My target is Krugman’s "The iPhone Stimulus" which recently appeared in his regular New York Times column of September 14, 2012. In this essay he looks forward to the release of the Apple iPhone 5, as a way of stimulating the economy. He states: "What I’m interested in … 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."
Krugman is not looking to Apple iPhone 5 to improve the economy through ease of communication. Rather, very much to the contrary, he sees its benefits as stemming from the obsolescence of already existing plant and equipment of the same type. He says: "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."
I am glad you are sitting down as you see these words, gentle reader, otherwise you would topple right over as I did when first encountered them, while mistakenly standing up on my two feet. The economic benefits of the Apple iPhone 5 do not come from its merits, merely from the fact that the introduction of this item embodies obsolescence? My goodness gracious. If this were true, then wouldn’t it be even better if the rate of capital destruction were even greater? And wouldn’t it help the economy even more if this devastation were not confined to communication implements like the Apple iPhone 5 but ranged widely over the economy, poisoning everything in its path including housing, factories, pipelines, mines, etc. In the extreme, we might as well neutron bomb ourselves so that we are left with no food, no clothing, no shelter, no anything. Think of all the aggregate demand we would have then!