Paul Krugman on the idea that the iPhone 5 will save the US economy:
So is the new phone as insanely great as Apple says? Hey, I’ll leave stuff like that to David Pogue. What I’m interested in, instead, are
suggestions that the unveiling of the iPhone 5 might provide a
significant boost to the U.S. economy, adding measurably to economic
growth over the next quarter or two. Do you find this plausible? If so, I have news for you: you are, whether
you know it or not, a Keynesian — and you have implicitly accepted the
case that the government should spend more, not less, in a depressed
economy.
I’m clearly not a Keynesian, then. Given all of the screen and software problems that are being reported, it’s obvious that the latest iPhone is just another iPhone, less innovative and ultimately perhaps even less successful than its predecessors. Considering that the first iPhone was released in 2007, I think it is perfectly safe to conclude that regardless of how insanely great the iPhone 5 may be, it will not save the US economy in 2013 any more than iPhone 1 saved it in 2008.
However, I want everyone to note the massive logical flaw in Krugman’s piece. Even if mass purchases of iPhones did lead to measurable economic growth – and that is impossible even if Apple sold every single phone it manufactured, considering that the total 15 million unit order from Apple only amounts to $3 billion in a $15.6 trillion economy – that would not indicate implicit acceptance of the idea that the government should spend more in a depressed economy.
Suppose, for example, if instead of private consumers spending $3 billion on iPhones, the government spent $3 billion on purchasing and distributing pink plastic fake children’s phones. Would that lead to the same economic growth? According to Krugman and the Neo-Keynesians, it would have exactly the same effect. Those who actually understand the difference between an iPhone 5 and an unusable hunk of plastic know otherwise.