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> airline deregulation shows just how bad command economies are at planning and allocating resources. I'm curious why folks think the failure of command econom

> airline deregulation shows just how bad command economies are at planning and allocating resources. I'm curious why folks think the failure of command economies in the pre-digital era carries any weight today. We have orders of magnitude more data today, and I feel like it should (theoretically) be possible to use that data to optimize for things other than maximal profit.

jklinger410 3y ago
An overwhelming amount of propaganda fueled by private profits.
twoodfin 3y ago
What matters is the incentive structure (win, get profits!) and price signals (“Shut up and take money!”) provided by markets. Improving technology is downstream of those forces.
- jjoonathan 3y ago
  The market wants more banks and fewer airlines.
  - twoodfin 3y ago
    Kinda? The era of technological or business innovation for large airlines may basically be over. If you take that bet you want the airline you invest in to focus on financial wheeling and dealing to ensure they save a few pennies on fuel in 2035 or earn a few more pennies on affiliate credit card spend in 2027.
    - jjoonathan 3y ago
      So you're admitting that innovation isn't downstream from market incentives in this case, but financial wheeling and dealing is. I'm glad we are on the same page.
      - bluGill 3y ago
        I'm admitting there isn't much innovation left in pure airlines. The customer has spoken, they want cheap flights. Some are willing to pay for legroom, some are willing to pay for luggage, [insert a bunch of other things] but will do without for cheaper tickets. It is very hard to find any more innovation that hasn't already been found in this space. Airlines are working on the things grandparent named because it works to consumer wants: lower prices.
        creato 3y ago
        I think part of the problem with air travel is it’s hard to know what you’re actually getting. The seating chart doesn’t visualize leg room or cleanliness or the details of the seat design on that particular flight. If there were reliable indicators of these things, people might choose to pay more for some of those.
        deleted 3y ago
        [deleted]
        hakfoo 3y ago
        One consequence of giving everything a discrete price is that it drives customers to consume all services they pay for completely. If you say "I can take two checked bags, it's included in the fare", I'll probably only take one because I only need one for the duration of my trip. But I'll feel good knowing if I decide I see something awesome while on my vacation, I can take it home without too much care for penalty fees. But if you say "Each checked bag is $50", people will pack everything up to and including an entire 1996 Toyota Corolla into their free carry-ons, exhaust the available space, and the airline has to say to the economy class late-boarding group 'everyone after this line has to check their bag anyway, but we won't charge you the $50." As an added plus, the price awareness reduces the quality of the travel experience-- you end up asking "can I fit another souvenir in my little free bag", and often deciding against it, because it's insanity to spend $50 in bag fees for a $10 book.
  - svachalek 3y ago
    Every business once it gets out of its rapid growth phase seems to want to become a bank. Car companies are all about loans now, "X" is an attempt to turn social media into banking (and not the first), Google and Apple are both into payments and other financial services, and the list goes on and on. Either the market has an endless appetite for banking or capitalism does not in the end deliver what markets want.
    - creato 3y ago
      > Either the market has an endless appetite for banking I don’t like it but I think it’s clear this is the case. The demand for “buy now, pay later” seems to be huge, even if it costs more in the end, even for seemingly trivial amounts of money for regular purchases. But I really have no idea how much things like affirm on Amazon actually get used, maybe no one else is using it either.
    - sharedbeans 3y ago
      You say that as if you cannot buy a car or an airline ticket. In fact you can, because airlines fly planes and sell tickets on them, and car manufacturers make cars and sell them. It may be cute to say “X is a bank”, but an airline is not a bank. Besides the obvious facts that you cannot withdraw money from an account or pay your bills, if they didn’t fly planes the points would be ~worthless. The fact that they don’t profit from those activities is a market economy working as intended*. Cars and flights are easily substitutable goods, you’d expect to see the profit competed down to ~nothing. *Arguably there is getting to be too much consolidation in the airline industry, and also legal limits on airport gates act as a huge barrier of entry for new competition. (edited for clarity)
    - hakfoo 3y ago
      I suspect in the end, the financial component of any business has the highest margins, so business seeks it like a plant growing towards the sun. To do the "actually send passengers from LAX to ORD" part of running an airline you have to pay for pilots, gate agents, planes, the world's smallest cups of flat ginger ale... But shuffling around frequent flyer miles as a psuedo-currency? No actual tangible expenses there, just some obligations that end up on some future quarter's balance sheet.
- doublemint2202 3y ago
  if we could somehow structure our incentives to be a net positive for humanity overall, we'd be in a much better spot
  - jjoonathan 3y ago
    Yeah, but markets care less about what people want and more about what rich people want -- which, by and large, is to get paid for being rich.
    - bluGill 3y ago
      Most of the money belongs to the middle class, not the rich. So that is what markets mostly work for.
      - mjamesaustin 3y ago
        The bottom 50% of the population holds 2.4% of all wealth. The top 10% holds 69%. https://www.stlouisfed.org/institute-for-economic-equity/the-state-of-us-wealth-inequality https://www.stlouisfed.org/institute-for-economic-equity/the...
        twoodfin 3y ago
        Wealth (i.e. net worth) isn’t the relevant statistic for how much the market “cares” about a particular demographic. Aggregate disposable income is. A young doctor with $100k in med school loan debt is part of that “bottom 50%” of wealth but nonetheless an extremely attractive target for “the market”.
        rrrrrrrrrrrryan 3y ago
        By default, company executives are beholden to the shareholders (i.e. the wealthy). In a healthy competitive market, they're also reactive to customer desires, but when they're presented with the opportunity to decrease competition through consolidation or other means, it's blatantly obvious where their true loyalties lie.
brigadier132 3y ago
It doesn't matter how much data you have, it's computationally impossible to centrally plan an economy. Having individual agents plan their own economic choices is much more efficient and elegant (and more importantly, actually possible).
- rrrrrrrrrrrryan 3y ago
  > Having individual agents plan their own economic choices is much more efficient There's a great deal of inefficiency in our current system as well, though. I suppose I'm talking more about the "how much grain should we grow this year" sorts of questions that the Soviet Union failed at. It's almost certainly impossible with early 20th century tech, but with modern computing it seems like it might be more efficient to solve by one party with great resources, rather than by many parties with more primitive predictive tools. When it comes to the discussion at hand, transportation infrastructure is one of the few areas that's inarguably more efficient when centrally conducted, which is why our roads and subways are government-operated, and why the airlines have an insatiable desire to consolidate.
  - gottorf 3y ago
    > with modern computing it seems like it might be more efficient to solve by one party with great resources, rather than by many parties with more primitive predictive tools I'm not sure what technology we have now that the Soviets didn't have that would allow for successful central planning of agriculture. Local boots-on-the-ground conditions vary so much, even from one end of the field to another. That aside, even if we had technology sufficiently advanced so as to be indistinguishable from magic, there's the other great problem that central planning couldn't overcome, which is the problem of human nature and incentives. Many parties with primitive tools who have a direct incentive that their crop is bountiful will beat out the one central party with great resources that nevertheless lacks skin in the game.
nradov 3y ago
The amount of data is irrelevant. Data by itself isn't actionable. We don't have a proven theoretical framework that could be used to turn data into good decisions in a command economy. Plus it is nearly impossible to command innovation; command economies have occasionally produced innovations by throwing enormous resources at particular problems, but for the most part they are stuck with copying innovations from free market economies.
- rrrrrrrrrrrryan 3y ago
  > it is nearly impossible to command innovation Excellent point.
  - sandpaper26 3y ago
    The US military's many labs, test sites, software foundries, federally funded research and development companies, and research institutes are laughing at this sentiment. Innovation is routinely commanded -- look at Skunkworks, JPL, heck even the USSR's space program.
- PaulDavisThe1st 3y ago
  The problem is that too much of the innovation in our system targets ways of becoming a new middleman in existing economic exchanges, because collecting 1% of "all X" is much more valuable than collecting 100% of "a few Y". The incentives to innovate in ways that actually benefit people are weak in our system, because the disincentives to innovate in ways that just make you a bit wealthier are small to non-existent.
  - nradov 3y ago
    That's not a real problem worth worrying about. Look outside the tech industry bubble. There is a huge amount of innovation happening in sectors beyond of finance and software, but they don't get much attention on HN. Of the IPOs this year, what percentage are just middlemen? https://stockanalysis.com/ipos/2023/ https://stockanalysis.com/ipos/2023/
- 3y ago
lukas099 3y ago
This is an interesting point that I hadn't thought of. A counterpoint would be that the economy has also grown more complex since then, but I don't think it has to the same extent that computational power has increased.

jklinger410 3y ago

An overwhelming amount of propaganda fueled by private profits.

twoodfin 3y ago

What matters is the incentive structure (win, get profits!) and price signals (“Shut up and take money!”) provided by markets. Improving technology is downstream of those forces.

jjoonathan 3y ago
The market wants more banks and fewer airlines.
- twoodfin 3y ago
  Kinda? The era of technological or business innovation for large airlines may basically be over. If you take that bet you want the airline you invest in to focus on financial wheeling and dealing to ensure they save a few pennies on fuel in 2035 or earn a few more pennies on affiliate credit card spend in 2027.
  - jjoonathan 3y ago
    So you're admitting that innovation isn't downstream from market incentives in this case, but financial wheeling and dealing is. I'm glad we are on the same page.
    - bluGill 3y ago
      I'm admitting there isn't much innovation left in pure airlines. The customer has spoken, they want cheap flights. Some are willing to pay for legroom, some are willing to pay for luggage, [insert a bunch of other things] but will do without for cheaper tickets. It is very hard to find any more innovation that hasn't already been found in this space. Airlines are working on the things grandparent named because it works to consumer wants: lower prices.
      - creato 3y ago
        I think part of the problem with air travel is it’s hard to know what you’re actually getting. The seating chart doesn’t visualize leg room or cleanliness or the details of the seat design on that particular flight. If there were reliable indicators of these things, people might choose to pay more for some of those.
        deleted 3y ago
        [deleted]
        hakfoo 3y ago
        One consequence of giving everything a discrete price is that it drives customers to consume all services they pay for completely. If you say "I can take two checked bags, it's included in the fare", I'll probably only take one because I only need one for the duration of my trip. But I'll feel good knowing if I decide I see something awesome while on my vacation, I can take it home without too much care for penalty fees. But if you say "Each checked bag is $50", people will pack everything up to and including an entire 1996 Toyota Corolla into their free carry-ons, exhaust the available space, and the airline has to say to the economy class late-boarding group 'everyone after this line has to check their bag anyway, but we won't charge you the $50." As an added plus, the price awareness reduces the quality of the travel experience-- you end up asking "can I fit another souvenir in my little free bag", and often deciding against it, because it's insanity to spend $50 in bag fees for a $10 book.
- svachalek 3y ago
  Every business once it gets out of its rapid growth phase seems to want to become a bank. Car companies are all about loans now, "X" is an attempt to turn social media into banking (and not the first), Google and Apple are both into payments and other financial services, and the list goes on and on. Either the market has an endless appetite for banking or capitalism does not in the end deliver what markets want.
  - creato 3y ago
    > Either the market has an endless appetite for banking I don’t like it but I think it’s clear this is the case. The demand for “buy now, pay later” seems to be huge, even if it costs more in the end, even for seemingly trivial amounts of money for regular purchases. But I really have no idea how much things like affirm on Amazon actually get used, maybe no one else is using it either.
  - sharedbeans 3y ago
    You say that as if you cannot buy a car or an airline ticket. In fact you can, because airlines fly planes and sell tickets on them, and car manufacturers make cars and sell them. It may be cute to say “X is a bank”, but an airline is not a bank. Besides the obvious facts that you cannot withdraw money from an account or pay your bills, if they didn’t fly planes the points would be ~worthless. The fact that they don’t profit from those activities is a market economy working as intended*. Cars and flights are easily substitutable goods, you’d expect to see the profit competed down to ~nothing. *Arguably there is getting to be too much consolidation in the airline industry, and also legal limits on airport gates act as a huge barrier of entry for new competition. (edited for clarity)
  - hakfoo 3y ago
    I suspect in the end, the financial component of any business has the highest margins, so business seeks it like a plant growing towards the sun. To do the "actually send passengers from LAX to ORD" part of running an airline you have to pay for pilots, gate agents, planes, the world's smallest cups of flat ginger ale... But shuffling around frequent flyer miles as a psuedo-currency? No actual tangible expenses there, just some obligations that end up on some future quarter's balance sheet.
doublemint2202 3y ago
if we could somehow structure our incentives to be a net positive for humanity overall, we'd be in a much better spot
- jjoonathan 3y ago
  Yeah, but markets care less about what people want and more about what rich people want -- which, by and large, is to get paid for being rich.
  - bluGill 3y ago
    Most of the money belongs to the middle class, not the rich. So that is what markets mostly work for.
    - mjamesaustin 3y ago
      The bottom 50% of the population holds 2.4% of all wealth. The top 10% holds 69%. https://www.stlouisfed.org/institute-for-economic-equity/the-state-of-us-wealth-inequality https://www.stlouisfed.org/institute-for-economic-equity/the...
      - twoodfin 3y ago
        Wealth (i.e. net worth) isn’t the relevant statistic for how much the market “cares” about a particular demographic. Aggregate disposable income is. A young doctor with $100k in med school loan debt is part of that “bottom 50%” of wealth but nonetheless an extremely attractive target for “the market”.
        rrrrrrrrrrrryan 3y ago
        By default, company executives are beholden to the shareholders (i.e. the wealthy). In a healthy competitive market, they're also reactive to customer desires, but when they're presented with the opportunity to decrease competition through consolidation or other means, it's blatantly obvious where their true loyalties lie.

brigadier132 3y ago

It doesn't matter how much data you have, it's computationally impossible to centrally plan an economy. Having individual agents plan their own economic choices is much more efficient and elegant (and more importantly, actually possible).

rrrrrrrrrrrryan 3y ago
> Having individual agents plan their own economic choices is much more efficient There's a great deal of inefficiency in our current system as well, though. I suppose I'm talking more about the "how much grain should we grow this year" sorts of questions that the Soviet Union failed at. It's almost certainly impossible with early 20th century tech, but with modern computing it seems like it might be more efficient to solve by one party with great resources, rather than by many parties with more primitive predictive tools. When it comes to the discussion at hand, transportation infrastructure is one of the few areas that's inarguably more efficient when centrally conducted, which is why our roads and subways are government-operated, and why the airlines have an insatiable desire to consolidate.
- gottorf 3y ago
  > with modern computing it seems like it might be more efficient to solve by one party with great resources, rather than by many parties with more primitive predictive tools I'm not sure what technology we have now that the Soviets didn't have that would allow for successful central planning of agriculture. Local boots-on-the-ground conditions vary so much, even from one end of the field to another. That aside, even if we had technology sufficiently advanced so as to be indistinguishable from magic, there's the other great problem that central planning couldn't overcome, which is the problem of human nature and incentives. Many parties with primitive tools who have a direct incentive that their crop is bountiful will beat out the one central party with great resources that nevertheless lacks skin in the game.

nradov 3y ago

The amount of data is irrelevant. Data by itself isn't actionable. We don't have a proven theoretical framework that could be used to turn data into good decisions in a command economy. Plus it is nearly impossible to command innovation; command economies have occasionally produced innovations by throwing enormous resources at particular problems, but for the most part they are stuck with copying innovations from free market economies.

rrrrrrrrrrrryan 3y ago
> it is nearly impossible to command innovation Excellent point.
- sandpaper26 3y ago
  The US military's many labs, test sites, software foundries, federally funded research and development companies, and research institutes are laughing at this sentiment. Innovation is routinely commanded -- look at Skunkworks, JPL, heck even the USSR's space program.
PaulDavisThe1st 3y ago
The problem is that too much of the innovation in our system targets ways of becoming a new middleman in existing economic exchanges, because collecting 1% of "all X" is much more valuable than collecting 100% of "a few Y". The incentives to innovate in ways that actually benefit people are weak in our system, because the disincentives to innovate in ways that just make you a bit wealthier are small to non-existent.
- nradov 3y ago
  That's not a real problem worth worrying about. Look outside the tech industry bubble. There is a huge amount of innovation happening in sectors beyond of finance and software, but they don't get much attention on HN. Of the IPOs this year, what percentage are just middlemen? https://stockanalysis.com/ipos/2023/ https://stockanalysis.com/ipos/2023/
3y ago

lukas099 3y ago

This is an interesting point that I hadn't thought of. A counterpoint would be that the economy has also grown more complex since then, but I don't think it has to the same extent that computational power has increased.