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Comment by nateabele | Hacker News Reader

> The drop in price has a great deal to do with improving technology not simply competition driving down prices

And this improved technology was an inevitable, foregone conclusion?

People make arguments like this as if it was some passive thing, as opposed to thousands if not millions of conscious decisions to improve turbines, airframes, and myriad other technologies, then actually implement them in real aircraft, then acquire and deploy a commercial fleet.

People made these decisions because they were incentivized to trade time and money today for material improvements tomorrow. Why do you think that might have been?

Hint: think about industries where there isn't much competition. Do we see similar improvements there, usually?

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There very much was global competition in the airline manufacturing market in the 1970’s. US airlines also weren’t the only people buying aircraft at the time so those regulations didn’t actually impact manufacturing very much.

As to improvements without competition, it’s surprisingly common. AT&T was a huge hotbed of technical innovation when they were a monopoly from ever improving switches and fiber optics etc but they even produced one of the first commercial Unix System V. They also played a surprisingly large role in early satellites literally owning the first commercial communications satellite used for the first live transatlantic television signal. https://en.wikipedia.org/wiki/Telstar

Monopolies often spend huge sums on R&D outside of their core business. Google’s self driving car is exactly the kind of investment you see when companies have more money than they know what to do with. Xerox for example developed the desktop UI mouse included when they held a huge monopoly, not that it helped them but it did push the industry forward quite a bit.

AT&T may have innovated in their labs, but they were glacially slow pushing innovation out to consumers. AT&T launch the push button phone in 1963, but it wasn't until the 80's (deregulation in 1984) that a majority of dial phones had been switched over to touch tone. One didn't their home phone, they rented from AT&T, so what was their incentive to innovate?

That’s not a lack of innovation, that’s a slow rollout. Innovation is the creation or introduction of some new thing not its takeover of the market.

Your primary care physician is in a competitive market yet presumably still makes appointments over the phone rather than allowing people to schedule online. Such technology has existed for decades and some doctors let you, but adoption is still slow.

It stifled innovation in the home phone market - everyone had the same phone for 40 years. When people were allowed to own their phones, you immediately had innovation. Some stupid consumer aesthetic innovation, but also more real changes like cordless phones, answering machines..

Except they did actually innovate headsets several times including inventing the push button phone. They were even working on Cellphone technology as they were broken up.

AT&T was hardly the only phone company in that time period, people just didn’t really care. Phones just cost a lot and spending more to have buttons just wasn’t considered worth it.

Even into 1982 most people were still renting their phones from the phone company: “Some resistance to buying phones might be evident in the response to the sale offers made in New York, California and Oregon. In New York, those who now rent a plain rotary dial phone pay $3.03 a month and have the option of buying it for $35, which means that the phone would pay for itself in reduced bills in one year. The return on some other models is even faster.

Yet New York Telephone has sold only 400,000 to 500,000 of the 5.5 million phones it has placed in homes, according to Paul D. Covill, New York Telephone's vice president of marketing.” https://www.nytimes.com/1982/12/16/business/new-era-for-the-...

Only 78% of US households even had a phone in 1960, jumping to 90% in 1970, and that was unusually high compared to the rest of the world.

Even into 1982 most people were still renting their phones from the phone company:

Exactly! You had to. 1982 is a very relevant year, the last year before AT&T was broken up. People did want to own their phones, and they wanted choice, and they wanted fun weird phones, or cheap phones, or whatever. Monopoly quashed that.

From 1960 -> 1980 phones barely changed. Compare that to the changes from

You seem to misunderstand, this is months after the breakup and people still rented the phone. It stopped so quickly because the practice was literally banned by the FTC.

It seems strange today that people would rent phones, but they used to be very expensive items even outside the US. The practice ended because prices fell so far not because people’s preferences changed.

practice ended because prices fell so far not because people’s preferences changed.

As if prices aren't a part of preference? As if innovation isn't lowering costs? That alone torpedoes your claim - why wasn't AT&T innovating on lowering prices? Obviously because they were a monopoly and how no incentive.

What you you may not know, is that people didn't switch from renting to buying the same boring phones, the market exploded with phone options. Where was the AT&T cordless phone pre-1982?

I don't really buy this premise at all

> think about industries where there isn't much competition. Do we see similar improvements there, usually?

I can't think of an industry without competition where said industry doesn't try to improve their product or production for more profit. Maybe something in the medical space that I'm unaware of, but this definitely doesn't fly for aviation or transportation in general.

> but this definitely doesn't fly for aviation or transportation in general.

Precisely because those fields are in a high economic (and consequently technology) competition, you see innovation as you noted. The parent comment is that you cannot throw away the competition and still expect innovations to happen.

And my question is what industries that don't have competition also don't innovate? I am not aware of nor can play devils advocate and try to imagine an example.

Had deregulation not happened for airlines in the 70's, why would we expect that they wouldn't innovate to produce less expensive and more reliable aircraft? Any sort of improvements there makes a bigger profit and avoids killing customers (also pretty good for profit).

There are plenty of examples. I will give one in transport, as we are discussing here.

Seoul and Tokyo have the most extensive subway systems in the world. Both have both privately owned and de facto government-owned lines through government business entity. The innovation here is connecting key areas in the city. The new lines that connect new city centers that emerged are privately owned; they care about profit and they are incentivized to provide popular, convenient services by connecting new city centers. Also, there are other innovations like self-driving trains in those private lines (see Shinbundang Line, the newest in Seoul). A government line with legally guaranteed profit is less poised to innovate although some innovations happen due to popular demands or government initiatives.

It's not that government-led projects have zero innovations, but they tend to have less momentum than well-motivated well-aligned private corporations. Well-aligned (with the public's interest) is the key here.

I don't know if particular examples prove anything, but you asked for examples, and here it is. We do have decades of economic research that competition generally leads to innovation in services and technology.

Regulatory capture is far more profitable than innovation.

I love how you start with critical thinking, essentially asking for evidence, only to then turn around, put on your cheerleading outfit and make heaps of implications and assumptions in favor of deregulation and capitalism without so much as a notion of evidence.

You didn’t even bother to argue against the points raised by the article itself, which goes as far as to say that the benefits you attribute to deregulation hasn’t occurred beyond the first few years after deregulation.

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