The Lesson Of Steve Jobs

Economist Russ Roberts writes:

The death of Steve Jobs is a useful reminder of the fact that much wealth is not winner-take-all but winner makes everybody better off. Steve Jobs’s estate is estimated to be something between $6 billion and $7 billion. About 2/3 of that is Disney stock he received when Disney acquired Pixar. The rest if Apple stock. This is clearly a fraction, maybe a small fraction of the wealth Jobs created for the rest of us.Yes, he made a lot of money. But he made it by making the rest of us better off. He didn’t take it from us. He shared it with us.

One reason that the top 1% only earned 8% of the income in the 1960′s vs. 20% now is that our economy has changed in ways that are good for all of us. I pause here to mention the obvious–the bottom 99% can be better off with a smaller share of the pie if the pie is getting sufficiently bigger which is what has happened over the last 50 years. But the top 1% gets a bigger share not because they are hoarding more of the pie. The top 1% gets a bigger share because the opportunity to create a lot of wealth for everyone has changed.

Think of it this way. The IBM Selectric was a wonderful improvement in the typewriter market. The people who created it and ran IBM made a lot of money from that improvement. And that’s nice. But improving the personal computer makes you a lot richer now than it did then. It creates more wealth. So the most creative people in technology today (Brin, Jobs, Page, Gates, Zuckerberg) make a lot more money than they did in 1960. That’s good.

Full post can be found here.

19 Responses to “The Lesson Of Steve Jobs”

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  2. Jon says:

    Do you think any of the credit should go to the government? As I’ve pointed out before computer development was funded exclusively by the government for decades. All the technology needed for computers came about because the government provided the demand. That produced the core elements that made the creation of the personal computer possible. Billions of dollars in funding. Those developments were then handed off to private industry, and yeah that made the whole world better. But the profits generated from the research and development paid for by the government fall more into the hands of fewer and fewer super wealthy individuals.

    I mean, why shouldn’t the rest of the public benefit from the profits generated by this technology which was paid for by the public. The revenues are moving away from labor and more into capital. Into the ownership class that is able to be successful thanks to publicly funded R&D. Not a single person you mentioned could have had the success they now have without MASSIVE government funding.

    And that’s why if you look at countries that lack the heavy government involvement in the economy you don’t see these developments. Who is going to develop nanotechnology, advances in bio-engineering or other new frontiers? Africa? These come from places like the US that use government funds to perform the R&D.

    Maybe I’m wrong, but I don’t think Bill Gates or Steve Jobs actually invented anything. Jobs did not invent the Macintosh computer. He probably had more to do with the i-Pod. I think he kind of envisioned it, and the engineers ran off and created it. That’s a matter of using government developed products for new uses. I’ll give him some credit there, but it’s not like he did it on his own in a free market. I think Bill Gates real claim to fame was he bought some software that didn’t look extremely promising, but then Compaq reverse engineered the IBM computer which allowed the software Gates had bought to be installed on other computer brands and it took off. I don’t think he really did anything. Both of these guys basically stood on the shoulders of geniuses, many of whom worked for the government at public expense.

    The right wants to portray them as these free market guys that made the world so much better. Maybe Jobs did some of that. For Gates it was more stealing the ideas of others and buying up companies that threatened competition. Maybe some credit can be given to them, but not as much as people think.

  3. Seriously Jon, no offense, but the more you go into leftist ideology, the more out there you seem. I dont even know where to respond to this. Where to even begin?

  4. Jon says:

    I’m really not saying anything different from what I’ve been saying for a long time now, so it’s not like I’m going out anywhere I haven’t been before. The right continuously pretends that people like Jobs and Gates are good examples of the success of free market capitalism. So I like to just keep reminding them that in fact they are good examples of how government intervention in the economy can produce changes in the economy that help the whole world. Places that lack this government intervention don’t produce world changing technologies. They don’t produce a Steve Jobs or Bill Gates. These examples precisely contradict right wing theory in my mind.

    And yet you just keep repeating the same thing without responding to the point. There is no Bill Gates or Steve Jobs without billions of dollars of government funding spent over multiple decades. Can you admit that? Maybe the fact that you can’t admit that despite the obvious truth of it is the reason you don’t know how to respond. It directly contradicts your world view, yet it’s true. So how to cope?

    But certainly no offense taken.

  5. I dont know many right-wingers who would be against government R&D. I wouldn’t even be surprised if Friedman was in favor of it too (though not sure). So you are arguing against a ghost here.

    So yes – government spending on R&D has it’s benefits. If I was dictator of the world, I would continue it. But lets remember that alot of the R&D of the USA was primarily military based (and yes, I would say military R&D carries a bigger bang for the buck) and wasn’t completely only government based – alot of times it was partner based, with a private entity operating in the partnership (think bell labs). I would argue that this is one of the reasons why the United States has had greater success than say European government R&D.

    But that is all beside the point. What makes your post odd, and off base, is that this post is talking about Steve Jobs in a world of others – all operating under the same condition, past, and tools. It is that exceptionalism people highlight. And yet you bring up some inventions made decades ago.

    Tunnel vision. You see everything as leftism now. Sometimes a flower is just a flower. 🙂

  6. Jon says:

    You don’t know many right wingers against government R&D?

    Really? Remember Sarah Palin complaining about research related to fruit flies and the right wing defending her? Do you ever see people like Mark Perry complaining about NASA? John Stossel complains about government funding for AIDS research. Now, you could say they are only focusing on the “wasteful” government R&D, not necessarily saying it should be ended entirely, but I don’t see them calling for more government funded R&D in other areas (with the exception of Palin, I use her just because the right jumped on board to defend her). The way they communicate that they don’t support it is simply by criticizing specific instances where they regard it as a failure and never mentioning the successes (computers, commercial aviation, lasers, shipping, the internet, satellite communication, etc).

    On military and on partnership with private enterprise, I totally agree.

    Are you saying this post is simply to highlight exceptionalism? Because I thought it was talking about how the inequality we see with people like Jobs is OK because Jobs brought benefits to society generally. My response is addressing that claim. Your quote says “He didn’t take it from us. He shared it with us.” Jobs took nothing. He did it all on his own and made us all better. So the inequality is worth the price. If that were true he’d be right. But it’s totally wrong. He certainly did take from us. He more than most entrepreneurs benefited from the government funded research that came about via taxation. Do you agree or not? You just said “Government spending on R&D has it’s benefits.” So you agree with me and against your quote. Jobs certainly did take, and I’m glad he did. But let’s not pretend he didn’t take. Roberts is totally wrong.

    You can address my argument or not. But it seems you don’t even see the relevance. You’re unable to make the connections. And I’m the one with tunnel vision. Kind of weird, man.

  7. Okay – let me clarify. I don’t see many right-wing economists complaining about government R&D.

    I don’t follow politicians – I follow economics.

  8. Jon says:

    Mark Perry is an economist and you link to his economics blog on your home page. I just google Don Bordeaux, another economist you link to. He sent me to “Citizens Against Government Waste”. The front page has compaints about Obama’s loans for the development of solar power. They have a whole page dedicated to government involvement in technology. Seriously man, this is after the most superficial googling. And when I make points like this on right wing blogs the right wingers jump down my throat and try to pretend the government had nothing to do with computer development. Because they have it in their head that government involvement in this stuff is wasteful. The market knows best. If computers are worth pursuing a private source would pursue it because it would be profitable.

    So do you agree with the claim that “Jobs took nothing from us, all he did was share, so the inequality is worth the price?” Did jobs take nothing from society? He only gave?

  9. Jon,

    Be careful here. This is subtle stuff. I would ALSO be against specific government R&D for functions that the private sector is ALREADY involved in, or has an incentive to be involved in. So I too would be for closing NASA (private sector already provides space shuttle services for a fee, for example), same with Solar panels, etc.

    But that is different than saying we shouldn’t have government R&D that researches LARGE projects that would be difficult for the private sector to make money off of. Or an R&D project that kinda had free reign to dig into several random things, hoping something sticks.

    In other words, my R&D would be exactly like what textbook R&D should be: focused on areas that the private sector would generally ignore (too expensive projects, or small random interests) and hoping something sticks. This is what has worked in the past, and it makes economic sense.

    Btw, I dug up this OLD “ideal budget” from the ChicagoBoyz blog…a right-wing economics centered blog. As you can see, they do NOT eliminate government R&D. I suspect this is the case with most (all?) right-wing economists.

  10. Darf Ferrara says:

    Since HP seems to be going off the rails believing that government r&d has it’s benefits, I’m going to have to step in.

    Jon, firstly, government r&d can create technology. Steve Jobs created value. The Soviet bloc countries had as talented and intelligent scientists and mathematicians as the U.S., but they didn’t have an entrepreneur class that brought the technology to market. That is what Jobs did better than anyone. He created value that did not exist previously, despite the fact that the technology existed. That is the important point. Technology is not value, the products that Steve Jobs was instrumental in bringing to market was. Claiming that Jobs and Gates didn’t really do anything because they weren’t inventors is to miss the point of a market system. This is a subtle point, and it isn’t really emphasized in econ textbooks, but it’s very important. You seem to be stuck in an 18th century labor theory of value, that doesn’t account for wealth creation.

    The other point that you seem to not understand, HP, is that you believe that government R&D has large benefits. This is an empirical point. Occasionally this is the case, but even when Gov’t investments pay off, the value of it depends on what you assume as the counter factual. Had the government not taken money away from taxpayers there would have been capital to invest privately in other enterprises. Comparing the costs and benefits is what is necessary to do a proper economic analysis. Historically, there are rates of return on government r&d is mixed. There are some big successes, but there are also some huge failures. Certainly prior to the twentieth century the return rate by the government was very small.

  11. Jon says:

    That’s precisely what I’m saying. I’m not advocating government alone with no role for private enterprise. Government funded R&D played a critical role in Jobs’ success. He also played a critical role.

    Elizabeth Warren said something similar in a video you may have seen. She says nobody does it on there own. That seems true to me.

  12. Jon says:

    Kind of related and interesting video on science funding in government. Neil deGrasse Tyson discusses who’s more pro-science, Republicans or Demcrats.

  13. Darf Ferrara says:

    What you seem to be arguing is that the marble for David was all there, Michelangelo just got rid of some excess stone to create the sculpture. The role of Steve Jobs as the Michelangelo here isn’t too far from the truth.

    Here is a rejoinder to the Warren that I think is right on the money.

  14. Darf Ferrara says:

    Innovations are the engines of economic growth.

    After watching the Tyson video, I disagree with him on two fronts. First, I disagree that government funding is an indication of how much science is appreciated. Second, he is factually wrong that innovations in science and technology are engines of economic growth since the industrial revolution. The economic heft of late-nineteenth-century innovations mostly did not depend at all on science. Here is a much more detailed historical analysis of the role of science and technology in economic growth.

  15. Jon says:

    Warren says the factory owner benefited from the tax contributions of others so he should give some money back.

    So that means, according to pajamasmedia, that since women get hot by plastic surgery and that wouldn’t be possible without government support, such women should be obligated to have sex with people against their will.

    If you are interested in understanding my position I think you would already know why that doesn’t make sense. If you don’t know then you aren’t interested in understanding.

  16. Darf Ferrara says:

    The point is that the forms of the arguments are identical, yet the conclusion of the parody is obviously absurd. Shouldn’t that make you question the rhetoric of the original argument?

    Warren’s quote was widely noted as being a straw man argument even by liberal media.

  17. Jon says:

    The point is that the forms of the arguments are identical, yet the conclusion of the parody is obviously absurd.

    Yes, I know that’s the point. Do you expect that I agree that the forms of the arguments are identical? Read my summary of Warren’s statement and the statement from pajamasmedia. Do those look like identical arguments to you?

    Suppose a girl runs a red light and hits someone and injurs them. I suppose you would agree that this person should be obligated to pay damages in the form of money even if she doesn’t want to. Does it necessarily follow that you would likewise agree that this girl should be obligated to provide sexual favors even if she doesn’t want to? Isn’t there a difference between compelling someone to pay money and compelling them to have sex?

  18. Fernando says:

    First to File vs. First to Invent.

    It use to be First To Invent vs. First to File.

    Though there are other factors in play as well that will change in how we do business now and in the future, as well as the internet itself.

  19. Fernando says:

    First to File vs. First to Invent.

    It use to be First To Invent vs. First to File.

    Though there are other factors in play as well that will change in how we do business now and in the future, as well as the internet itself.

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