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This assumption that everything will be cheaper seems a bit disingenuous, because why would these companies want to automate themselves so badly if they weren't

This assumption that everything will be cheaper seems a bit disingenuous, because why would these companies want to automate themselves so badly if they weren't going to keep most of the savings as profit? Even if prices were lowered by a few percent for some goods thanks to cheaper shipping, that's little help when you have no source of income. This will only exacerbate the demand-limited economic slump we're currently experiencing.

harryh 10y ago
Companies will want to automate because if they don't they will go out of business because their competitors will.
- kalleboo 10y ago
  For the prime example of this - look at the global shipping market right now. It's going at a loss right now due to the largest shippers building massive ships to bring down the cost/kg/km down bringing overcapacity to an unsustainable level.
- fjjrxcbdhx 10y ago
  Regardless, that's not going to help an economy whose primary problem is a consumer base who can no longer afford to purchase goods in sufficient numbers.
  - harryh 10y ago
    I'm skeptical that you've identified the primary problem in the US economy. I would definitely rank two things higher: 1) Challenges that come about due to an aging population 2) An overall slow down in innovation (Cowen's "Great Stagnation" hypothesis)
    - fjjrxcbdhx 10y ago
      An unbalanced young-old demographic ratio is indicative of worsening economic conditions for average people. Looking at Japan, they have a population crisis because there's no time to start a family when you have lots of mandatory unpaid overtime. Thankfully we're not quite that far gone yet, but we're headed in that direction and are starting to face similar demographic problems. Innovation is slowing down because companies are preoccupied with irrationally slashing labor expenses, and R&D tends to be quite expensive so it gets cut significantly. The result is less income for consumers, who in turn buy fewer goods, which ultimately leads to even more cuts for labor.
afarrell 10y ago
This depends on what the barriers to entry for starting a company. If the barriers to entry are low because you can buy self-driving software off-the-shelf for $20,000 then profits will be low. If the barriers to entry are high because the shipping is done by Uber, Google, etc then the profits will be high. But you are right that it would increase economic inequality.
- smokeyj 10y ago
  How does automated truck drivers unequivocally equal economic inequality? It's theoretically possible that this labor is now freed up to create value for lower income households.. The only reason self driving tech won't be commoditized will be regulatory barriers. You can imagine why entrenched interests would lobby for such.
  - afarrell 10y ago
    > It's theoretically possible that this labor is now freed up to create value for lower income households. If there is competition, then it is true that driving down food/commodities prices will create value for lower income households. But a solid portion of that value will still accrue to the companies running the transit networks using fewer people. Google has spent years trying to enter the field of self-driving cars. So has Uber. Would not the inherent difficulty they are encountering be a barrier to entry. I'm not arguing for throwing regulations around willy-nilly. I'm not arguing for regulations at all. I don't know enough to do that with any confidence. I'm just saying that in asking the question "Should we use the force of the state to handle some of the effects of this?", the probability of this increasing income inequality is worthy of serious consideration.
    - smokeyj 10y ago
      > I don't know enough to do that with any confidence. From an epistemological perspective no one does. No one person in this world contains the knowledge needed to manufacture a modern day pencil from scratch. I don't think the term "income inequality" accurately describes the problem. Someone growing richer doesn't mean someone else had to become poorer. The problem more accurately is that poor people are poor.
stale2002 10y ago
Because of supply and demand and competition. If companies could squeeze more money out of customers why wouldn't they just do so right now by raising prices?
- fjjrxcbdhx 10y ago
  Because they have far greater leverage over labor markets than they do over the market for their product. You don't have to raise prices in a fickle consumer market when you can just make your profits off the much less elastic labor market instead. They only have to keep prices the same or negligibly lower in order to profit from this proposal.
- falcolas 10y ago
  Well, if truck driving were automated, they certainly wouldn't lower then. Personally, I imagine a lot of companies will use that extra money to buy out, take over, or otherwise eliminate their competition. I doubt the consumer will win.
  - maverick_iceman 10y ago
    You could have made the same argument about any technology when it was first created. Why didn't that happen?
    - falcolas 10y ago
      It has happened; just look at how the computer manufacturers consolidated when off-shore production took the bottom out of that market. Really, anytime a major player has cash on hand, they're going to buy out competition, either through acquisition or buying an equivalent product. When Oracle had liquid assets, they buy Sun. ATT and Verizon consolidated the cell phone market down to ATT and Verizon (and even attempt to merge down one step further). DeBeers buys every diamond producer on the market.
  - MarkMc 10y ago
    If transport companies don't lower prices, won't new companies enter the market and undercut the incumbents?
gaius 10y ago
Right, the price of anything is what people are willing to pay, there is minimal correlation with production costs. If the inputs get cheaper profits will go up but the consumer will pay the same. Do we see massive price drops whenever any company outsources their call centre to India? Nope, the price stays the same and the execs pocket the difference in bonuses.
- orangecat 10y ago
  Right, the price of anything is what people are willing to pay, there is minimal correlation with production costs. This only works if the seller has monopoly pricing power. Otherwise gas would be $5/gallon all the time. Do we see massive price drops whenever any company outsources their call centre to India? Massive, no, but the prices of most things other than housing, health care, and education have in fact been dropping.
  - brianlweiner 10y ago
    Or they are in response to internal rising costs; e.g outsource 20 IT positions because health insurance costs for your other 200 employees are increasing 16%.
MarkMc 10y ago
I don't think the word 'disingenuous' is appropriate here. You can argue that GarrisonPrime is misguided or incorrect, but there's no need to assume he or she is deliberately withholding information or is not sincere.
xapata 10y ago
> keep most of the savings as profit Only to the extent they are resistant to market forces.

harryh 10y ago

Companies will want to automate because if they don't they will go out of business because their competitors will.

kalleboo 10y ago
For the prime example of this - look at the global shipping market right now. It's going at a loss right now due to the largest shippers building massive ships to bring down the cost/kg/km down bringing overcapacity to an unsustainable level.
fjjrxcbdhx 10y ago
Regardless, that's not going to help an economy whose primary problem is a consumer base who can no longer afford to purchase goods in sufficient numbers.
- harryh 10y ago
  I'm skeptical that you've identified the primary problem in the US economy. I would definitely rank two things higher: 1) Challenges that come about due to an aging population 2) An overall slow down in innovation (Cowen's "Great Stagnation" hypothesis)
  - fjjrxcbdhx 10y ago
    An unbalanced young-old demographic ratio is indicative of worsening economic conditions for average people. Looking at Japan, they have a population crisis because there's no time to start a family when you have lots of mandatory unpaid overtime. Thankfully we're not quite that far gone yet, but we're headed in that direction and are starting to face similar demographic problems. Innovation is slowing down because companies are preoccupied with irrationally slashing labor expenses, and R&D tends to be quite expensive so it gets cut significantly. The result is less income for consumers, who in turn buy fewer goods, which ultimately leads to even more cuts for labor.

afarrell 10y ago

This depends on what the barriers to entry for starting a company. If the barriers to entry are low because you can buy self-driving software off-the-shelf for $20,000 then profits will be low. If the barriers to entry are high because the shipping is done by Uber, Google, etc then the profits will be high. But you are right that it would increase economic inequality.

smokeyj 10y ago
How does automated truck drivers unequivocally equal economic inequality? It's theoretically possible that this labor is now freed up to create value for lower income households.. The only reason self driving tech won't be commoditized will be regulatory barriers. You can imagine why entrenched interests would lobby for such.
- afarrell 10y ago
  > It's theoretically possible that this labor is now freed up to create value for lower income households. If there is competition, then it is true that driving down food/commodities prices will create value for lower income households. But a solid portion of that value will still accrue to the companies running the transit networks using fewer people. Google has spent years trying to enter the field of self-driving cars. So has Uber. Would not the inherent difficulty they are encountering be a barrier to entry. I'm not arguing for throwing regulations around willy-nilly. I'm not arguing for regulations at all. I don't know enough to do that with any confidence. I'm just saying that in asking the question "Should we use the force of the state to handle some of the effects of this?", the probability of this increasing income inequality is worthy of serious consideration.
  - smokeyj 10y ago
    > I don't know enough to do that with any confidence. From an epistemological perspective no one does. No one person in this world contains the knowledge needed to manufacture a modern day pencil from scratch. I don't think the term "income inequality" accurately describes the problem. Someone growing richer doesn't mean someone else had to become poorer. The problem more accurately is that poor people are poor.

stale2002 10y ago

Because of supply and demand and competition. If companies could squeeze more money out of customers why wouldn't they just do so right now by raising prices?

fjjrxcbdhx 10y ago
Because they have far greater leverage over labor markets than they do over the market for their product. You don't have to raise prices in a fickle consumer market when you can just make your profits off the much less elastic labor market instead. They only have to keep prices the same or negligibly lower in order to profit from this proposal.
falcolas 10y ago
Well, if truck driving were automated, they certainly wouldn't lower then. Personally, I imagine a lot of companies will use that extra money to buy out, take over, or otherwise eliminate their competition. I doubt the consumer will win.
- maverick_iceman 10y ago
  You could have made the same argument about any technology when it was first created. Why didn't that happen?
  - falcolas 10y ago
    It has happened; just look at how the computer manufacturers consolidated when off-shore production took the bottom out of that market. Really, anytime a major player has cash on hand, they're going to buy out competition, either through acquisition or buying an equivalent product. When Oracle had liquid assets, they buy Sun. ATT and Verizon consolidated the cell phone market down to ATT and Verizon (and even attempt to merge down one step further). DeBeers buys every diamond producer on the market.
- MarkMc 10y ago
  If transport companies don't lower prices, won't new companies enter the market and undercut the incumbents?

gaius 10y ago

Right, the price of anything is what people are willing to pay, there is minimal correlation with production costs. If the inputs get cheaper profits will go up but the consumer will pay the same. Do we see massive price drops whenever any company outsources their call centre to India? Nope, the price stays the same and the execs pocket the difference in bonuses.

orangecat 10y ago
Right, the price of anything is what people are willing to pay, there is minimal correlation with production costs. This only works if the seller has monopoly pricing power. Otherwise gas would be $5/gallon all the time. Do we see massive price drops whenever any company outsources their call centre to India? Massive, no, but the prices of most things other than housing, health care, and education have in fact been dropping.
- brianlweiner 10y ago
  Or they are in response to internal rising costs; e.g outsource 20 IT positions because health insurance costs for your other 200 employees are increasing 16%.

MarkMc 10y ago

I don't think the word 'disingenuous' is appropriate here. You can argue that GarrisonPrime is misguided or incorrect, but there's no need to assume he or she is deliberately withholding information or is not sincere.

xapata 10y ago

> keep most of the savings as profit Only to the extent they are resistant to market forces.