Innovation starvation

Austin 7

Reading this article by Neal Stephenson  set me to thinking about the progress we haven’t made in the last 100 years or so.

In 1922 you could buy an Austin 7 for about £100 which would (eventually) achieve 52 mph and would give 40-50 mpg. £100 was something like 71 weeks’ pay for an agricultural labourer at the time. The UK’s bestselling car last month was the Ford Fiesta at £9,495 which will achieve about 100 mph and yield about 50 mpg. The UK minimum wage is 6.08 per hour so that is £212.8 for a 35 hour week or 44.6 weeks’ work to buy a Fiesta. Even adjusting for tax that’s a bit of an improvement, but surprisingly little for 90 years of the most rapid technological change in the history of mankind.

Admittedly the Austin 7 looks like something constructed by men who had only built bicycles and prams before and your likelihood of surviving an accident at anything above walking pace is nearing 100% better in the Fiesta. On the other hand, for local urban or rural journeys 52 mph is rarely exceeded by much so performance and fuel economy are not improved in any practical realisable sense at all.

So why haven’t cars really improved in terms of performance or cost in the last 90 years? It’s surely not lack of industry competition, although there has been considerable consolidation of manufacturers.

It’s maybe the fact that we keep buying what they make because no-one is offering an alternative. Unless you want to go from the same place, to the same place, at the same time, as 500 other people a train is not an alternative. Even buses are too inflexible in when and where they go to exist without public subsidy. We buy cars then because they suit our needs, but innovation should still occur when there is competition and market feedback.

However, car makers only get market feedback from each individual consumer once every 3-7 years or longer. Suppose that instead of having to choose and finance a car say every five years and live with the choice you have made, there were many more, very local, places where you could rent a car for a few hours or days. You could rent a small one for local chores, a bigger one for holidays, a convertible for days out. If this were slickly managed, cheap enough, and combined with a delivery and collection service why would you want to own a car? Over time, the stock of cars held, and the numbers bought would probably halve.

More importantly, with people making a decision about choosing a car several times a month, rather than once every five years or so, consumer feedback to manufacturers would multiply more than a hundredfold. Even small differences in preference would assume importance, as would the performance of what was on offer. Small, local manufacturers would be at much less of a disadvantage, balancing much better local knowledge of preferences against the lack of economies of scale. Innovation and progress would flourish, because the lack of progress in car development is not due to a lack of technology, but a lack of information which only the market can provide.

 

 

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2 thoughts on “Innovation starvation”

  1. You now have me thinking about parallel issues. Things at work seem to take as long now as they did twenty years ago. Then, you couldn’t just fire off email questions or send a message to twenty people with a button push. You had to use your resource prudently – compile your correspondence prudently, ask all the questions not just the one in your head, and select your fax recipients with care. Time was scarcer and more valuable. Technological efficiency hasnt saved us time at all; it has filled its own void with other noise. Bring on the electronic Edwardian butler…

  2. Absolutely, I have two other posts in draft one of which is on how the Edwardian Gentleman had the exemplary lifestyle and the butler was at the heart of this, ensuring life was allowed to progress in a well ordered manner. I think I got my opinions on this from Nicholas Negroponte so wanted to check before posting so that due credit / references can be given.

    The other post as yet unfinished continues in the same vein as this one but looking at the progress people of all types in western society have made since 1922. It seems to me that the unskilled / semi-skilled are barely better off in terms of accommodation and lifestyle but now need considerable Government support. Skilled people are better off but not much, middle class people are rather worse off, living in smaller houses, both working and with no household staff. The very top earners seem about the same now as in 1922. Nearly all the progress, an increase of some 10 fold in national wealth, seems to have been consumed by the Government machine established for the purpose of reallocating the wealth. This seems nearly as true of the US as it is here in the UK / Europe.

    It’s all rather like the machine invented on the Goon show that does the work of three men but takes four men to operate.

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