Response to: Broken Windows and the iPhone 5
Well, as usually happens with “all things Apple” - delusions have supplanted reality. As Krugman points out, there’s some hope that the new iPhone will boost the U.S. economy.
He then goes on to explain how that vindicates the broken window “theory” (as he puts it).
The key point is that the optimism about the iPhone’s effects has nothing (or at any rate not much) to do with the presumed quality of the phone, and the ways in which it might make us happier or more productive. Instead, the immediate gains would come from the way the new phone would get people to junk their old phones and replace them.
In other words, if you believe that the iPhone really might give the economy a big boost, you have — whether you realize it or not — bought into a version of the “broken windows” theory, in which destroying some capital can actually be a good thing under depression conditions.
Well, the iPhone will NOT help the economy. It may help Apple stock, which - according to CNBC - is now “the economy.” (Because it’s somehow impossible to see the total market cap of all the Nasdaq 100 components without adding them all up manually, I can only guess AAPL is about 40% of it these days.)
Disposable consumer gadgets don’t help the economy. They may raise GDP. They may raise that one stock everyone in the country apparently owns. They may even let you take more artistic photos of your coffee. But they are bad news!
For starters, 51% of people buying Apple toys do so using credit. To me - a rational adult - this is incredible! In the “worst economic downturn since The Great Depression,” a huge portion of the population is willing to go further into debt to buy high-end designer telephones. That’s staggering.
More debt will not help us. More gadgets we don’t need won’t help us. More people on Twitter and Instagram won’t help us. A bigger trade deficit with the country that makes Apple products won’t help us.
Of course, that all assumes you’re grown-up enough to understand that consumer spending doesn’t drive the economy. There’s many out there (Krugman, chiefly) who want to pretend that if we all go out and buy new houses and cars and spend money we don’t have and can’t pay back - somehow everything will be fixed!
If reckless spending is good for the economy, then we should all thank American hero MC Hammer for showing us how to sacrifice and make the tough choices in life - like getting a swimming pool shaped a dollar sign.
Any idiot can buy stuff. It doesn’t “boost” the economy to burn money - and resources - on junk.
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dwangelo posted this
