Why hasn't technology improved customer service?

Because it doesn't have unlimited power to improve things, and the market seems to prefer most of that power be directed to lower prices instead.

It is frustratingly common for companies big and small to think of customer service as a cost rather than an investment.

As anyone who has dealt with people in a customer facing role knows you will deal with people who think that a five dollar purchase entitles them to fifty dollars worth of service. Automating your way out of dealing with people like that is a very tempting prospect; but it should be avoided.

It's possible to do a good job of automating customer service; if you are clear and honest and make it easy to talk to a human being if that is what the customer wants.

A book that will change your thinking on the topic is http://www.thesupporteconomy.com/

Frankly, good customer service needs to be provided by knowledgeable human beings. So, one could argue why hasn't mankind improved customer service? In general, at least with tech support over the phone, it's usually lame. "Let me transfer you to another department," echo echo echo.

Because the people who run things don't have taste or vision.