Technology Is Deflationary and This Shouldn’t Be Controversial
Marc Andreessen's manifesto has people confronting economics (and they don't like it).
Note: all prices mentioned in this essay are inflation-adjusted, using U.S. Government historical CPI data.
Last week Marc Andreessen published his Techno-Optimist Manifesto, a rallying cry for more technological progress and ambition, and a statement against the barriers to this: excessive regulation, stagnation, ressentiment.
Sure, Marc added some bite to the piece — he called it a manifesto, after all — but most of it was grounded in economics: if you can do more with less, you get more for less. Sadly, in the dozen responses from outlets like the New York Times and Gizmodo, that got zero airtime. It’s the cleanest argument for technology, yet it fails to claim mindshare.
The classic demonstration of deflation-through-technology is the price of a book, as measured by the number of days’ wages it would take to purchase 200 pages. For centuries such a manuscript cost owners the equivalent of two months’ wages, until the printing press arrived in the 1430’s. Over the next three centuries, the price of a book collapsed so that by 1650 the average European could buy one with the earnings from just four hours of labor. Today, we’ve obviated the need for paper entirely, and an ebook — if you have to pay for it — costs less than the suggested tip in the Doordash app.
The iPhone
If the Gutenberg example feels theoretical, the iPhone is a more relatable one. Over fifteen years it has improved by an order of magnitude, yet the price of each year’s base model has never broken 25% higher than the price of the original iPhone 1.
Camera
The iPhone’s camera resolution has increased by 24% every year since 2007, on average. In 2010 Apple added the selfie camera, and the second ultra-wide lens showed up in 2019, both years when the iPhone decreased in price.
Measuring the price we pay for every megapixel of the iPhone’s camera, we’re now enjoying a 95% discount from 2009 prices, and a 65% discount from 2021 prices.
Screen Resolution
The screen of the iPhone, once 320 pixels wide, now spans 2,796 pixels. Ignoring details such as color reproduction, brightness, and refresh rate (they’ve all improved), we’re now getting 12x more screen resolution for the same price.
Processing Power
The price of processing power has collapsed five-fold, and there’s no sign of it stopping. This increase in processor efficiency has helped Apple to double the iPhone’s battery life over the last decade, too.
Everything Else
All the other iPhone improvements are harder to chart: the number of apps available — once just fifteen — has exploded to two million. We can locate our phone when we lose it, use it as a boarding pass, and FaceTime a friend — while paying roughly the same price we paid when the iPhone could do none of these things. We, the people, are winning.
This never stops
Since the late 1990s the word “technology” has shifted to mean something similar to “software.” Its popular association with wealthy founders and investors has given rise to “tech bro” as a slur, and to many people “technology” no longer represents technology: better tools, made by applying science.
If we borrow from Buckminster Fuller’s definition of technology — things that allow us to do more with less — we’re liberated from the myopic definition, and Andreessen’s Manifesto seems less radical. It’s simply a call for us to use the laws of physics to exploit a glitch in economics: build better tools, get more done.
Bravo, Eric.
Great piece, Eric