4: FOLLOW THE FREE
The accelerating expansion of knowledge...
...and technology simultaneously pushes up the demand curve while pushing down the supply curve. One very potent force shifts both sides.
The effectiveness of technology in driving down prices is easy to appreciate. As stated at the beginning of this chapter, price drops have been going on for a while, although now it is accelerating. We know the outcome of this trend: lower prices everywhere. Consumers rejoice. But how are companies to make a profit in a world of constantly sinking prices? In the supply. Technology and knowledge are driving up demand faster than it is driving down prices. And demand, unlike prices, has no asymptote to limit it. The extent of human needs and desires is limited only by human imagination, which means, in practical terms, there is no limit.
Anything that can be replicated will have a price that will tend toward zero, or free. While the cost may never reach free, it approaches the free in a curve called an asymptote.
The quicker the price of transportation drops, the more quality and services and innovation are embedded into cars, planes, and trains, lifting the quality of the "wants" they satisfy.
Over time, any product is on a one-way trip over the cliff of inverted pricing and down the curve toward the free. As the network economy catches up to all manufactured items--from cell phones to sofas--they will all slide down this slope of decreasing price more rapidly than ever.
"the more quality and services and innovation are embedded into... planes and trains"
Not really sure what airlines in the US you have been flying - but as the price has dropped my experience the quality, services and innovation have dropped even faster.
This "everything for nothing" philosophy is really a deadend. Money/price is how we establish value. If things have zero price, they become of zero value in the marketplace.
Attempting assign qualitative metrics to quantitative things is a fail.
So whats being said here is that we drive the price down on transportation so quickly the only way to make money from selling them is to foster the desire superfluous wants and sell their satisfaction back to the consumer?
What if instead the service of transportation was streamlined, the service provided to more people cheaper, enabling more transfer of products and services at a lower rate. While less money would be made from the sale of trumped up add on services more new products and services would be available that actually satisfy genuine desires and needs.
What if this is the way all services work? are we now paying for superfluous needs in everything we buy? Is a box of cereal's cost the cost of the cereal or the cost of the advertising? is health care the same story? paying for research on drugs to treat things we never knew we had, but can be convinced we need cured, instead of funding research into ways to cure real world problems?
The real question I'm getting at is how do we embrace the expansion of technology while avoiding becoming caught up in the ever expanding "wants" that come along with the market consequences?
I am talking about "superfluous" wants like decent wages and pension for pilots, for instance. Like a reasonable amount of space between seats and passengers. Like a modicum of flexibility on changing plans.
No, not all services work, or should, work this way.