Comment by Traster | Hacker News Reader

Comment by Traster | Hacker News Reader

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>Before the internet, consumers who wanted to buy an airplane ticket would talk to a travel agent, who would type into a “green screen” terminal, which would “talk” to a mainframe computer, which would procure said airplane ticket.

Sorry but what? Before the internet you went to a travel agent. Now you go to... expedia (a travel agent). The only difference between then and now is your human travel agent has been replaced by an algorithm designed to efficiently fleece you.

This isn't disintermediation. There is intermediation of 500 silicon valley engineers between you and your flight instead of 1 local travel agent.

Naturally this is A16Z's business model, go from a state where 100,000 travel agents are getting $50,000 a year for sales and move to a state where their start up is making $5Bn a year capturing that same value.

What's bizarre though, is A16Z trying to explain to you that actually that $5Bn they're trying to capture actually doesn't exist. Expedia isn't a middle man making money, no according to A16Z there's no longer a middle man. Pay no attention to the $20Bn market cap.

That's not true in any way, shape, or form. Maybe it's true for you, but don't assume it's true for others or for the the rest of the world.

When I book a flight ticket, I go to the airline directly, which is true for more or less all people I know. For me this will typically be KLM, AirFrance, or SAS. These companies are Dutch, French, and Swedish.

There are no "500 silicon valley engineers" between me and them.

The world is bigger than your little world. I didn't even know what Expedia was until I looked it up.

It works well for popular flights within Europe, but if you want to fly to bit less mainstream destination given your starting point (even something like Katowice -> Las Vegas, and back), you may end up on transfers between different airlines, or the return part of the journey may be via a different airline. Booking through Expedia, Kayak etc. is basically the only way (I know) to handle this with zero hassle.

The expedia example was from the article not from me. Airlines could set up phone lines for direct purchases before the internet.

I think the basis for that pretense is that every digital intermediary can compete with every other digital intermediary, unlike a human intermediary who can only effectively compete with other human intermediaries in the same geographic area. This causes very different effects on pricing. It's probably premature to say that it will drive the profit margins of the intermediaries almost to zero, but that is one possible outcome.

Margin is a bit of a nebulous concept.

Computers can help bring down costs. Competition can help force companies to pass on those savings.

(Though even in the absence of competition, there is some incentive to lower prices in order to increase volume. But it's much weaker. See eg https://en.wikipedia.org/wiki/Monopoly_profit)

And here lies the humanitarian problem with “software eats the world”.

What is problematic about this?

If 500 silicon valley engineers can replace 100,000 travel agents earning $50,000, then you have 500 silicon valley engineers earning $10m and 100,000 unemployed travel agents.

The whole point is that the engineers all taken together would make less than the travel agents all taken together.

That's where the consumer surplus and company profit come from.

Second: freeing up the work of 99,500 people would be awesome! You know that nearly everyone used to be a farmer back in the day? Surprisingly, the world today is not made up of 70%+ unemployed farmers?

In fact, the stable boy and hay industry has never recovered after the introduction of the Ford model T.

Which is fine, as long as you're not the stable boy, don't care about the stable boy, and don't live in a democracy where the stable boy gets a vote.

Which is fine, as long as you don't mind being outcompeted and replaced by a system that is able to phase out stable boys.

You nailed it - statist democracy is having control over vast amounts of weapons, and forcing your way into the wallet of your neighbour, rather than competing and providing value to others.

Right, but the lesson is that we ought to look after the stable boy, not that the invention of cars was a bad idea.

Yeah which is why it's stated as a problem to be solved, not some immutable fact of life. The issue is that we've seen incredibly little progress in this area. There have been studies on the British coal mines that shuttered under Thatcher - the areas are still not back to the level of employment they had before the mines were shut. It's fine to say that shuttering those mines was a good thing - it probably was. It's also factual to say that those who felt the negative effects didn't benefit from the advantages of government policy, and ina human sense beyond employment numbers it means a lot of those people never worked again.

The crucial side-effect of most productivity-increasing inventions is marginalization of most of the work force (barring the few lucky ones - the SV engineers in the case of XXI century), destruction of communities and concentration of wealth and power in fewer hands. The luddites were definitely onto something. Wendell Bell explored these ideas in detail in his writing, if anyone is interested in learning more.

If you mean force others to take care of the stable boy, then no, it can not be moral.

What is moral and also efficient and kind is not standing in the way of him finding another occupation - to remove all regulation that hinders someone from providing value

Ford model T did not compete with stable boys and hay industry. It competed with horses and no, they never recovered.

500 sv engineers earning $500k. Most of the savings passed on to consumers.

Expedia is based in Seattle, London and India. As far as I know, they don't pay SV FAANG salaries.

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