Wednesday, October 5, 2011

In Memoriam: Steve Jobs

Apple is reporting that Steve Jobs has died. A sad day indeed.

Much will be written about him in the next few days, no doubt. The world does not often celebrate businessmen. Steve Jobs was one of the exceptions to this, because his products held such immense appeal to so many people that even those with an instinctive anti-business bent had to admit they were cool. But rather than praise his design skill, or his determination to come back from being exiled from Apple or his many other achievements, I'd like to celebrate something more basic.

Steve Jobs created a truly stupendous amount of value for the world. The $345 billion I was talking about yesterday is only the starting point. The consumer surplus to these products must be many times more than that, as evidenced by the devotion of Apple customers to their products.

It is ridiculously hard to create $345 billion worth of value. This is merely another way of saying that it's incredibly hard to become rich.

And he did it without rent-seeking, without big negative externalities, without lobbying for legally privileged positions, or anything else. He did it the old-fashioned way - creating truly excellent products that people voluntarily wanted to buy, and sold them cheap enough that they treasured the surplus they got. In the end, he seemed at times a victim of his own success, as yesterday's announcement indicated - when expectations become high enough, great products still create market disappointment. Which is why market cap can drop by $8.7 billion, and people will still be lining up around the block to buy the new phone. Which they will be, you can depend on it.

Human nature being what it is, however good the product or service you provide is, people will end up taking it for granted and complaining that they wanted more. Which, I blush to add, I have been guilty of. The point is not that such criticisms are unwarranted, but that I was only motivated to write a post complaining about Apple, and never one praising it. People in this category must be feeling pretty small and mean today, when they finally reflect on what an immensely difficult achievement it is to create such products from scratch.

Society tends to heap the most praise on those whose inventions tend to extend life, but human welfare takes on many different forms. Steve Jobs created gobs and gobs of it, and the world is immeasurably better off because he was born into it. And that is tribute indeed.

Steve Jobs, I hereby induct you posthumously into the Shylock Holmes Order of Guys Who Kick Some Serious Ass.

Ave Atque Vale, Mr Jobs.

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