David R. Henderson  

Steve Jobs: Insanely Great

PRINT
Bruce Meyer on Income Distribu... Goolsbee, Friedman, and 1980...

I woke up in Turkey at 4:00 a.m. Thursday, went to my computer, and found out that Steve Jobs had died. I titled this post as I did because "insanely great" was the term Jobs loved to use to discuss Apple's products. The lives of virtually everyone reading this post are better because of Steve Jobs.

He was an incredible entrepreneur who not only knew how to start a company but also how to keep coming up with new "insanely great" products as the company matured. If you want to see Jobs at his young impish best, watch this 5-minute video of his introduction of the Apple Macintosh when he was only 28 years old.

Steve Jobs's career was an extreme illustration of Friedrich Hayek's point about people using their own "local knowledge" to make good economic decisions. Imagine how Jobs would have fared if he had born in the Soviet Union. Or, closer to home, there are probably a few people who are the equivalent of Steve Jobs or, at least, one quarter of a Steve Jobs, who could develop "insanely great" or, at least, great drugs. But they have to get the permission of the Food and Drug Administration to sell such drugs. So imagine that Steve Jobs had had to get a federal agency's permission to sell the Mac, or the iPod, or the iPhone, or the iPad, or, or, or. We might not have had these things or, if we did, we would have had them much later--and they probably would have been much more expensive.

Steve Jobs made all our lives better. He and other entrepreneurs are a key part of why a truly free-market economy works so well for so many of us. And here's the appalling fact about how economics is taught today: most economics textbooks have no mention, or only a slight mention, of the entrepreneur. What's the ideal form of competition, according to most textbooks? Well, if it's perfect, it's got to be ideal, right? So what is perfect competition? Everyone produces the same thing, no one innovates, no one advertises, if one competitor drops out, no one will notice. In short, perfect competition is boring.

One last point and it relates to Bryan Caplan's point about the value of a college degree. Thank goodness Steve Jobs and Bill Gates dropped out of college.


Comments and Sharing





COMMENTS (14 to date)
tim writes:

At yet Jobs was a major advocate for programs and positions that are completely against your own worldview. Stop trying to hijack his career and life to enforce your own positions. Its insulting to say the least.

And Gates staying in college perhaps would of avoided some of the mind-numbingly stupid decisions that he made during the early years of Microsoft.

(for the record I don't have a degree either and find your views on this topic insulting myself)

Clay writes:

Steve Jobs was a devout Democrat. I thought such a successful tech entrepreneur would be a strong free market advocate, which seems to conflict with his Democratic involvement. I would love to hear Steve Jobs socio-political ideals and beliefs, but I never have.

What is your take on this? Why did Jobs not seem to share this type of enthusiasm in free market ideology?

Conrad writes:

I am an avid listener to EconTalk, supporter of the Cato Institute, and devotee of F. A. Hayek.

That is relevant so that you do not misunderstand my following statement.

Debate liberalism and the use of knowledge in society tomorrow. Let us today celebrate the life and achievements of a great man. Please set aside politics and economics just this once.

Scam writes:

tim and Conrad, I think your comments are a little off base.

First, Dave was not trying to promote Steve's views on politics and economics as being the same as his own. He was simply using a real life example to show how the real world works. To suggest that somehow this post "hijacks his career and life" is ridiculous to say the least.

Second, if you don't want read a tribute to Steve that involves economics, then don't go to an economics blog to read one. There are plenty of posts on thousands of other sites you can go to that reflect on Steve without any econ involved.

rpl writes:
Thank goodness Steve Jobs and Bill Gates dropped out of college.
David, isn't there a bit of survivor bias buried in that statement? Most people who drop out of college to start a business don't do nearly as well as Gates or Jobs.
Pedro writes:

Actually, David, perfect competition is not competition at all. If there's nothing you can do to outperform your competitors, in what sense are you "competing"?

Eric Larson writes:

*would HAVE* not of

Colin K writes:

I think Bono's politics are highly suspect, but I still listen to U2's music.

The larger story here is about more than just entrepreneurship. At 7.2%, the US is actually near the bottom of the OECD countries for the percent of workers who are self-employed. Funny enough, Greece is the highest, at almost 36%, according to 2007 stats, with the next-highest being Italy, Portugal, and Spain.

What makes the US special isn't how many people start businesses, but how many small businesses in the US become medium-sized businesses, and how many of those become enormous ones, and how quickly some of them do it.

Think about the great companies of Europe or Asia: Sony, Ikea, Toyota, Siemens, Alstom, Honda, Samsung--most were born before WWII, and many are tightly linked with their governments. In the US, that list might look like Ford, Boeing, Apple, Microsoft, Google, and Amazon. Google and Amazon are less than 20 years old, and Apple and MS are a little over 30, and became superstars within their first decade.

The reason there isn't a "European Steve Jobs" or "European Google" has nothing to do with the number of talented people in France or Germany. It's because the would-be Apples and Googles of Europe simply never had the access to capital that they have here. The large number of ultra-wealthy individuals and trusts in the US provided a pool of investment capital that simply does not exist in the private sector in other countries.

All of this is important because even on the right side of the fence, there is a strong preference for small business over big business, and general loathing of the finance sector. While I take my hat off to America's pizzeria owners and 3-man construction firms, they are not the only cylinder in the engine. If we go after the finance sector in general to squash the quant funds and mortgage shysters, we also risk damaging the venture capital and private equity sectors, without whom we would not have the booming technology sector we have today.

M.R. Orlowski writes:

"And here's the appalling fact about how economics is taught today: most economics textbooks have no mention, or only a slight mention, of the entrepreneur. What's the ideal form of competition, according to most textbooks? Well, if it's perfect, it's got to be ideal, right? So what is perfect competition? Everyone produces the same thing, no one innovates, no one advertises, if one competitor drops out, no one will notice. In short, perfect competition is boring."

Are you channeling your inner Austrian?

Don writes:

You do realize that smartphones need FCC approval to be sold, don't you? Not to mention separate approvals of the batteries, the chargers, and probably parts of the phone none of us even could identify. PCs are also approved by the FCC. It's all done by the division of Engineering and Technology. I would think someone who chafes so badly at the thought of government regulation would hae some minimal understanding of the scope of the federal goverment's regulatory framework.

So, we don't have to imagine what would have happened if he needed permission from some anti-innovation, market-killing, government agency to sell his products. We already know.

PrometheeFeu writes:

I think the politics of Stever Jobs are besides the point. I never very much liked the business models he promoted and I tended to prefer his competitors. That said, Jobs does represent the ideal that David and many Austrians try to promote. Jobs was an entrepreneur who had great ideas and took the risk of working hard to implement them. Did he ever reach for the government to stifle competitors? Yes. But most of what he did was take the world as it was and worked hard to do what he wanted to do. He was not the sort of man to write blog posts about regulations stifling economic activity or spending hours trying to mathematically derive the optimal way to run a firm. He had a vision and he ran with it dealing with obstacles as they came, sometimes failing but always getting back up to try again. That is something to admire. I'm not going to buy an iPhone, but when I have kids and they start looking for a role model, I will make sure someone like Steve Jobs is who they aspire to be: Driven, passionate and smart.

David R. Henderson writes:

M.R. Orlowski asks, "Are you channeling your inner Austrian?”
Me: Absolutely. I believe you take good insights from wherever they come, which is why I don’t call myself an Austrian and don’t call myself a neo-classical. Why reject an idea that makes total sense?
Don writes:
You do realize that smartphones need FCC approval to be sold, don't you? Not to mention separate approvals of the batteries, the chargers, and probably parts of the phone none of us even could identify. PCs are also approved by the FCC.
Touche. I overstated. I’m pretty sure, though, that the approval process is much easier and done by fairly common-sense rules. If it’s not, though, then that certainly would be an area of concern. Is it possible that that kind of regulation has also prevented innovation?

Arthur_500 writes:

I find it interesting that Bill Gates used his expertise in writing software to develop a huge company that has affected so much of the world. However, he is more reserved, nerdy, and outwardly conservative than the reverred Steve Jobs. However, he built his company on his expertise and preached to the world that amazing things were possible.

He has been reviled, laughed at, and called a copy-cat.

Steve Jobs was given the basis for his first computer after it was developed by Xerox. He packaged his computer in sleek plastic housing and any one who wanted to write software for it had to be licensed. (Somehow this was OK while Gates was monopolistic)

Steve Jobs was a micromanaging business leader who drove people to his vision. Today, Apple wrestles with how to continue that drive while somehow not micromanaging. However, there is a fine line between managing excellence and micro-managing.

For all the praise and soon to be saint-hood heaped upon Steve Jobs I really think there needs to be some balanced thought. He was an idea guy who drove his people to produce his ideas. That is great. That is also being done at other companies throughout the US and the world.

Ahh but he changed the world with his neat and expensive gadgets! So did Sony. However, Sony is a company and Apple has - so far - proven to be one man. Sony has developed new technologies and brought them to market. Although the Betamax didn't win that battle (even if it was better than the VHS) their produts continue to be inovative and available for people throughout the world. However, Sony isn't inspiring and Steve Jobs could put on a good show.

As far as being a die-hard liberal, that is a consistent charade among wealthy people. He got stock options changed when they became worthless. He didn't work for peanuts. But he gave money to political causes that espoused everything he was not. He sold overpriced Apple computers to schools so the American taxpayer could make him rich. Obviously he was unable to act in the same manner he espoused through his politics.
On this point I laugh at those in the Anti-Wall Street show in new York. Watch them on their I-Phones telling the world to avoid large companies (Apple and AT&T?)

Steve Jobs was an extraordinary salesman. He could take an idea and march it through its development and bring it to market. He charged high prices and people paid them because he made cool gadgets. He deserves a lot of credit for his accomplishments.

However, when it comes to saint-hood, I think we are getting way out of hand.

asdf writes:

[Comment removed for supplying false email address. Email the webmaster@econlib.org to request restoring this comment. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

Comments for this entry have been closed
Return to top