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> there's no law of the universe that says that "disruption" is a good thing, and there certainly isn't any clean way to weigh the interests of one big establis

> there's no law of the universe that says that "disruption" is a good thing, and there certainly isn't any clean way to weigh the interests of one big established industry with those of a large, successful, wealthy competitor industry. There's something fairly close to a law which says that disruption is a good thing. Industries can only be disrupted by entrants that provide products that consumers prefer, so we have almost-a-law: disruption is a preferable-to-consumers thing. There a few cases where that's not socially desirable (I suppose crack replacing cocaine would be an example) but those are exceptional enough that I think we ought to regard disruption as presumed good unless shown otherwise. Similarly, a decent heuristic for choosing whose interests to consider out of an established industry and a competitor is to let consumers choose which one is better. Of course this can be difficult for those in the established industry, but we're in a society-wide Prisoner's Dilemma over this, and a useful function of government would be making sure we all cooperate. Letting consumers choose the best companies is cooperation; protecting your own industry is defection. I'd be better off if my job and income were guaranteed, but I'd be worse off if everyone else got the same deal.

api 13y ago
I think the real underlying problem is the jobs situation. I don't think this would be so much of an issue if jobs weren't so much of an issue. The concern that many people have is that technological disruption is replacing old industries that employed more people with new industries that -- while preferable to the consumer -- employ less... and that those jobs will not be replaced since the same thing is happening all across the economy. Who then will be the consumer to whom these new industries are preferable?
- icambron 13y ago
  It's important to remember that people said the same thing when machines started becoming part of assembly lines in the 20th century. The key insight was that while there was lots of very real short term employment pain, society's increased productivity allowed it to make more goods and services and thus employ more people than it did before. You're assuming demand is constant and different forms of productivity are simply competing with each other to fulfill it most efficiently. But that isn't true! As society becomes more productive, more stuff gets made, and more money gets created to buy it with, and everyone is richer. Now maybe you think this time it's different, either because people won't be able to move up the "ladder" (like our grandparents learned to operate those machines) or that society won't be able to generate enough demand (which seems crazy to me, but okay). You could make that argument, but you aren't. Just pointing at innovations as job killers is like pointing at the sail and complaining about all the oarsmen who will be laid off. Another lens to look at all of this through is the Star Trek future. In, like, three hundred years, what do you want society to look like? Like it does now, where people toil away at current productivity levels, or is everyone is vastly richer? Assuming you want that future to be awesome, how do you draw a line from here to there? Because the "we can't have technological disruption" attitude just can't really be on that line, right?
  - api 13y ago
    "society's increased productivity allowed it to make more goods and services and thus employ more people than it did before." I agree, but only if we can solve our energy and resource problems. If we can't do that, supply constraints will keep that scenario from happening again. There won't be any growth. No growth + automation = massive unemployment.
timr 13y ago
"There a few cases where that's not socially desirable" There are tons of examples where that's not socially desirable. Piracy is one easy example -- people don't want to pay for stuff, and will love a product to death if it enables piracy. Said another way: what consumers like is orthogonal to what makes society better.
- icambron 13y ago
  You can argue that they're not always the same thing, but they're certainly not orthogonal. Consumers are a huge and extremely important part of society and the idea that the fulfillment of their preferences is completely unrelated to society's wellbeing is just silly.
- Karunamon 13y ago
  >people don't want to pay for stuff, and will love a product to death if it enables piracy. That's blatantly false at worst and misleading at best. People will love a product to death if it allows them to consume media on fair terms in an easy way. Netflix reduced movie piracy and iTunes reduced music piracy. Because they're not priced in an insulting way, and because they're friction-free to use.
x0x0 13y ago
That's hardly the only example, and I think it's better to say so-called disruptors provide a service preferable to some consumers. Many industries create negative externalities and government regulations force them to internalize some of those costs. Hotels are full of loud, annoying people; we stick them in certain parts of town only. Or many industries are a form of cost pooling. The US decided that we want to have reliable mail delivery. The post office (which does an amazing job as compared to the vast majority of countries) uses the profits from short routes and urban centers to subsidize expensive and/or remote routes. Of course a business would love to come in a cherry pick the profitable routes. We -- rightly -- don't permit that, because we wish to have universal mail delivery and this is how we've chosen to pay for it. Reliable city-wide taxi service is probably similar; I don't know if uber et al are just cherry picking the best / most profitable routes, but I wouldn't be surprised. (And don't get me wrong, I love uber -- at least in sf, it's a taxi that actually comes. Amazing! But still, service guarantees are important, as are flat fares to/from airports, in part to avoid screwing tourists.) And this doesn't even mention tax revenues; I know HN tends towards the glibertarian but the simple fact is if we, as a society, want nice things someone has to pay for them. A (big?) piece of many of these controversial startups' innovation seems to be thinly disguised tax avoidance (amazon, airbnb). I actually think disruption tends to be neutral at best. Cities, especially dense urban living, are a large set of compromises amongst many people, and valley companies often have little respect for that.
- rayiner 13y ago
  This is a really wonderful post that captures a lot of what people overlook about Uber, AirBnB, etc. To some extent, these companies are built to arbitrage on government regulations intended to limit negative externalities, or achieve cost pooling or achieve universal coverage. Particularly Uber, because its not exactly some great innovation to be able to call a cab with your phone. The business model relies heavily on being free of taxi regulated rates and cherry picking the premium customers.
  - Fomite 13y ago
    This. I have no sympathy for "Laws are for other people" as a business model.
saraid216 13y ago
> Industries can only be disrupted by entrants that provide products that consumers prefer Can't industries also be disrupted by evil government bureaucrats taking them over, by ordering in jack-booted stormtroopers to drive out all competitors, for the benefit of the all-powerful state? Or does that not count as disruption because it's not a scrappy underdog?

api 13y ago

I think the real underlying problem is the jobs situation. I don't think this would be so much of an issue if jobs weren't so much of an issue. The concern that many people have is that technological disruption is replacing old industries that employed more people with new industries that -- while preferable to the consumer -- employ less... and that those jobs will not be replaced since the same thing is happening all across the economy. Who then will be the consumer to whom these new industries are preferable?

icambron 13y ago
It's important to remember that people said the same thing when machines started becoming part of assembly lines in the 20th century. The key insight was that while there was lots of very real short term employment pain, society's increased productivity allowed it to make more goods and services and thus employ more people than it did before. You're assuming demand is constant and different forms of productivity are simply competing with each other to fulfill it most efficiently. But that isn't true! As society becomes more productive, more stuff gets made, and more money gets created to buy it with, and everyone is richer. Now maybe you think this time it's different, either because people won't be able to move up the "ladder" (like our grandparents learned to operate those machines) or that society won't be able to generate enough demand (which seems crazy to me, but okay). You could make that argument, but you aren't. Just pointing at innovations as job killers is like pointing at the sail and complaining about all the oarsmen who will be laid off. Another lens to look at all of this through is the Star Trek future. In, like, three hundred years, what do you want society to look like? Like it does now, where people toil away at current productivity levels, or is everyone is vastly richer? Assuming you want that future to be awesome, how do you draw a line from here to there? Because the "we can't have technological disruption" attitude just can't really be on that line, right?
- api 13y ago
  "society's increased productivity allowed it to make more goods and services and thus employ more people than it did before." I agree, but only if we can solve our energy and resource problems. If we can't do that, supply constraints will keep that scenario from happening again. There won't be any growth. No growth + automation = massive unemployment.

timr 13y ago

"There a few cases where that's not socially desirable" There are tons of examples where that's not socially desirable. Piracy is one easy example -- people don't want to pay for stuff, and will love a product to death if it enables piracy. Said another way: what consumers like is orthogonal to what makes society better.

icambron 13y ago
You can argue that they're not always the same thing, but they're certainly not orthogonal. Consumers are a huge and extremely important part of society and the idea that the fulfillment of their preferences is completely unrelated to society's wellbeing is just silly.
Karunamon 13y ago
>people don't want to pay for stuff, and will love a product to death if it enables piracy. That's blatantly false at worst and misleading at best. People will love a product to death if it allows them to consume media on fair terms in an easy way. Netflix reduced movie piracy and iTunes reduced music piracy. Because they're not priced in an insulting way, and because they're friction-free to use.

x0x0 13y ago

That's hardly the only example, and I think it's better to say so-called disruptors provide a service preferable to some consumers. Many industries create negative externalities and government regulations force them to internalize some of those costs. Hotels are full of loud, annoying people; we stick them in certain parts of town only. Or many industries are a form of cost pooling. The US decided that we want to have reliable mail delivery. The post office (which does an amazing job as compared to the vast majority of countries) uses the profits from short routes and urban centers to subsidize expensive and/or remote routes. Of course a business would love to come in a cherry pick the profitable routes. We -- rightly -- don't permit that, because we wish to have universal mail delivery and this is how we've chosen to pay for it. Reliable city-wide taxi service is probably similar; I don't know if uber et al are just cherry picking the best / most profitable routes, but I wouldn't be surprised. (And don't get me wrong, I love uber -- at least in sf, it's a taxi that actually comes. Amazing! But still, service guarantees are important, as are flat fares to/from airports, in part to avoid screwing tourists.) And this doesn't even mention tax revenues; I know HN tends towards the glibertarian but the simple fact is if we, as a society, want nice things someone has to pay for them. A (big?) piece of many of these controversial startups' innovation seems to be thinly disguised tax avoidance (amazon, airbnb). I actually think disruption tends to be neutral at best. Cities, especially dense urban living, are a large set of compromises amongst many people, and valley companies often have little respect for that.

rayiner 13y ago
This is a really wonderful post that captures a lot of what people overlook about Uber, AirBnB, etc. To some extent, these companies are built to arbitrage on government regulations intended to limit negative externalities, or achieve cost pooling or achieve universal coverage. Particularly Uber, because its not exactly some great innovation to be able to call a cab with your phone. The business model relies heavily on being free of taxi regulated rates and cherry picking the premium customers.
- Fomite 13y ago
  This. I have no sympathy for "Laws are for other people" as a business model.

saraid216 13y ago

> Industries can only be disrupted by entrants that provide products that consumers prefer Can't industries also be disrupted by evil government bureaucrats taking them over, by ordering in jack-booted stormtroopers to drive out all competitors, for the benefit of the all-powerful state? Or does that not count as disruption because it's not a scrappy underdog?