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Apples: Golden or Sour?

By 2 June 2010 No Comment

On the Daily Beast, Reihan Salam uses the question “Time to Short Apple Stock?” as an opening for a fine rant on the company and its products.  (That characterization is praise, btw – a “fine rant” is one that sounds a bit intemperate while saying interesting things about serious themes, maintaining a tongue-in-cheek good humor, and avoiding the venom and vulgarity that too often passes for Internet wit.)

After noting that Apple now has the largest market cap of any technology company, he says:

Apple Inc. might be America’s most beloved company. Led by Steve Jobs, possibly the world’s most charismatic man, Apple bears more than passing resemblance to a 1970s therapy cult. With his infectious faith in the liberating power of technology, Jobs has persuaded countless impecunious hipsters to pay vast sums for his brushed aluminum baubles, even as his control-freakery reaches new heights. His turtlenecked product launches are like tent revivals, only more hushed and reverential. Express any doubt about the superiority of a Mac over, say, a humble PC with identical specs that costs half as much and your blasphemy will be met with sputtering, uncomprehending rage. This is the kind of devotion that is the hallmark of a small, tight-knit group, like the Branch Davidians. Yet the cult of Apple has expanded to include tens of millions, many of whom were first hooked by the ease and attractiveness of the iconic iPod, pusher-man Steve’s gateway drug.

The cult includes Salam:

Who needs human affection when you can spend countless hours downloading apps and staring blankly at a glossy screen? To be sure, it is probably better to be addicted to well-designed gizmos than to crack cocaine. But sometimes I wonder.

From there he goes on to touch the relation between Apple’s popularity and the distribution of income in the U.S., Apple’s products as the equivalent of a fashion accessory, open vs closed systems, the lumbering beast of Federal antitrust law, and CEO pay and the cult of personality.  He could have added some links to Virginia Postrel’s book The Substance of Style and her considerations of glamour, and perhaps looked at the relevance of Max Weber and the routinization of charisma to the Steve Jobs phenomenon, but one can’t do everything in a short piece.

As a good free market type, though, I get nervous when he says:

Apple’s success amidst the downturn, fueled by robust sales of the iPhone and more recently the iPad, is an almost perfect illustration of Plutonomics at work. As Ajay Kapur first observed in 2005, in a report written for Citigroup, the United States has become a Plutonomy, in which the richest fifth of the population is responsible for as much as three-fifths of all spending.

Well, the “richest fifth” is not necessarily a high bar. Economist Alan Reynolds, who likes to look at real numbers, has noted:

The top quintile – every couple with a pretax income above $91,705 – accounted for 29.1 percent of all full-time, year-round workers, which is the largest single reason they received 40% of disposable income in 2004 [xls]. The top quintile also had more college grads, but that only affects market income if they work.

So one could also interpret the numbers as meaning that Apple is the choice of people who work the most, and who value their time (and thus Apple’s ease of use) the most. People do indeed value their time, and the busier and richer they are, the more they value it – a reality that has always eluded the open source types. It would be unfortunate if Apple’s success became another excuse for the government to decide to help us.

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