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There has been an incredible amount of innovation in the food to consumer supply chain. But despite this cost savings, the prices for food keeps on going up. W

There has been an incredible amount of innovation in the food to consumer supply chain. But despite this cost savings, the prices for food keeps on going up. Who’s absorbing all that extra value?

nerdponx 5y ago
I always heard that food price fluctuations were dicated mostly by weather events and fuel prices.
virtue3 5y ago
I've asked the same question when we saw all the people at the bank disappear to be replaced by computers (you can look at like scenes from older movies with TONS of people at the bank doing processing I assume). Robots, unfortunately, move capital from labor to owners. I'm not proposing robots are bad. You're kinda screwed once they're out in the wild, if you don't adopt them you can't stay in business eventually (without some sort of pivot to a niche market segment).
- thdxr 5y ago
  In a competitive environment automation doesn't actually help business make money. The increased margin quickly gets turned into discounts that competitors will trade to grab more marketshare. Areas where there is automation but prices continue to go up have issues with competition - banks are a great example because banking licenses are impossible to acquire.
  - virtue3 5y ago
    Really great insight. I would even add in for automation for cars or heavy manufacturing: they increase the cost of getting into the game: thus driving down competition as well.
- TulliusCicero 5y ago
  People don't explicitly pay for bank accounts anymore -- remember when "free checking" was a big deal? So it actually did have some benefits for consumers.
  - virtue3 5y ago
    I feel like that was... in the 90s? BoA is still only free if you have direct deposit or some such I'm pretty sure. The automation started in the late 70s at least tho. The other child comment about banks and lack of competition I think really hits this on the head.
- hosh 5y ago
  That's an interesting line of thought. That sparked a different one: Carol Sanford had been talking about "value-adding" for a long time. Not in the sense of "value-added" (such as packaging, or productizing), but in the sense that additional value is created. How can automation add value instead of capturing existing value through better efficiency?
  - virtue3 5y ago
    Interesting, can you elaborate on your question? all of my initial thoughts tend to focus more on better quality assurance etc; which I think is more about efficiency than anything else.
    - hosh 5y ago
      What can you do with the technology that you could not before, that benefits our civilization? I once heard this example using coffee beans. If you buy coffee beans, and you have to brew it, that's a commodity. When you go to a coffee shop, and the server brews it for you and brings it to you, that's a service. When you have one of those single-server instant coffee that you pop into the machine, and it brews it for you, that's a product. The distance between you and the original commodity can be defined as the number of transformations from the coffee plant to your cup. Raw beans that you have to process yourself is closer to the original plant. A service provider inserts themselves into that process of brewing a coffee, and charge you for it. Productizing it so you don't even have to wait on someone else to do it for you inserts additional steps -- packaging, technology, etc. We call this "value-added", meaning that some merchant captures the value from transformational steps that you would have otherwise have to do yourself. However, I am talking about "value-adding". The key difference here is that the transformation changes the commodity in a way that contributes something beyond what you could have done yourself, not simply capturing existing value in the value chain. I think most use of technology and automation are attempting to capture existing value rather than creating value that was not there before. Network effect of the internet might be value-adding, but we have also seen the same network-effect used to aggregate and capture large swaths of the market without contributing anything back (Facebook, for example). Is the network effect of Amazon's logistics prowess value-adding? And if it is, what unintended consequences have we seen from it? It may also be that, for computing, we would have to look at older generations of our software and look for the forks not taken. As an example, Apple's Hypercard enabled individuals to create their own computing experience, something that could not have been done before without it and other systems like it ... and it was deliberately dropped so that all design came from Apple (iPhones, iPads, etc.). By the metric of return on shareholder value, that decision was wildly successful. But in terms of adding value for our civilization, was it? AlphaGo and AlphaGo Zero demonstrated that humans can no longer beat AI Go players. If you are willing to spend energy to power all those TPUs, they can play far beyond the best human players. That shook up a lot of the pros. Some of the top players have quit. However, other players got more excited. They saw Go being played in ways they had never seen before. People who made their living tutoring Go to other people have lost their livelihood. On the other hand, Isee discussion at the high amateur ranks now uses Leela Zero, or Katago to learn and explore the game. That's a positive contribution that could not be done before. (And the shadowside: it is easier for people to cheat; though if you are using Go to develop your own intellectual ability to evaluate and make decisions, using an AI to play competitively is kinda cheating yourself).
jakearmitage 5y ago
Shipping?
bpodgursky 5y ago
My semi-conspiracy theory is that we're in de-facto hyperinflation already (visible in education, healthcare, housing), but it's being masked by wild productivity improvements in agriculture and basic manufacturing which keep inflation at a nominal 2%.

There has been an incredible amount of innovation in the food to consumer supply chain. But despite this cost savings, the prices for food keeps on going up. Who’s absorbing all that extra value?

nerdponx 5y ago

I always heard that food price fluctuations were dicated mostly by weather events and fuel prices.

virtue3 5y ago

I've asked the same question when we saw all the people at the bank disappear to be replaced by computers (you can look at like scenes from older movies with TONS of people at the bank doing processing I assume). Robots, unfortunately, move capital from labor to owners. I'm not proposing robots are bad. You're kinda screwed once they're out in the wild, if you don't adopt them you can't stay in business eventually (without some sort of pivot to a niche market segment).

thdxr 5y ago
In a competitive environment automation doesn't actually help business make money. The increased margin quickly gets turned into discounts that competitors will trade to grab more marketshare. Areas where there is automation but prices continue to go up have issues with competition - banks are a great example because banking licenses are impossible to acquire.
- virtue3 5y ago
  Really great insight. I would even add in for automation for cars or heavy manufacturing: they increase the cost of getting into the game: thus driving down competition as well.
TulliusCicero 5y ago
People don't explicitly pay for bank accounts anymore -- remember when "free checking" was a big deal? So it actually did have some benefits for consumers.
- virtue3 5y ago
  I feel like that was... in the 90s? BoA is still only free if you have direct deposit or some such I'm pretty sure. The automation started in the late 70s at least tho. The other child comment about banks and lack of competition I think really hits this on the head.
hosh 5y ago
That's an interesting line of thought. That sparked a different one: Carol Sanford had been talking about "value-adding" for a long time. Not in the sense of "value-added" (such as packaging, or productizing), but in the sense that additional value is created. How can automation add value instead of capturing existing value through better efficiency?
- virtue3 5y ago
  Interesting, can you elaborate on your question? all of my initial thoughts tend to focus more on better quality assurance etc; which I think is more about efficiency than anything else.
  - hosh 5y ago
    What can you do with the technology that you could not before, that benefits our civilization? I once heard this example using coffee beans. If you buy coffee beans, and you have to brew it, that's a commodity. When you go to a coffee shop, and the server brews it for you and brings it to you, that's a service. When you have one of those single-server instant coffee that you pop into the machine, and it brews it for you, that's a product. The distance between you and the original commodity can be defined as the number of transformations from the coffee plant to your cup. Raw beans that you have to process yourself is closer to the original plant. A service provider inserts themselves into that process of brewing a coffee, and charge you for it. Productizing it so you don't even have to wait on someone else to do it for you inserts additional steps -- packaging, technology, etc. We call this "value-added", meaning that some merchant captures the value from transformational steps that you would have otherwise have to do yourself. However, I am talking about "value-adding". The key difference here is that the transformation changes the commodity in a way that contributes something beyond what you could have done yourself, not simply capturing existing value in the value chain. I think most use of technology and automation are attempting to capture existing value rather than creating value that was not there before. Network effect of the internet might be value-adding, but we have also seen the same network-effect used to aggregate and capture large swaths of the market without contributing anything back (Facebook, for example). Is the network effect of Amazon's logistics prowess value-adding? And if it is, what unintended consequences have we seen from it? It may also be that, for computing, we would have to look at older generations of our software and look for the forks not taken. As an example, Apple's Hypercard enabled individuals to create their own computing experience, something that could not have been done before without it and other systems like it ... and it was deliberately dropped so that all design came from Apple (iPhones, iPads, etc.). By the metric of return on shareholder value, that decision was wildly successful. But in terms of adding value for our civilization, was it? AlphaGo and AlphaGo Zero demonstrated that humans can no longer beat AI Go players. If you are willing to spend energy to power all those TPUs, they can play far beyond the best human players. That shook up a lot of the pros. Some of the top players have quit. However, other players got more excited. They saw Go being played in ways they had never seen before. People who made their living tutoring Go to other people have lost their livelihood. On the other hand, Isee discussion at the high amateur ranks now uses Leela Zero, or Katago to learn and explore the game. That's a positive contribution that could not be done before. (And the shadowside: it is easier for people to cheat; though if you are using Go to develop your own intellectual ability to evaluate and make decisions, using an AI to play competitively is kinda cheating yourself).

jakearmitage 5y ago

Shipping?

bpodgursky 5y ago

My semi-conspiracy theory is that we're in de-facto hyperinflation already (visible in education, healthcare, housing), but it's being masked by wild productivity improvements in agriculture and basic manufacturing which keep inflation at a nominal 2%.