What the iPhone 4S Says about Inequality

Buried in David Pogue's no doubt technologically deserved paean to the iPhone 4S in the New York Times is this telling aside:

Speaking of older models: The iPhone 4 is still for sale, for $100, and so is the iPhone 3GS -- free with a two-year contract. That ought to be catnip to people who think that a phone's price is significant next to the $2,000 two-year cost of the contract.

For someone who plans to use a smartphone extensively, for example as a GPS with Google Maps, the virtual end of unlimited Web plans could make the cost significantly higher.

Are all million people who pre-ordered the 4S all one-percenters? It isn't clear from reports how many of those purchasers are American, but the estimate of 25 million sales by the end of 2011 suggests strong demand in the U.S. and other ailing economies. Isn't there a contradiction between the widespread sense of misery and doom and our willingness to commit to a service that can indeed be essential, but only if we decide to make it so?

Or perhaps the times are actually driving technophilia. That's what George Orwell argued about England in the Great Depression, in The Road to Wigan Pier (1937):

And then there is the queer spectacle of modern electrical science showering miracles upon people with empty bellies. ... Whole sections of the working class who have been plundered of all they really need are being compensated, in part, by cheap luxuries which mitigate the surface of life.

Far from condemning broadcast radio, Orwell considered it and 1930s cinema to be vital aids to self-respect, even if they served the "governing class" (one-percenters) by heading off revolution. Of course it's much more expensive to be poor, or even middle class, now. For example, pay phones have been disappearing at such a rate that everyone needs at least a prepaid cell phone. In fact, America now has more cell phones than people. Radios were relatively expensive in the 1930s, and there was and is a BBC license fee in the UK, but US broadcast radio was advertising supported.

This isn't to dismiss the claims of Occupy Wall Street just because many so many of the 99 percent still choose data plans. And a smartphone may be a great decision for practical reasons as well as for diversion. At least one distinguished economist, Amar Bhidé, has celebrated America's "venturesome consumption" as more important to prosperity than competitive research prowess. Costly as the contract is, the iPhone does have the amazing merit that the owner who can barely afford it enjoys the exact same technology as a billionaire. Nobody is talking about the blinged-out luxury cell phones I wrote about as recently as 2005. That can't be said of high-performance automobiles or first-class airline tickets. Inequality is far more complicated than either the protesters or their conservative critics acknowledge.