost if the employees actually cared about the objectives in an actually trying sort of way. I'm getting this 90% inefficiency by judging the difference in cost between companies with an objective it's employees actually care about and companies with phony objectives the employees aren't so emotionally invested in. (For example, SpaceX vs Boeing or Lockheed Martin.) I don't think it's quite that bad, but it seems to be the right order of magnitude.

I think most people are trying mostly to signal competence and hard work to their bosses. It's far easier to look like you're doing useful work than to actually do something useful. I can't find the link at the moment, but I believe some survey showed that almost everyone would take a bet with 10:1 odds against winning if the payoff was $100 for every dollar bet. However, when asked whether they thought their boss would want them to take such a bet with company money, almost all said "no". This hints that individuals within companies may pass up on risky or non-Ra-flavored opportunities.

In order to signal competence well in most jobs, you still have to be somewhat competent. Perhaps programming ability is hard to fake, but management consulting is easy to fake. If so, then in accordance with Goodhart's law, a rational self-interested management consultant should spend almost all his or her time making spreadsheets as pretty as possible, learning all the buzzwords, keeping up with the latest management fads, and optimizing for whatever other subjective or objective metrics of success they may be judged by. If they do not, and waste time on actually achieving the company's goals, they will quickly be out-competed by someone better at signaling.

But all that is just signaling losses within a company. There are entire industries devoted to signaling. If half of all GDP is for products that exist to signal, then we might estimate that 0.1*0.5=0.05=5% of all human activity is devoted to things besides signaling. Unfortunately, this is harder to estimate, since the big industries like mining and construction make products that serve a mix of signaling and non-signaling purposes. I'd be a little surprised if 90% of GDP was exchanged for signaling reasons, for a total signaling burden of 99%, but that doesn't seem completely unreasonable to me. We can put an upper bound on it, though. Suppose the cost of 1 person living comfortably with 0 signaling is $15,000 a year or less, but this could be $1,500 a year without signaling bloat in industry. Per capita GDP in the US is $72,923, so that puts an upper bound of ~98% signaling. If you think the minimum amount you could live comfortable for is $20,000, and you think my 90% figure is inflated, then use 75% to get a cost of living of $5,000/year. That would suggest 93% of GDP goes to signaling.

(The efficient market hypothesis does make this argument less probable, but not impossible. It's financially, socially, and legally difficult to monitor not just employees actions, to make sure they aren't slacking, but also their thoughts, to make sure they are spending significant mental effort looking for better ways of doing things, rather than just blindly doing what's mentally easiest on their System 1. Perhaps in the Age of EM we will have that level of monitoring, but at the moment it's too expensive to go full 1984 on employees. The only good metric we have is the success of large projects, which suffers from coordination problems and free-rider problems. Some startups get around this by using the "change the world" line and convince employees to make company goals into personal goals. They then oust the old regime, and slowly turn into the next generation's stagnant industry.)