The Case for Capitalism, Part IV

Previous editions of the case for capitalism (Part I, Part II, and Part III) have focused on big-picture analyses of markets vs statism. Today, let’s look at a specific product that free enterprise has delivered.

Younger readers may take smartphones for granted, but I was born during the Eisenhower Administration and grew up with no Internet, no cell phones, and clunky government-sanctioned telephone monopolies.

So I’m still sometimes amazed at how quickly smartphones have evolved. As shown by this image, dozens of bulky products now exist in the a device not much bigger than a checkbook (younger readers may not even be familiar with those!).

In an article for the American Enterprise Institute, Bret Swanson explains what has happened.

“What would an iPhone have cost in 1991?” The purpose is to measure — at least in a rough way — the progress of technology by looking at the components and features integrated in smartphones owned by billions of people. In past years we’ve focused on the three most basic (and easily measurable) components: computation, digital storage, and communications bandwidth. This time, we will also look at another revolutionary facet of smartphones: their cameras. …The iPhone 12, unveiled last month, has three 12-megapixel cameras, which is 36 times the number of pixels of the original DCS 100. At $15,000 per megapixel, circa 1991, that’s $540,000 worth of photographic power in every smartphone. Of course, this most basic measure doesn’t begin to account for the radical improvements in image quality and a hundred other features that make today’s smartphone cameras far superior in many ways to the very best cameras of the past. …Building today’s iPhone in 1991 would thus have cost at least $51 million, with $540,000 worth of cameras thrown in for free.

Maybe I’m too much of a cheerleader for free enterprise, but it seems very impressive that people can now buy, for less than $1,000, something that would have cost $51 million less than 30 years ago.

Not to mention that you don’t need to hire someone to carry around dozens of pieces of equipment.

If you want to peruse the details, here’s Swanson’s chart.

And here’s a timeline showing the prices of phones starting in the 1980s.

Keep in mind, by the way, that a smartphone today is far, far superior to a cell phone in the past.

Now think about sectors of our economy run by the government (Postal Service, air traffic control, etc) or heavily regulated and controlled by government (health care, agriculture, etc).

Call me crazy, but I’ll pick capitalism. It’s an ethical system that delivers prosperity and reduces poverty,