Carpe Diem

1991 Radio Shack ad: 13 electronic products for $5k (and 290 hrs. work) can now be replaced with a $200 iPhone (10 hrs.)

radioshackad

Buffalo (NY) journalist and historian Steve Cichon has an article on the Trending Buffalo website (“Everything from 1991 Radio Shack ad I now do with my phone“) featuring a full-page Radio Shack ad from the Buffalo News on February 16, 1991 (see graphic above). Of the 15 electronics products featured in the Radio Shack ad, 13 of them can now be replaced with a $200 iPhone according to Steve’s analysis. The 13 Radio Shack items in the ad (all-weather personal stereo, AM/FM clock radio, headphones, calculator, computer, camcorder, cell phone, regular phone, CD player, CB radio, scanner, phone answering machine, and cassette recorder) would have cost a total of $3,055 in 1991, which is equivalent in today’s dollars to $5,225. Versus only $200 for an iPhone 5S.

In hours worked at the average wage, the 13 electronics items in 1991 would have had a “time cost” of 290.4 hours of work at the average hourly wage then of $10.52 (or 7.25 weeks or 36.3 days). Today, the $200 iPhone would have a “time cost” of fewer than 10 hours (9.82) of work at the average hourly wage today of $20.35, and just one day of work, plus a few extra hours.

MP: When you consider that an iPhone can fit in your pocket and has many apps and features that were either not available in 1991 (GPS, text messaging, Internet access, mobile access to movies, more than 900,000 apps, iCloud access, etc.) or not listed in the 1991 Radio Shack ad (camera, photo-editing), it’s amazing how much progress we’ve made in just several decades, and how affordable electronic productions have become.

The comparison above is an example of the “invisible hand” at work, giving us more goods, better goods, and cheaper goods over time. And the poor and middle class benefit the most. While only the wealthy might have been able to afford the bundle of 13 electronic products costing $5,000 in 1991 (in today’s dollars), almost anybody today can afford an iPhone with features that far exceed the 13 products in 1991.

Instead of spending so much time obsessing about income inequality, the “top 1%,” the “decline of the middle class,” and generally criticizing and blaming the free market for every woe, maybe we should devote more time to celebrating how the “miracle of the marketplace” has brought about rising living standards for all income groups in America, especially low-income households. Falling prices of manufactured goods like food, cars, clothing, household appliances, computers and electronics have probably given low-income households in the US greater access to the “good life” than all of the government programs and safety nets that are part of the trillion dollars of spending on America’s “War on Poverty.”

 

47 thoughts on “1991 Radio Shack ad: 13 electronic products for $5k (and 290 hrs. work) can now be replaced with a $200 iPhone (10 hrs.)

  1. “Instead of spending so much time obsessing about income inequality, the “top 1%,” the “decline of the middle class,” and generally criticizing and blaming the free market for every woe, maybe we should devote more time to celebrating.”

    Can’t we do a little of each?

        • Ah, the old ‘Zero Sum’ game, eh? So are you saying that the wealthy stole money from others who would have otherwise earned it? Really? How….quaint.

          You need to go back to school and take a few economics courses because you’re a few hundred years out of date. Wealth is not a zero sum game…unless Obama and the other looters say it is.

  2. Note a iPhone at $200 has $450 of hidden costs in the two year contract. Buying one off contract is $650. You would need to really work 35 hours for the cell phone.

    But it is still impressive to work only 35 hours to have a computer in your pocket about as fast as the fastest supercomputers from 1991. The current high end phones are slightly faster in MFLOPS than the Cray 2.

      • Paul

        Moore’s law makes up for a lot of the damage done by government.

        True, of course the equal opportunity Moore’s law allows government to cause damage at a faster rate.

        The NSA couldn’t monitor everyone’s phone calls in 1991.

      • I’m calling for a repeal of Moore’s Law, if the income inequality yellers don’t recognize its profound benefits to the 99%.

        • Cit

          I’m calling for a repeal of Moore’s Law…

          Good luck with that. I can count on one hand the number of laws that have ever actually been repealed. There’s been an ongoing effort since 1951 to repeal Murphy’s law, and so far it’s not been successful.

          • “There’s been an ongoing effort since 1951 to repeal Murphy’s law…”

            Yeah, Jon has a very strong lobby and so does Moore. :-)

          • Yeah, Jon has a very strong lobby and so does Moore.

            Yes, I believe Jon took over as head of that militant advocacy group in 2009. The MLLF (Murphy’s Law Liberation Front), was first organized by Jon’s grandfather in 1951.

            The Moore group is now headed by Dinty Jr. and his sister Tellme.

          • I’d appreciate you guys not discussing clandestine operations in a public place.

            Loose lips sink ships!

    • I was going to make the same point, this $200 price is not the real price of the iPhone. You have to use the unsubsidized price, which is closer to $600-700. Otherwise, it is like saying you had to pay the whole cost of a car, $16k in 2014 dollars, up front back then, but today you can put $2k down and leave the dealership paying an additional $350/month, so the cost of today’s car is 8 times less. It isn’t. You’re just paying it off over a longer time, just like with the iPhone and your cellular contract.

      • Okay, then let’s use a year old Iphone that really does cost $200.00 used or even a used, $50.00 Android? The difference in technology is fairly minor.

        • The used year-old iPhone would be the iPhone 5, which goes for double that. That’s what happens when you choose the BMW of smartphones as your example. ;) As for anything costing $50, you’d be hard pressed to find a smartphone at that price. Besides, the 1991 gizmos aren’t used, so it’s not fair to start talking about used ones now.

          • Not sure what smart phone it is, but way overpriced for the value you get is apropos.

            At least with the 5S they caught up with Qualcomm chip processing speeds. Now if you could only read the display with the postage stamp screen.

          • You’re getting the same functionality as those 13 gadgets and more at a tenth of the cost in hours worked, not sure how you can call it “overpriced.” Could the cost be driven down even more? Sure, but if people are ready and willing to pay that much for an iPhone, which still maintains around 45% market share in the US, obviously the iUsers are gaining enough value for it to be worth it for them.

            I think Apple’s in-house chips were always competitive with Qualcomm, as the two of them always aced the benchmarks. As for the small iPhone display, at least you can use it comfortably in one hand, which certainly isn’t true for the vast majority of Android smartphones these days. Plus, the latest scuttlebutt is that Apple is finally planning to release a 4.5″+ phone and a phablet this year, so for the Apple fans who want the larger sizes, they’ll get their wish soon.

      • Ok, take the retail $600-700 figure and compare it to the $5,000. Still impressive. You could even add in the cost of the damn phone bill. Still impressive. You just fit a sedan load of electronics in your pocket. That’s damn impressive.

        Nice try though.

        • I agree. It’s still impressive, as I said below. So why does Mark continue to skew the numbers by using the subsidized price for the iPhone, even after this has been pointed out to him on previous posts also?

    • i am confused.

      i keep trying to figure out which slot in the iphone i am supposed to put my 8 track into.

      can someone please help?

      • i am confused.

        i keep trying to figure out which slot in the iphone i am supposed to put my 8 track into.

        can someone please help?

        It depends on which iPhone you have, but basically you insert the 8 track in the slot in the bottom of your kitchen sink, then operate the nearby switch on the wall. Expect the music to be loud and grating on the nerves, just as your parents described it when you first played it for them many years ago.

    • M. H. Wlson: “But what about the costs of housing in the same period?”

      In many parts of the nation, the cost of comparable housing has not increased in real dollars over the past 25 years.

      The change in housing costs vary considerably across the nation. I think the main drivers of housing costs are geography, local economic conditions, and land use restrictions (which eliminate the potential supply). Some examples:

      Dallas has always been surrounded by inexpensive farmland prairies. The ability to develop inexpensive suburbs – the potential supply of homes – has kept the prices of existing housing down throughout the metropolitan area.

      Detroit’s depressed economy has resulted in a persistent decline in the price of homes.

      As Randal O’Toole has explained at his American Dreams website, so-called “smart growth” planning has resulted in highly inflated housing costs in development-dumb cities such as Boulder, CO, Portland, OR, and San Jose, CA.

      http://americandreamcoalition.org/penalty.html

      The problem with trying to relate housing costs with consumer product costs is that government has intervened so much more in the housing market.

    • The cost of housing has been in decline.

      In 1990, the median new home size was 1905 sq ft and median price was $120,000 ($200,204 in 2010 dollars), which is $62/sq ft ($105/sq ft in 2010 dollars). The average new home size was 2080 sq ft and average price was $153,000 ($255,260 in 2010 dollars, with is $73/sq ft ($122/sq ft in 2010 dollars).

      In 2010, the median new home size was 2169 sq ft with a median price of $204,200, which is $94/sq ft. The average new home size was 2392 sq ft and cost $254,400, which is $106/sq ft.

      Thus the median sq ft price dropped by 11% from 1990 to 2010 and the average sq ft price dropped by 13%.

      • Additionally, the quality of housing has dramatically increased from electrical, to foundational, to paint, etc. Cheaper and better. As expected, but sadly people don’t think so, particularly because they forget to account for inflation.

      • Hmm, interesting calculation, certainly puts the lie to the claims that housing is the exception to the rule of falling costs, as Wilson asked above. I wonder what the results would be if one ran the same calculation in LA and NY or the Case-Shiller top 20 markets, if costs really did go up in the major metros during those two decades.

  3. I’ve seen this a few places now, and everyone seems to be under the impression that the headphones are part of the capability of a smartphone. Headphones are still a completely relevant accessory, as no phone yet invented can play sound in your ears without disturbing anyone else. The only real change to modern headphones is the addition of a microphone to the cable–even the design is similar.

  4. In the private sector, hardware just seems to get better and cheaper, and more user-friendly every year—as this excellent example by Dr. Perry illustrates.

    Military hardware just gets more and more expensive every year.

    Why?

    • Because bureaucrats control the specs and purchasing and have no incentive to save money and every incentive to spend as much as possible.

      • Rick, it’s not just that. Most military hardware has to survive conditions consumer hardware does not. Military hardware requires traceability, meaning meticulous (and expensive) documentation tracing parts in each system back to their origins. (An example: a hand-truck of paperwork to trace a stainless steel 3″ 4-40 panhead Philips screw all the way back to the mine the ore came from.) Now multiply that by the hundreds or thousands of different parts in each piece of equipment and you’ll understand why military hardware costs do darned much.

  5. You’re right.

    But doesn’t change the overall meaning of the post.

    Please do not swear at me for pointing out a meaningless objection.

  6. Good catch. Adjust that down and adjust the price of the iPhone up to its real price and you get 300 hours back then compared to 30 hours today, a factor of 10 difference. Still huge, but not the factor of 50 claimed above.

    A much bigger difference is that you actually end up using all those functions on your smartphone because it’s always in your hand, as opposed to having to hunt down each of those 1991 devices every time you wanted to do something back then. My parents had a shelf of encyclopedia volumes at home, but I never touched them. Now that wikipedia is always accessible within seconds on my ultrabook or smartphone, I’m always looking stuff up.

    There are huge differences between life today and back then because of our new technology, many of which are hard to measure but nevertheless real.

  7. Right and with the error in iPhone price, which is 35 hours instead of 10, the difference is not as dramatic, but still dramatic enough.

  8. The correct calculation changes the “time spent” ratio from 500:10 to 290:35, adjusting for the actual cost of an IPhone. That’s a substantial difference. As an aside, you can probably buy the 13 products at today’s prices for the same price as today’s Iphone. The true “miracle of the marketplace” is combining 13 products into one hand held product.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>