"If you believe that the iphone 5 can give the economy a lift, you've already conceded both that the total amount of spending in the economy isn't a fixed number, and that more spending is what we need. And there is no reason this spending has to be private." -- Paul Krugman, NY Times 9/17/12
Here Krugman reasons that those who welcome the new iphone as economic stimulus have tacitly accepted the three premises he articulates, thus undermining their own case against government spending as a way to ease unemployment. This is good reasoning so far as it goes, but as often happens it may operate inside a bubble of short- and medium-term assumptions -- unlimited growth for its own sake, as Wendell Berry has observed, is the ideology of the cancer cell. Krugman and his opponents all agree that we need more economic growth; they disagree only about how to do this and who should benefit. Perhaps we need to craft a different vision altogether, while the planet is still habitable.
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4 comments:
Wait, so if Krugman believes we need more economic growth, is he mocking the people in his quote, or is he being serious? Does he think the new iPhone will be good for the economy? I'm confused.
No, he agrees that the iPhone 5 will be good for the economy. His contention is that everyone else who thinks so tacitly agrees with him that government stimulation (which many people reject as useless) would ALSO be good for the economy, since anything that increases spending improves the economy.
I don't think I entirely agree. Spending money = gaining money? Maybe I'm missing something.
All iPhones have been such a hit with those of all ages. Everywhere I go, I see more people using an iPhone as opposed to any other. I am pretty sure it is the name "Apple" that makes this new iPhone 5 so desirable. That is my opinion.
The principle at issue is what it takes to get an economy out of a depression. Conservatives counsel governmental austerity, and waiting for innovation, obsolescence, and new products people like to get them spending again. Keynsian theory, backed by almost a century of data, suggests that short-term deficit spending by government can put people back to work, which gets them spending and paying taxes, kick-starting the whole process instead of waiting around a decade or two while people starve. Krugman argues that of course we need both -- and that if you are in favor of innovation you have granted the principle behind stimulus (i.e.: it doesn't matter WHY people are spending; the economy grows when people spend, whether they buy iPhones or vegetables).
It is worth remembering that President Herbert Hoover, himself a brilliant manager and organizer, announced at the beginning of the Great Depression that government had done everything it could, and was helpless to do anything further for the millions of unemployed and destitute Americans. Roosevelt, following Keynes, proved otherwise.
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