The iPhone, Poverty, and the Middle Class

We often hear that incomes at the middle and lower tiers have been stagnant since the 70’s. It is true, but that statistic misses some important nuances. We can measure incomes and compare them to an inflation rate, but that is a deeply flawed measure of relative well-being.

I’ve touched on this problem before, but an article in the Washington Post today raises it in an interesting way:

Buffalo writer Steve Cichon dug up an old Radio Shack ad, offering a variety of what were then cutting-edge gadgets. There are 15 items listed on the page, and Cichon points out that all but two of them — the exceptions are a radar detector and a set of speakers — do jobs that can now be performed with a modern iPhone.

The other 13 items, including a desktop computer, a camcorder, a CD player and a mobile phone, have a combined price of $3,071.21. The unsubsidized price of an iPhone is $549. And, of course, your iPhone is superior to these devices in many respects. The VHS camcorder, for example, captured video at a quality vastly inferior to the crystal-clear 1080p video an iPhone can record. That $1,599 Tandy computer would have struggled to browse the Web of the 1990s, to say nothing of the sophisticated Web sites iPhones access today. The CD player only lets you carry a few albums worth of music at a time; an iPhone can hold thousands of songs. And of course, the iPhone fits in your pocket.

Measuring relative incomes completely misses the most radical and amazing transformation that has occurred in our time. The rise of global capitalism over the past two generations has triggered a collapse in the real cost of almost everything. The happy exception to this deflationary spiral is the cost of human expertise, reflected in the price of things like education and medical care.

Almost everyone in the stable corners of the world is, as I’ve written before, rich beyond the wildest imaginings of anyone living in 1975. It is certainly true that income distribution has been growing wildly more unequal over the past few decades, but understanding the differences in lifestyle for ordinary people that have accompanied that change is an important part of the equation that we often overlook.

Chris Ladd is a Texan living in the Chicago area. He has been involved in grassroots Republican politics for most of his life. He was a Republican precinct committeeman in suburban Chicago until he resigned from the party and his position after the 2016 Republican Convention. He can be reached at gopliferchicago at gmail dot com.

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Posted in Economics, Ownership Society
11 comments on “The iPhone, Poverty, and the Middle Class
  1. lomamonster says:

    The amount of measurable desperation grows at an inverse rate relative to the advancement of various technologies. The all- knowing Siri cannot provide comfort to the truly poor and disadvantaged, and those who compare how rich the rest of us are just set up the poor for more grief in the name of those who have comparatively succeeded in acquiring enough distractive technologies to forget about shanty towns and tunnels and underground communities.

    I have even seen desperation in the eyes of those standing in line for “the latest and the greatest” technologies, and those that exit those lines failing to score before the inventory is exhausted exhibit even more curious expressions of poverty through their abject failure to procure those technologies.
    They won’t even talk to Siri about it.

    Neither will I, but I don’t perceive wealth in quite the same terms smart phone afficionados do. I will talk to a Roomba though if a serious question comes up since I already know the answer.

  2. Tuttabella says:

    Ok, so if we ordinary people are now able to afford all this technology, if we are somehow “richer” now than anyone’s wildest imagination, but yet still not rich enough, what do the richest, the 1%, have that we ordinary people can never hope to attain? Will we ever catch up?

    Is it sheer influence that keeps the 1% in their exalted position? The bigger microphone Captain Sternn always talks about? The power of money in politics that Bobo recently mentioned? Is all this new technology nothing more than a bunch of toys to keep us ordinary people distracted (and under surveillance), while we erroneously think we’re making a difference in the world with our little blogs, comments boards, and our social media? Is technology just the new opium for the masses? Can we honestly say technology has improved our station in life?

    • goplifer says:

      Have you ever had cancer treatment, used an airbag, taken medication to clear up acid reflux? Little things perhaps, all of them, but the thousands if not millions of them which have piled up just overthe past generation make a pretty impressive impact.

      The interesting question to me is the degree to which concentrations of wealth lead to concentrations of power which could cripple the whole machine. Never mind political power, which is overrated, but concentrations of wealth could potentially break the economic engine that keeps this thing rolling.

      What do the richest have that we don’t? Money. More specifically though they have access to capital and the ability to leverage that capital to hedge out competition. This is what Adam Smith warned about in Wealth of Nations. Other longer term concerns aside this shift has generally had a lot to offer for everyone.

      • Tuttabella says:

        You’re right about technology in general being beneficial. I was referring to “gadgets” such as the ones you focused on in your post. I consider those to be toys, frivolous luxuries.

      • Turtles Run says:

        Justice Louis D. Brandeis wrote:

        “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

        Wealth concentration at the very top is a part of every capitalism. We all dream of becoming wealthy and a few of us get the opportunity to fulfill that dream. Sure we may have access to things that 20 years ago were unheard of but that is a benefit of technological breakthrough and increased efficient production. But like all things too much is not a good thing. What I am referring too is real wealth, the money not just able to buy luxuries but influence. The wealthy are ever more protective of their place in society and work to strengthen it by shaping laws & the tax code to their favor and they use astro-turf groups to make themselves seem like the victims of the jealous and less prosperous..

        This negatively affects society by preventing upward mobility and the concentration of wealth at the top also limits the ability of the American economic engine to run efficiently. The wealthy have seen their share of income grow from 8% in the mid-70s to 24% now. The economic pie instead of growing is instead being redistributed to the very wealthy. This cannot continue.

      • CaptSternn says:

        Astro-turf groups like the Coffee Party, the Occupiers and the No Label Party? Yes, they fell away almost as fast as they were embraced by the left. Not even democrats want to be associated with people that publicly defecate on police cars.

        We are wealthy beyond our imaginations, even the middle class and the poor here are extremely wealthy. And wealth is not limited, it is not finite. It is infinite and is created. We live lives of such luxery that people of the past could not even imagine. But there are those that do not like our wealth or our freedom to enjoy it. They use class warfare and jealousy to try to bring the more successful down. That will end up bringing us all down.

      • John Galt says:

        The political game is pretty rigged right now, but this is still a democracy. The more lopsided the income and wealth distributions get, the more likely it will be that a new wave of populism arises. Based on historical ranges, marginal tax rates have a lot of room to go up and the dirty unwashed will elect politicians who will do exactly that. The “elite” may find that their attempts to cement their status backfires on them.

    • captsternn says:

      First world problems. Anybody that lives in the U.S. is the 1% of the world. More later.

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