The American Spectator : Paul Krugman's Obsolescence

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Paul Krugman’s Obsolescence

By Iain Murray on 9.21.12 @ 6:08AM

His stimulus obsessions have deadened his thinking.

Last week in his New York Times column, Paul Krugman cheered Apple’s introduction of the iPhone as an example of the Keynesian theory of how depressions end — through “use, decay, and obsolescence,” which provide the stimulus economies need to recover. He went on to suggest that government can do what Apple does by increasing spending.

I then wondered whether Krugman was channeling Mad Magazine’s satirizing of planned obsolescence. In its early days, the magazine suggested that companies had figured out that making your products obsolete quickly was a real money-spinner, and so would build obsolescence into them. The example that always stuck with me was the humble eraser, which Mad noted now seemed to have a thin shell of eraser materiel surrounding a vulcanized rubber core, forcing you to throw the eraser away and buy a new one after just a few uses.

Taken to its logical extreme, Mad’s planned obsolescence business model could become the foundation for a whole new economic theory of growth. Make your products easily disposable and jobs will be guaranteed! More workers, more shops, more salespeople! The economy will be humming right along.

Of course, it wouldn’t be. An economy based on planned obsolescence falls afoul of the classical French economist Frederic Bastiat’s warning about broken windows. Why not break a shop window deliberately, as it will provide employment to the glazier and a new window to the shopkeep? Because this simply diverts the shopkeep’s money away from a more productive use — all that happens is the economy is down one window instead of up something else.

However, Krugman’s celebration of obsolescence does ring true in one way. It is innovation — which sometimes, but not always, makes products obsolete as a consequence (it can also make existing products more efficient) — that drives the end of recessions. Yet, the current bloated regulatory state that Krugman also celebrates is an enemy of innovation. Regulations make it difficult to start a business, difficult to find money to finance a business, and difficult to bring a product to market.

For instance, according to my colleague Wayne Crews, businesses with just one employee have to comply with 10 different costly regulations. By the time you get to 100 employees, you have to comply with 20 regulations for each and every employee. In fact, regulations cost small companies over $10,000 per employee each year. That’s quite a barrier to innovation right there.

Then there’s the difficulty in raising money. It used to be that a bank could give a promising start-up a loan. Today, due largely to financial regulations aimed at big corporations, small companies cannot access finance as easily as they used to, which is one reason why crowdfunding has taken off. There has been some small relief since the passage of the bipartisan JOBS Act, which has made stock market launches easier, but much remains to be done.

As a final example, many innovative products have to jump through regulatory hoops before they can be sold. Medical devices, to take just one case, have significant restrictions placed upon them, made even worse by a new tax imposed on them to help pay for the Obamacare bureaucracy.

Then there is the barrier to innovation imposed by America’s patent courts, which Apple used to sue Samsung over its competing smartphones, after patenting such innovations as a “rounded rectangle shape.” By using these barriers, Apple has protected itself from competition to increase its market share — and, in the Krugman view of the world, harmed the economy by preventing its own phones from becoming obsolete quickly.

If Paul Krugman is serious about wanting an economy where products grow obsolete quickly, he should be arguing for radical and swift deregulation. The fact that he isn’t suggests that what he really wants to do is grow the size of government, seemingly for ideological reasons. It is that ideology that needs to become obsolete if we are to get out of this recession.

About the Author

Iain Murray heads the Center for Economic Freedom at the Competitive Enterprise Institute and is the author of Stealing You Blind: How Government Fatcats Are Getting Rich Off of You.

Letter to the Editor View all comments (100) | Leave a comment Leave a comment

The Avenger| 9.21.12 @ 7:36AM

But, but, but Krugman is a Nobel prize winning economist. Yes indeed and Obama is a Nobel winning peace maker. Well, those are 2 huge mistakes by the prize committee, eh?

TLP| 9.21.12 @ 9:02AM

Contest over at Roger Kaplan's House.

pogybait| 9.21.12 @ 9:45AM

However, Mr. Krugman, can always think for us and provide examples of how an efficient economy can work with the right experts making all the correct big decisions.

C. Vernon Crisler | 9.21.12 @ 11:29AM

Krugman's view is the old fallacy that prosperity is the result of having more money available. However, this is like saying umbrellas are the cause of rain. A true economist, however, understands that more money, more demand, is the result of prosperity, not the cause of it.

In actual fact, savings are the ultimate cause of economic growth, but most Keynesians don't understand this because it doesn't having anything to do with the Progressive idea of growing the state. And that's what Krugman and his ilk are really interested in: growing the state, not the economy.

JD| 9.24.12 @ 1:09PM

Well put. The Left consistently treats symptoms as causes, and seeks to manipulate symptoms.

JD| 9.24.12 @ 1:08PM

Krugman is most easily hanged with his own words:

"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."

That entire quote is garbage. I do find it plausible that the iPhone 5 will "add measurably to economic growth over the next quarter or two." But that is because Apple PRODUCED it. It is the production of this device which helps the economy, not the buying of it. Buying is just a transfer of wealth. Producing is a creation of wealth. Apple took bits of silicon and plastic and ideas in peoples heads, all relatively worthless, and combined them into something which will sell for billions of dollars. THAT is a contribution to the economy.

The exchange of that value from phone-form to cash-form by Apple, and the corresponding trade of cash for phones by consumers, is not a net increase at all (though both Apple's use of their cash and consumers' uses of their phones might create value later).

Apple's example is proof of supply-side, not demand-side. Krugman stared the truth in the face and got it completely wrong.

Jack London| 9.21.12 @ 7:39AM

The usual AmSpec lies. All you have to do is read Krugman's article to see that he wasn't 'celebrating obsolescence' but arguing for more direct government stimulus so we don't have to wait for cycles of obsolescence alone.

Here's what he said:

"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’s no reason this spending has to be private....

"Over time there will be more equipment that needs replacing, more iPhone-like innovations that boost spending, and, in the long run, we will exit this economic trap. But, as Keynes famously pointed out in another context, in the long run we are all dead. To borrow a phrase from myself, why not end this depression now?"

http://www.nytimes.com/2012/09.....mulus.html

c. j. acworth| 9.21.12 @ 8:41AM

Bullshit. "....there's no reason the spending has to be private." Sure, we can let Obama, Reid, and Pelosi pick the winners for us. Winners like Solyndra, for instance. Dropping the taxpayer's money out of helicopters onto politically favored groups is a far cry from individuals investing (risking) their own money. Apple gives us the i-phone. Government gives us the Chevy Volt. Stick to writing dog stories, Jack.

The Avenger| 9.21.12 @ 9:56AM

B.S. for sure. It is amazing to me that some who consider themselves intelligent, believe that taxing one part of the economy and lavishing government spending on another part will create economic growth. Never has, never will. Oh and BTW, QE3 is but another example of failure on the part of the likes of Krugman.

Immortal 600| 9.22.12 @ 7:27PM

Avenger, totally true and well put.

Ryan| 9.21.12 @ 8:45AM

Where does the money come from? Krugman would support infinite printing. No thanks.

If the spending isn't private, we get inflation, which hurts us all in the long run.

And innovation cannot be forced - in fact, if anything, it comes out of belt-tightening and the need to profit.

Jack London| 9.21.12 @ 10:26AM

The right question to ask is where does the demand come from. Until we fix things like underwater housing and put more disposable income out there we won't have enough demand in the economy to rapidly end the depression.

C. Vernon Crisler | 9.21.12 @ 11:31AM

This is like saying we should all max out our credit cards. Spend, spend, spend, and we'll all be more prosperous. Right....

TLP| 9.21.12 @ 3:02PM

You left out: And when the Bill comes do, take out your Credit Card from The Bank of China, and Spend some more.

Contest at Roger Kaplan's House. (Column)

Ryan| 9.21.12 @ 11:33AM

Demand comes when people have the available money to spend from services or products they provide.

Open up markets for people to work and innovate, then they'll be able to have the incentives to produce.

Underwater housing gets fixed by liquidations and the tort system, which failed it against the ratings companies and big banks.

Remove the safety net for the banks - the bailouts, TARP, stimulus, etc - and watch them actually make loans that make sense without relying on taxpayer dollars to bail them out.

Taxguy| 9.22.12 @ 10:07AM

Jack, banks are full of cash that is not circulating in the economy because of fear of Dumbo. What is putting more cash in bank vaults going to accomplish. When it finally does go into circulation, then we'll have a massive inflation problem ala Jimmy Carter. That is why we face such a cruicial decision in November. The only hope is getting rid of this incompetent.

JD| 9.24.12 @ 12:14PM

Demand can only come from supply.

JD| 9.24.12 @ 12:40PM

"The right question to ask is where does the demand come from. "

Jack is exactly right. That is the right question. And the answer is "supply". Demand comes from supply. One must supply in order to have something to spend. This is ALWAYS true. Even when government prints money, it is taking wealth from people through currency devaluation.

George S| 9.21.12 @ 9:43AM

What gives the economy a lift is the iPhone's existence. That is what causes the spending because people want it. Waaaant it. That is the crucial difference.

If you believe in the Krugman philosophy of spending equals economic growth, then hire a person to dig a hole in your yard in the morning and another to fill the hole in the afternoon. Every day (gives two people a job). The diggers do indeed do hard work for their money. Why don't you do this, Jack? Because you don't waaaaant a hole dug in your yard -- or more accurately, you don't want to exchange wealth with the hole diggers.

See why Krugman is a fraud? He fails to take needs and wants into the picture. Needs and wants. They grow the economy, not money changing hands.

BTW -- if Obama gave out the stimulus as a tax refund for the 140 million taxpayers (up to $5,500.00 per taxpayer) with the proviso to spend it within a year, do you think that would have done the job of stimulating the economy? OF COURSE. But that would mean the taxpayer spends it and not government.

Who would send their refund to Solyndra? Not me; how 'bout you? See? It's like pouring your money into a hole.

Jack London| 9.21.12 @ 10:30AM

The iPhone effect is small. And Krugman most certainly takes needs into account - the need to unlock demand. And the effect of stimulus is to generate more than the amount put in. And you can mention Solyndra all you want - it doesn't change the fact that the majority of new energy projects are successful.

c. j. acworth| 9.21.12 @ 11:13AM

Bullshit squared. Name one "Green" energy project that doesn't exist and survive only by sucking on the taxpayer's teat. And for all that, they deliver only the most pathetic, piddle-power. Six miles north of me sits the Lempster Mt. wind farm. A small installation of 12 turbines that have a rated capacity of about 24MW. So maybe on a good day it puts out 25% of that, say 6MW. Across the river sits Vermont Yankee nuclear power plant, which puts out around 600MW. and takes up a hell of a lot less room. If the green stuff were truely successful they wouldn't need Obama to take my money at gunpoint and give it to them. But OK Jack, I won't mention Solyndra again. How about Abound Solar, which just got it's assets auctioned off? Stick to writing dog stories.

Jack London| 9.21.12 @ 11:36AM

We are investing in research into new technologies for the long term. Do you want to licence it all from China?

c. j. acworth| 9.21.12 @ 12:14PM

Bullshit cubed. Let the Chinese waste their money on fantasy energy sources. Everyone forgets that 200 years ago the USA ran 100% on solar power. Why did we stop, if it's such a great energy source? Because it's too dilute, that's why. About 200w/sq. meter over most of the US. Most solar collectors are about 10% efficient, at best, 'till they start to degrade, of course. Piddle-power is all they will ever be good for.
By the way, when I say "solar" I include wind, which is driven by the sun. The only solar sources that provide any usable amount of power are the one's we've been using for thousnds of years; hydro and biomass (what we here in New England call firewood.)
It took 6 years to build a nuclear bomb from scratch. 10 years to put a man on the moon. After 40 years of handouts, the "alternate sources" are no closer to being viable than ever. It's nothing but a scam.
Here's a few more names of scammers for you; Google 'em and weep.
Beacon Power
Range Fuels
Evergreen Solar
Spectrawatt
Ener1.

Trinacria| 9.21.12 @ 2:04PM

"We are investing in research into new technologies for the long term. Do you want to licence it all from China?"

But Jack - in your post immediately preceding the quote above you said (and I quote): "it doesn't change the fact that the majority of new energy projects are successful." CJ asked you to substantiate this prior claim by naming a single successful "green" energy project that has survived without being propped up by taxpayer money. Since you couldn't, you suddenly changed your position and suggested that such projects represent long term investments.

So which is it? Are the majority of them successful, or are they long term "investments" (code word for redistribution of taxpayers' money) that have yet to prove that they are economically viable?

By the way, you can wave the red scare banner all you want, but we all know that the Chinese are about as much of a threat when it comes to innovation as Mike Tyson is when it comes to theoretical physics. The Chines are copiers - NOT innovators. Been that way for centuries. We know it. They know it. I rather suspect you know it, too (but, having no stronger argument to make, pulled this one out of your ass and gave it a shot).

Jack London| 9.21.12 @ 2:13PM

The DoE is investing in a huge range of projects - biomass, smart grids, battery technologies, building materials and so on - we have by far the world's leading research labs in many of these. It ain't just solar power but even here we are a world leader.

Trinacria| 9.21.12 @ 2:53PM

Still waiting for a SINGLE example of a successful "green" project that has survived without being propped up by taxpayer money. You stated that the majority of them are successful, so I should like to think it shouldn't be too difficult to cite just one of them...

Jack London| 9.21.12 @ 3:12PM

I didn't mention green - you did - but you can read about the research into renewables etc here (and I did point out to you that much of this is research and pilots - this is a long term strategy - but we do nothing we have nothing):

http://www.eere.energy.gov

Trinacria| 9.21.12 @ 3:32PM

No Jack, you said the majority of new energy projects are successful (green/new; potAto/poTAHto). So let's call them "new energy" (happy?). Name one that is successful. And remember, being awarded a government grant doesn't constitute success. Full economic viability in the open market - without subsidies....name one.

By the way, I ask you to name a single successful project that has survived without taxpayer subsidies and you paste a link TO A DEPARTMENT OF ENERGY WEBSITE THAT DESCRIBES ALL THE PROJECTS THEY ARE SUBSIDIZING? Are you f'ing kidding me?

Jack London| 9.21.12 @ 4:07PM

I said new energy - as in investing in energy technologies and I gave you examples. I also told you that this is a long term game on things like the building blocks, such as battery technologies.

But if you want evidence of the success so far in more advanced projects:

"The default rate on the U.S. clean- energy loan program that funded Solyndra LLC is a fraction of what the government budgeted for losses.
The BGOV Barometer shows the default rate on the $16.1 billion Energy Department loan portfolio is less than 3.6 percent. The White House planned for defaults of as much as 12.85 percent for loans to solar, wind and bio-energy projects, according to the Office of Management and Budget."

http://www.bloomberg.com/news/.....meter.html

I think you're just profoundly anti-American - aren't you even the smallest bit proud of all our great research scientists, national laboratories, Nobel Prizes etc? I am.

Trinacria| 9.21.12 @ 4:31PM

Holy shit, Jack! It's NOT THAT HARD! Give me a name. One name of one company among those that you claim are successful.

Are you really trying to claim that "not faulting on an energy department loan" constitutes success? Really, sport, I could take a $500 million DOE loan, stick it in my savings account and turn around and give it back a year later - I wouldn't have achieved a Goddamn thing in the market (and I wouldn't have a single customer willing to pay non-subsidized prices for my "new energy"), but by your definition I'm successful.

By the way - yes, I am indeed profoundly un-American; I became so when I witnessed the disgraceful manner in which my fellow citizens abandoned their responsibility to select candidates with due regard to their qualifications and the likely outcome of their choices. If the disgraceful puke in the White House represents the embodiment of what passes as the new American ideal, then yes...I happily confess to being un-American.

Trinacria| 9.21.12 @ 4:34PM

By the way, you were kidding about Nobel prizes, right? When individuals like Obama and Krugman have one on their shelf, it rather loses it's relevance, doesn't it?

JD| 9.24.12 @ 1:21PM

Like a good member of the modern Democratic party, Jack defines "the program was enacted" or "the money was spent" as "success". Achieving a net positive impact on society is never a criteria.

Government issued loans are "successful" if they're repaid, regardless of their impact.

Then Jack asks "aren't you proud of all our [socialism]?", implying that to not be proud is to be anti-American. It's like a 19th-century slaveowner demanding that his slaves be proud of the plantation!

Nick| 9.21.12 @ 6:42PM

The federal government isn't supposed to be "investing" in anything, Jack'o.
Show me where in the Constitution it says that Congress has the power to invest in "new technologies?
I'll save you the time, Jack'o. Congress has no such power.

Trinacria| 9.21.12 @ 3:24PM

"And Krugman most certainly takes needs into account - the need to unlock demand. And the effect of stimulus is to generate more than the amount put in."

By this logic, the government can "unlock demand" by giving people money to spend. It's a lovely theory - until, of course, one realizes that the government doesn't have any money of it's own. Since, unlike private industry, the government doesn't actually produce anything of value that it can sell in the market to "earn" the money, it has essentially 3 ways of getting it:

1) Print it (thereby devaluing the currency)

2) Borrow it (increasing the debt and further crippling the economy)

3) Confiscate it from private citizens in the form of higher taxes (shifting demand, not "unlocking" it).

The U.S. government has embarked on the unemcumbered simultaneous pursuit of all 3 options over the last 4 years. As a result, we've added $6 trillion to the national debt, suffered the first (and second) downgrade of our credit rating in the nation's history, doubled the number of families on food stamps, witnessed consumer confidence fall to historically low levels and - in return for all of this- the unemployment rate is HIGHER than it was when we embarked on this path. And Mr. Krugman's argument is that we just haven't spent enough? I'm not sure what "enough" is in Mr. Krugman's mind, but I suspect it's rather well beyond our means.

George S| 9.21.12 @ 6:58PM

Again... Krugman is saying people are being difficult by not spending. Why don't you prove him right by hiring those hole diggers?

Can't you understand that you spend money only when it benefits you? That is, you want a good or a service more than the money?

How does government spending satisfy YOUR needs WHEN you want them satisfied? It doesn't. Why?

Because government has their own needs! First and foremost, reelection and power. That's why Solyndra gets the good side of government spending -- because those people gave their own money to help put Obama in power and they are being "taken care of".

Krugman takes the needs and wants of government over the individual. And to make his brilliant point, he enlists the help of pop culture -- the iPhone. So buying an iPhone is the same as sending your money to Washington where it disappears into the bottomless pit of debt or gets laundered to repay big donors.

Trinacria| 9.21.12 @ 8:00PM

Krugman (and Jack) miss an even more fundamental point. They start from the assumption that the government HAS money. It doesn't; so the only way it can "stimulate" the economy by spending money is to take money from the very economy which it seeks to stimulate. It's a classic shell game, and Krugman is all too willing to slap our money down on the table in order to fund the con.

C. Vernon Crisler | 9.21.12 @ 11:13AM

It's actually savings that grow the economy, but this concept is too difficult for the Krugmans of the world to understand.

Bob Grant| 9.21.12 @ 9:52AM

Every time I read an article by Paul Krugman I have this vision of him sitting at a table playing Monopoly, alone!

Each time he runs out of money he lumbers down to the local, and - ironically - privately owned Toy's R Us, purchases another Monopoly game, lumbers back home, opens the box, removes the money, throws away the remainder of th box, and continues to play.

He plays a zero-sum game. The only thing that changes is the supply of money.

His brand of economics we can do without!!!!!!!!

C. Vernon Crisler | 9.21.12 @ 11:11AM

Keynesianism is just a lot of economic fallacies used to support Progressivism. Government spending is just wealth redistribution. It does not increase overall prosperity; it just lines the pockets of those who are best at milking the system.

Trinacria| 9.21.12 @ 2:31PM

"And there’s no reason this spending has to be private...."

And therein lies Mr. Krugman's fatal flaw; it's not that he can't see the solution - it's that he can't see the problem.

There's a VERY BIG reason why this spending must be private - there's no other type of spending! Public spending is nothing more than the inefficient diversion of private spending to buy things that the spender (the person from whom the money is taken) doesn't want or need. The "spender" therefore is the same; he's just lost the ability to chose what he's buying. When spending is untethered from demand, all sorts of bad shit begins to happen (you know how we know this? turns out it's not just a hypothesis - history is replete with irrefutable evidence that demonstrates PRECISELY what happens when societies pursue this path).

JD| 9.24.12 @ 12:51PM

Krugman is most easily hanged with his own words:

"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.

Apple's example is proof of supply-side, not demand-side. Krugman stared the truth in the face and got it completely wrong.

TLP| 9.21.12 @ 2:54PM

He quotes the Paper that sends EVERYTHING to The Muslim's White Mosque EVERY MORNING for Approval before going to Print, about a Guy with even Less Credibility then him, and Krugman, combined.

Go back to London, ya Cigarette. (Fag)

JamesDrouin| 9.21.12 @ 6:29PM

Yeah, well jack, if you could name ONE instance where "government spending" advanced ANYTHING, then you could claim to be "right" more often than a broken clock.

Come on, it's not a trick question, just ONE instance.

Trinacria| 9.21.12 @ 6:34PM

Hope you're not holding your breath, JD...

Stan Redmond| 9.21.12 @ 7:35PM

BS exactly.

The government isn't innovating anything. They are taking us back 100s of years. Come on WINDMILLS! 500 year old technology is innovation? TRAINS!!! 200 year old technology? Electric cars, 100 year old technology.

Hardcard| 9.21.12 @ 8:06AM

"What me worry " Yea those new i thingies are gonna save our economy. Apple's factories can't make them fast enough (in red china) Alfred E. Newman where are you?

Von Mises Jr| 9.21.12 @ 8:46AM

Krugman is guilty of the fallacy of composition. This is the false assumption that an integral part of something necessarily holds true for the composite whole.
Computers, electronics and other products that advance quickly are not worth building to virtually indestructible requirements. They will be obsolete before they cease to function.
But it does not follow that you should build houses that fall down in 25 years so contractors have work. Caterpillar should not build tractors that only last ten years until they are paid off. Roads and bridges should not be built to collapse in twenty years so DC will have something to spend on to stimulate the economy.
Once again, the leftist Krugman illustrates his ignorance. If these people were not giving each other prestigious jobs and awards, they would probably starve to death. I'll bet this moron couldn't fix himself breakfast in the morning without help.

DRed| 9.21.12 @ 11:41AM

You didn't read the article, did you?

TLP| 9.21.12 @ 2:59PM

Why would he?

It's the New York Times.

All the Left's Talking Points, that's fit to Print.

It's a Joke. Like your Favourite TV Show - MSNBFCKYOURSELF.

DRed| 9.21.12 @ 3:07PM

Because if he'd read it he'd know it doesn't say what he thinks it does, and then he wouldn't have made a fool out of himself. Instead, he looks like like an ignorantly braying ass. Or, to put it another way, he looks like a TLP.

TLP| 9.21.12 @ 3:49PM

An ignorantly braying ass who knows a Dumb@ss when I see one.

And, I'm looking right at you, Dumb@ss.

Von Mises Jr| 9.22.12 @ 8:11AM

Ignore Lenny, TLP. You remember him from "Mice and Men."

We are not the one's we have been waiting for that thinks our unemployment problem is directly linked to too many ATM's. The Luddites are still trying to destroy the looms.

JamesDrouin| 9.21.12 @ 6:32PM

D, did it ever occur to you to ask why krugman no longer allows comments on his articles???

Nick| 9.21.12 @ 6:51PM

Hey, DRed, where have you been?
I missed you during the disastrous democrat convention.

Where were all of your hippie protester comrades? I was hoping to see a bunch of smelly Occupy punks get pepper-sprayed, and attitude adjustments with billy-clubs.
I was very disappointed.

Speaking of which, how's that "Occupy" movement doing these days? Not too good, huh?
I told you they were a bunch of lazy slackers.

DRed| 9.21.12 @ 9:32PM

Last week I was in Morocco for a wedding. I find the conventions pretty boring, so I skipped that week here. I was looking for all the riots too-I was told so many times by so many people here that this was going to be just like the Chicago convention. I'm not sure where all those violent leftists were! Maybe they felt they couldn't outdo an old man yelling at an empty chair?

Hope all is well with you and your family. I'm touched that you missed me.

Anthony| 9.21.12 @ 12:11PM

Von, Once again, a most intelligent response to Krugman. I wonder if Krugman is aware of the built in obsolence for leftist college and university professors? Perhaps that explains their embrace of lunacy.
Hey Paul, you're on borrowed time, it's only a matter of time.....thank God.

DRed| 9.21.12 @ 1:38PM

If any of you had bothered to read the article you'd know Krugman isn't advocating planned obsolescence. But it's much more fun to beat the stuffing out of a straw man, isn't it?

Trinacria| 9.21.12 @ 2:48PM

Perhaps you should have bothered to read the article, DRed:

"Yet depressions do end, eventually, even without government policies to get the economy out of this trap. Why? Long ago, John Maynard Keynes suggested that the answer was “use, decay, and obsolescence”: even in a depressed economy, at some point businesses will start replacing equipment, either because the stuff they have has worn out, or because much better stuff has come along; and, once they start doing that, the economy perks up. Sure enough, that’s what Apple is doing. It’s bringing on the obsolescence. Good. "

DRed| 9.21.12 @ 3:05PM

Obsolescence caused by the creation of something new is not planned obsolescence. Come on-you know that.

Trinacria| 9.21.12 @ 4:10PM

ob·so·les·cence (noun): the process of becoming obsolete; falling into disuse or becoming out of date; "a policy of planned obsolescence".

Whether you plan for something to become obsolete by virtue of dysfunction or by replacing it with newer technology, the end result is the same - the consumer needs to buy a new product. From an economic standpoint, the goal is the same: ensure ongoing demand.

C'mon, sport, you're making this too Goddamn easy.

Bob Grant| 9.21.12 @ 6:32PM

Dred,

Were those Krugman's words or no?

Quit trying to mis-interpret Krugman.

DRed| 9.21.12 @ 9:38PM

Yes, those words are Krugman's. But there were other words too. I'm taking exception with my learned friend Von Mises the Lesser, who seems to think Krugman was advocating some sort of planned obsolescence as an economic strategy.

And as to you, Trini, there's a huge difference between something going obsolete out of dysfunction and something being replaced by a newer technology. A 3 year old iphone, which many people would consider obsolete, still works. You can do stuff with it. They sell for about 90 bucks used on ebay. If you bought one 3 years ago, you still wouldn't need a new phone. It's likely that you'd want one, but there's a big difference between that and a phone that stops working to get you to buy a new one.

Trinacria| 9.21.12 @ 11:19PM

Take it up with Websters, sport (it's not my definition).

DRed| 9.22.12 @ 3:53AM

Websters is right, sport. Obsolescence means the process of becoming obsolete; falling into disuse or becoming out of date. That's not an argument though, chief. Obsolescence doesn't mean planned obsolescence. The part there in quotes, champ, is an example of the usage of the word obsolescence. And I presume you know what an adjective is? If not-let me know, sonny, and I'll explain it to you.

Trinacria| 9.22.12 @ 1:06PM

One does rather admire the persistence with which liberals cling to untenable positions; there's something of a hint of loyalty there (misplaced, ill-informed loyalty, but loyalty nonetheless). And for that, I salute you, chap.

Now, with respect to the issue of obsolescence, let's take your example of the new iPhone. In an economic context, it matters not whether a current iPhone 3 user decides to buy an iPhone 5 because the iPhone 3 doesn't work as well as it used to or because the 5 offers more/better technology. For him the 3 has become out of date and, by virtue of the fact that he can now purchase a better phone, will fall into disuse (the fact that he can sell it to a member of the 99% on the secondary/used market not only doesn't mean that the phone hasn't become obsolete - for him - it actually makes it MORE obsolete, because it decreases the cost of obtaining the new iPhone 5). True, the iPhone 3 is not obsolete for the 99 per center who can't afford the iPhone 5, but that's not the customer Apple had in mind when they PLANNED to render the iPhone 3 obsolete for the existing owners (surely you aren't going to argue that Apple doesn't want every iPhone 3 user to run out and upgrade to an iPhone 5, are you? Then again, perhaps you are; you liberal types haven't exactly proven to be savants when it comes to the fundamental principles of capitalism).

If you have any questions, do feel free to ring me, sport.

JD| 9.24.12 @ 1:25PM

Trinacria, you've been sucked into a straw man. The issue of obsolescence, planned or unplanned, or whether there's a difference, is not the point. The point is that Krugman suggests that the iPhone's economic impact is proof of his demand-side ideas, when in fact it's a success of supply.

Like a good liberal, DRed has avoided the fallacy of Krugman by latching onto an irrelevant side-claim, thinking that if he can prove that Krugman didn't advocate planned obsolescence, he can prove Krugman right.

JD| 9.24.12 @ 1:29PM

At the same time, Krugman DID advocate obsolescence as a positive force (by citing Keynes' advocation, to boot). Straw man or not, it takes guts for DRed to read Krugman and deny what he meant in writing "Sure enough, that’s what Apple is doing. It’s bringing on the obsolescence. Good." That he said massive government spending could be even better than obsolescence (which confounds him by happening too slowly) neither changes his support for obsolescence nor improves what is already a terrible policy position, which is only made worse.

Jack London| 9.21.12 @ 3:07PM

I take it you didn't read the next sentence:

"But why suffer through years of depressed output and high unemployment while waiting for enough obsolescence to accumulate?"

Come on - you don't strike me as terminally stupid.

Trinacria| 9.21.12 @ 4:05PM

Yes, Jack; I did read the next sentence. Krugman's point (and giving it the status of "a point" is exceptionally generous) is: why wait for obsolescence if we can bring it on faster by using government spending to "invest" in new technologies which, in turn, render the old technologies obsolete?

Here's why:
1) The government doesn't HAVE money to spend. It must either print, borrow, or take it from those who are now unable to use/invest it
2) This strategy assumes that the government is better able to evaluate investment opportunities than the private market, an assumption which is demonstrably false
3) Speculative investment involves significant risk; risking taxpayer money in speculative investments without allowing the investor to participate in the decision about the level of acceptable risk he or she is willing to tolerate is both unethical and (at least in the private sector) illegal
4) The investor bears all the risk, yet reaps none of the gain (still waiting for my dividend check on all the "new energy" investments that were made on my behalf)
5) Most importantly, it's unconstitutional. Perhaps you can find a clause that lists among the enumerated powers of the federal government the power to engage in speculative investments on behalf of citizens in order to excellerate obsolescense through innovation and thereby preserve market demand. Until then, I'm sticking with "unconstitutional".

Jack London| 9.21.12 @ 4:12PM

Nope - he didn't say invest in technology, although we are (but it's part of our normal science budget). His next sentence is:

"Why not have the government step in and spend more, say on education and infrastructure, to help the economy through its rough patch?:

He's talking about wider investment in stimulus such as in infrastructure and housing. And it's not speculative - we need those bridge and we need to get homeowners back spending on consumer goods.

I suggest that you stimulate yourself to get some education - you clearly have trouble with reading and comprehension.

Trinacria| 9.21.12 @ 5:26PM

Let's take education (glad you asked). The US spends more per capita on education than any other country in the world. We spend twice as much as Japan, and 40-50% more than Canada, Finland, France, UK, Denmark, Australia, and South Korea. Why do I mention these countries? Because all of them score higher in math and science than the US! So what would be the goal of spending more? Is the idea that it will make our kids smarter and more competitive in the marketplace? C'mon, Jack, you know the real problem here - we're not really spending more than other countries per student; we're spending more per administrator and union employee. Throwing more dollars at education means throwing more dollars at the same administrators who are failing our students now. Krugman's argument is that the solution to any problem is to throw more money at it (even if the problem is that you're throwing too much money at things).

Trinacria| 9.21.12 @ 5:27PM

What about infrastructure? Mr. Obama approved $1 trillion in stimulus spending, citing the existence of "shovel-ready" jobs and the need to rebuild the country's infrastructure. But according to the House Transportation and Infrastructure Cte less than 7% of the stimulus budget was allocated to infrastructure projects and less than 3% was actually spent. Would infrastructure spending have helped the economy? Mr. Obama had a chance to put his money where his mouth is and find out - instead, he pissed it away on political payoffs and SPECULATIVE INVESTMENTS. Perhaps Mr. Krugman's beef should be with him.

Anthony| 9.21.12 @ 6:28PM

Right Jack London, sounds like Krugman was the author of Obozo's shovel ready jobs.
Are you really that stupid, or do you just work damn hard at it?

George S| 9.21.12 @ 6:42PM

Jack;

Why should the government step in an spend more? We can do that all by ourselves. Just give us a tax cut. We'll spend it. Promise.

Bob Grant| 9.21.12 @ 6:42PM

You're talking about the mysterious (and flawed) Keynesian multiplier.

So, we'll keep spending on education and bridges?

And the result?

A higher educated unemployed person walking over newer, brighter, shinier bridges on their way to the unemployment office?

Perhaps we should demolish and rebuild the unemployment office as well?

Trinacria| 9.21.12 @ 8:11PM

Yes, but only after we spend a few billion dollars doing environmental impact studies, donate a few million to the native americans to build a casino next door to compensate for the fact that construction vehicles will pass by a sacred burial site, stirring up dust and disturbing the spirits, and then establish a bidding process that ensures that all the work goes to minority-owned businesses that promote opportunities for handicapped gay african-american women with mixed race parents who adopted a transgendered undocumented child.

We ought to have her built in no time...

JD| 9.24.12 @ 12:19PM

Jack would have us believe that there was no technological advancement or education until the federal government got involved in those things, when reality shows that our educational decline coincided with the beginning of federal intervention in education and most of our greatest technological advancements occurred without government.

JD| 9.24.12 @ 12:50PM

Liberals believe that anything they think is good for America is Constitutional under the "General Welfare" clause. That clause has done terrible harm since the SCOTUS reinterpreted it under FDR. We need to restore the original interpretation before the Constitution can help us.

TLP| 9.21.12 @ 3:07PM

This is the same guy who was Apoplectic when GWB ran one $400 Billion Deficit.

Now, with His Boy in the White Mosque, 4 straight Trillion Dollar Deficits ARE NOT ENOUGH.

Only the Intelligence Impaired, like You, would think that anything said by this Puke, was anything other than Partisan Leftist Bullsh*t.

Get the picture?

Of course not.

You're an Idiot.

DRed| 9.21.12 @ 3:09PM

cut back on the commas, Timmy. It makes you, look, Intelligence Impaired.

TLP| 9.21.12 @ 3:52PM

I will. As soon as you cut back on the Idiotic Bullsh*t that you put out on a Daily Basis.

Which means Never.

George S| 9.21.12 @ 6:40PM

He's advocating spending. Yet Krugman cannot even win an argument with himself:

A) You can increase spending by enticing people to spend more money;

B) People can spend more money if they pay less taxes;

C) Tax cuts therefore are bad for the economy.

I'll take that Nobel to go... thank you.

Stan Redmond| 9.21.12 @ 7:40PM

In regards to A the government isn't "enticing" us to spend money. They are now able to force us to spend money. Thanks John Roberts.

JD| 9.24.12 @ 12:47PM

Krugman is most easily hanged with his own words:

"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.

That entire quote is garbage. I do find it plausible that the iPhone 5 will "add measurably to economic growth over the next quarter or two." But that is because Apple PRODUCED it. It is the production of this device which helps the economy, not the buying of it. Buying is just a transfer of wealth. Producing is a creation of wealth. Apple took bits of silicon and plastic and ideas in peoples heads, all relatively worthless, and combined them into something which will sell for billions of dollars. THAT is a contribution to the economy.

Apple's example is proof of supply-side, not demand-side. Krugman stared the truth in the face and got it completely wrong.

JD| 9.24.12 @ 12:50PM

Krugman is most easily hanged with his own words:

"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.

Apple's example is proof of supply-side, not demand-side. Krugman stared the truth in the face and got it completely wrong.

merlin| 9.21.12 @ 8:55AM

Production is wealth.

What does the govmint produce? In your small business, you will spend money as wisely and as efficiently as you can to maximize production and/or minimize expense. Generally not concepts associated with Federal spending.

The Avenger| 9.21.12 @ 10:03AM

Amen Merlin, you speak the truth, something which liberals HATE!!

Who Knows?| 9.21.12 @ 11:47AM

Reading “planned obsolescence”, I snapped back to the days of my youth, when the great year of 1955 gave us so many new looking cars. What a radical change in one season! The Chevy was so cool, as was the Ford. The Chrysler product line was especially “far out”!

It was generally agreed that the auto industry embodied planned obsolescence, to a certain extent, so that the vehicles were expected to last for, say, 100,000 miles.

Ah, but what about the USSR? For many years, all of its miniscule output of cars resembled Packards, year after year after year---meant to last forever.

WW II leveled most of Europe and Japan, so their industries were able to start mostly from scratch, and use the most innovative technology of the day, unlike the USA, which still had legacy factories.

Maybe Krugman and Obama et al, if they get their way even more than they already have, will in effect “level” the productive landscape of America---their own homegrown version of a changing World War.

Gotta blow up all those old “edifices”, to clear the “ground”, so they can build their own Utopian village---for idiots, and/or the children.

Krugman and Obama are about as innovative as a black hole---infinite gravity, sucking all order into itself and no-thing-ness.

Anthony| 9.21.12 @ 12:02PM

The classic defination of obsolecence is Leftism. The economics department of Princeton University and the MSM fall under that rubric.

TLP| 9.21.12 @ 3:09PM

Contest at Roger Kaplan's house.

Be there. Or be from Wilton.

Stan Redmond| 9.21.12 @ 7:39PM

There is just no polite way to say Krugman is a moron. I left out the colorful profanity to describe Krugman's level or moronitude for our younger readers.

Can Krugman and his flock of followers not see what's going on in the world where his government spending fantasies take place?

Trinacria| 9.22.12 @ 2:44PM

Isn't it interesting how liberals view tax cuts as government spending (which in and of itself tells us a lot about who they think the money belongs to), yet when mopes like Krugman advocate increased government spending to stimulate the economy, tax cuts no longer fit their definition of government spending (despite the fact that they are the only actual solution to the problem).

JD| 9.24.12 @ 12:17PM

Leftists demand that tax cuts be "justified".

How completely backwards!

Tax cuts do not need to be justified. Taxes need to be justified.

This is the fundamental lie that Democrats have perpetrated for decades, and we have been far to lax in calling them on it.

What audacity, to suggest that the natural order of things is for government to take all of our money, and that we must justify being allowed to keep any of it! Is that "government by the people, for the people"? Heck no!

If government is going to take any of our money from us, it must justify itself, and the burden of proof should be very high. It must prove, quite convincingly, that it will use our money in a way that benefits us more than us keeping it for ourselves. The instances in which government can meet this requirement are few, which is why we conservatives recognize that government should necessarily be small. Leftists recognize the same thing, but because they desire bigger government, their response to this realization is to flip the conversation and act like it is our prerogative to justify keeping any of our own money!

JD| 9.24.12 @ 12:17PM

We must not let them do this anymore. Be offended - be very offended by the mere suggestion that tax cuts must be "justified". Be MORE offended by the suggestion that a tax cut must be "paid for" with a corresponding delta in the federal budget. Quite the contrary - government must prove that a tax HIKE will be "paid for" with a corresponding increase in PRIVATE wealth!

We conservatives must return the conversation to honest fundamentals: That our money is first and foremost ours, and that PRIVATE SECTOR WEALTH is more important than PUBLIC SECTOR WEALTH, and the latter exists to enhance the former, not vice versa.

JD| 9.24.12 @ 12:21PM

"Spending" doesn't create. Production creates. No one can spend what they don't have, and they don't have because they haven't produced.

There is no chicken and egg. The myth is that you need to already have stuff before you can produce stuff. If that's true, then how did we get from the Stone Age to here? There is "demand" in the sense that people don't have all they want. There are also idle people capable of working. If these people started building what they don't have but want, they could have for themselves or sell to each other. That's how all economies get off the ground. With PRODUCTION, not spending!

JD| 9.24.12 @ 12:24PM

People who read left-wing editorials are often confused by the directive to spend when they have nothing to spend.

It's not their fault. They're trying desperately to square reality with the Left's political agenda, but the two are simply incompatible. Spending doesn't drive economies, because one cannot spend until one has, and one cannot have until one produces. Production drives economies, not spending. And when you state it in plain terms, it's obvious. What IS an economy if not people building stuff?

Unfortunately for leftists, the idea that production drives economies has always been a central tenet of conservatism, so as enemies of conservatism, they must oppose this idea. That's why they've created the label "supply-side economics", grossly misdefined it as "give money to the rich" or "trickle down", and proceeded to condemn it as nonsense. But giving money to people in the hope that it will spread around is actually a cornerstone of liberal "stimulus" policies. They have it backwards!

The only argument the leftists make that isn't an outright lie is the idea that production isn't beneficial if you have no buyers. But while not a lie, this idea is just stupid. If two or more people produce, they can buy from each other! Production creates wealth to spend, both for yourself and for those who you need to buy from you.

JD| 9.24.12 @ 12:35PM

Jack London is trying to tell us that we misunderstand Krugman, but this is merely his efforts to spin away the most easily-attacked aspects of Krugman's folly.

"Planned obsolescence" (PO) is indeed not Krugman's central theme. His central theme is that we need to "stimulate demand". PO is just one cited example of doing so. But the greater point is greater folly than the small one.

In every aspect of life, the Left is telling us that we need to make more work for ourselves. Existing work needs to be made harder. Things that aren't broken need fixing. Automation needs to be made manual. We must destroy so we can rebuild.

All of these things are plainly stupid, which is why the Left doesn't state them so directly. It speaks of "creating jobs" in the abstract, and uses language akin to exercise, which is popular modern vernacular for a justifiable unproductive activity performed just to burn excess resources (calories). It sells well in these obesity-stricken times, but we don't have excess economic resources. We're starving.

The Left blames the Right for "corporate greed" driving the production of ever shoddier products in the name of PO's promised revenue. Yet it celebrates that same PO's "stimulative" effect and sees no contradiction.

Ever more, the Left wants to see hardship, for hardship serves both of the Left's purposes. It can be blamed on the Right, securing elections, and it justifies spending.

JD| 9.24.12 @ 12:47PM

Krugman is most easily hanged with his own words:

"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.

Apple's example is proof of supply-side, not demand-side. Krugman stared the truth in the face and got it completely wrong.

JD| 9.24.12 @ 1:07PM

Adding to this, Krugman seems to celebrate not the creation of the value (the phone), but the trading of value for other value (the phone for money). He thinks that this trading is the engine of our economy. Why, then, does he condemn the financial sector for "merely moving money around"? Seems he should love them for that!

BrianColvin| 10.1.12 @ 4:17PM

Funny (actually sad) how the writer quotes Krugman as calling the Iphone a stimulus. If you actually read the article you would see that is NOT what he is saying, and if you DO, you are a Keynesian economist and stimulus comes in many forms. Yes, money being spent on the iPhone is money spent, which is a good thing, but that is not the only mechanism.

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