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Inefficient, but Smart (strongtowns.org)
162 points by oftenwrong 6 days ago | hide | past | favorite | 147 comments





I think that the differences between the two models can be attributed to the difference between the cost of human labor in the two countries.

Everything mentioned in the Ecuador example is labor intensive: private sector busses driving around plentifully, moving laborers just parked next to the furniture market standing around waiting, many small proprietorships in close proximity haggling over prices, etc.

The big box model is better in the US where labor is very expensive. The "bazaar" model is better in Ecuador where labor is much cheaper.


I actually think there is a bigger motivator for differences is cost to enter.

Consider this: in the US the biggest cost of a furniture store is the land. When you compare the cost of starting a Quito-style "no guarantees" store vs. an American style "customer is always right" store, the difference is negligible. You see this also in the US real estate market - "luxury" real estate is overrepresented, because the difference between building with nice appliances and marble vs. cheap appliances and particle board is a trivial percentage of total build cost. So if you're going to develop real estate, or open a furniture store, or a restaurant, or almost anything else in the US, you usually go for the "nice" version because it's a marginal expense.

This swings the other way too - because the relative risk of opening an American-style store in Quito is greater, you end up with disproportionately high prices, often approaching those of the West.

Disclaimer: I said "Quito" but the above is based on my experience with another city in a developing nation.


Real estate is a messy example though because the supply is heavily restricted for what are ultimately aesthetic reasons. There's always going to be more average earners than exceptional earners and both need homes, but if you restrict the available supply of developable land with things like height limits and zoning then of course builders are going to prioritize the luxury markets.

The big box model in the US just outsources the labour involved in producing goods to countries where that labour is cheaper; it's not like any of the big manufacturers of anything manufacture locally in the US.

Mostly, yes.

I read something once that indicated that the industrial revolution started in Europe and didn't really hit places like China as early because China had a huge amount of cheap human labor and Europe had less.

It was proposed that the lack of cheap labor is what drove people to find efficiencies.

Granted I'm not a historian so I can't verify this claim, but it was an interesting dynamic.


That is a nice "just so" story that simply doesn't fit the facts.

Europe had many points in its history where labor was dear. For example wages went up after the Black Death because so many workers had died. Why did the Industrial Revolution not happen then?

Where and when it did happen, the https://en.wikipedia.org/wiki/British_Agricultural_Revolutio... preceded it. Meaning that lots of laborers were displaced from fields (particularly due to enclosures) and forced to move to cities. This lead to an excess of labor in the cities, not a shortage.

The evidence is rather better that the progress of science and technology simply hit an inflection point with the invention of things like the steam engine (factories could be put anywhere) and the spinning jenny (machines could make cloth far cheaper than it had been). In a society which already had a free market bent (it was not an accident that The Wealth of Nations came out of the same time and place), these things were seized upon, imitated, and further innovations proceeded apace.

The spread of the Industrial Revolution afterwards was dependent upon the spread of the necessary skills, the investment of capital, and the building of supply chains. Which meant that what started in England spread to places in closest contact with her. Namely the United Stated and Continental Europe. And then only slowly spread elsewhere.


I've been told (also with no references to cite) that this was also one of the reasons why Rome didn't industrialise, they always had a plentiful supply of slaves, so there was no demand for machinery to replace them.

The causation of the Industrial Revolution is one of those historian's favorites because there isn't a definite "yes" to it, and you can point to origins going as far back as the end of the Roman Empire and the beginning of the Great Migration. Europe lost its old identity as it went into the medieval period - with one large invasion after the next, it was difficult to keep track of anything - and the new nations that formed from the ashes gradually lost their taste for subjugating and extracting tribute from each other, preferring trade competition instead, which is an innovation! If you look at most earlier empires, there's trade, but it isn't in a systemically central position because the ruling class would stomp out competition. That there were multiple of these nations is critical to the process: it allowed someone who angered a so-and-so to flee elsewhere and keep working. Fleeing is a common recurring theme in biographies of notable early modern people. This allowed Europe to keep holding on to ideas and discoveries over time, putting it in a good position to absorb the world's knowledge.

Why Britain specifically is a subset of the question. One of the precipitating factors often cited is the enclosure movement, which was part of a push for stronger, more logical systems of property rights(a big philosophical movement originating in the late 1600's and gaining steam in the 1700's - "life, liberty, property", utilitarianism, and related ideas all come from this period, and in Britain these ideas were especially popular). Enclosure had the effect of kicking peasants off the farm, leading them into wage labor, and Britain had a colonial system already in place, giving it many export markets and therefore demand for manufacturing. Add to that the local availability of coal and the gradual ceding of governing power to Parliament(another centuries-old process) and you have something resembling a thesis for preconditions of industrial capitalism - a stable country ruled by its merchants, with a strong export market, availability of labor and energy sources, and sufficient knowledge to usefully organize the labor.


Thank you

The Industrial Revolution happened on England in a time when labor was plentiful relative to the usual rate. There was a run away into the cities happening.

> Everything mentioned in the Ecuador example is labor intensive: private sector busses driving around plentifully

I don't think this is a result of cheap labour but rather increased efficiency of routing due to a less spread out city:

> with a bevy of signs—up to a dozen—in the front windshield listing major destinations: neighborhoods, universities, other landmarks

A bus that does this in most American cities would need to drive quite far and make a large number of stops, as everything is far apart from everything else.

In non-American cities, things are usually more concentrated, so a single bus route can reach more stuff in less time.

More stuff in less time = more trips completed per unit time = more money for the driver = more drivers.

I think another way you can think of it is as an evolution of Uber/Lyft's ride-sharing services. If you ran such a service you might find that there are common routes. At that point drivers could drive those routes repeatedly and advertise them through the app. But why bother with the app when you can just put signs outside?


Labour costs are a factor only when trading internationally or across markets.

Within a single market, they're not so relevant. In this case, everything is cheaper. The furniture is cheaper, so there's less money to pay people with. So the proportion of costs for labour is about the same. Assume 10% of the cost of the furniture goes to paying people - in the USA that's a larger number than in Ecuador, but still 10%. It doesn't really affect the model.

I think the real difference is the consolidation of the supply chain in the US (and other developed economies). In the US, the first "big box" stores were able to squeeze savings from the supply chain and offer lower prices. Customers liked that, bought more, and soon every furniture store had to either go very up-market or adopt the same strategy. A few decades and a lot of acquisitions later, and the entire new furniture market consists of half a dozen completely vertically integrated superstore chains, plus a few up-market retailers.

The second-hand market is not so consolidated. The article doesn't say whether they were buying new or second hand furniture. It'd be interesting to find out why the second-hand market isn't subject to the same market forces. How come there isn't a few large second-hand furniture stores?


> Within a single market, they're not so relevant.

The relative cost of labor and capital is a defining property of any place.


yes, but within that place, they're not so relevant

Yes, they are. The ratio is relevant within the place, even in insulation.

That ratio basically determines the economy productivity.


Ah, OK, I see.

I'm saying "the fact that Ecuadorian labour earns less than US labour doesn't matter to an Ecuadorian furniture shop owner because everything costs less in Ecuador, including furniture".

You're saying "labour costs are less in Ecuador relative to capital costs, so it's more affordable for business owners to hire more people instead of buy more trucks"

is that right?


Yes, that's right.

Getting on a tangent, the market for capital goods is much more globalized than for labor, so capital prices vary less from one place to the other. As a consequence, when everything is cheaper on some place, it usually means that labor is cheaper relatively to capital too.


> Assume 10% of the cost of the furniture goes to paying people - in the USA that's a larger number than in Ecuador, but still 10%. It doesn't really affect the model.

It makes everything bigger. Instead of a couple guys with a pick up truck making one delivery at a time it's a couple guys with a big box truck making multiple deliveries. Instead of one shop keep with their tiny shop you have one big shop. That scale allows efficiencies which drives down the labor per unit.


agreed, but that's not driven by high labour costs. That's driven by scale, which is a product of consolidation and vertical integration.

The big box store has (let's say) 20 deliveries a day to make, because it's serving a larger proportion of the market. So it becomes worth buying a big box truck and hiring a couple of guys to make all those deliveries.

The small retail store has (presumably) fewer deliveries to make, so they don't do delivery themselves. So the delivery is done on a case-by-case basis by the couple of guys in a pickup truck.

If the small store has more sales and more deliveries, it will eventually become worth them hiring a truck and drivers, and offering delivery to their customers. Again, not limited by labour costs, but by scale and vertical integration.


> Assume 10% of the cost of the furniture goes to paying people - in the USA that's a larger number than in Ecuador, but still 10%.

You're assuming without evidence the key supporting point of your argument? Why not assume something different and end up with the opposite conclusion?


I think it's fair to assume the labour costs are lower in Ecuador than in the USA. I also think it's fair to assume that furniture costs less in Ecuador than in the USA (though probably relatively more in terms of GDP because of the price efficiencies of the big box store).

So yes, you're right, I have assumed this. And if you disagree with this assumption then you're going to disagree with my argument. However, the article provides some good evidence that this assumption is true. I would be interested to hear any evidence that it's not...?


I don't think that most Ecuadoreans would be afford to furnish an entire apartment in straight cash, any more than an American could in the USA.

The idea here of how you furnish a place in the US doesn't match my personal experience. He does mention Craigslist in passing, but simultaneously dismisses it, but I think that's a bit trite. We bought a ton of fixtures, furniture, and even construction materials from Craigslist, St. Vinnies, and our local Habitat for Humanities and saved a pile of cash. We didn't deal with the whole big-box experience. Furniture is similarly dealt with.

Even before Craigslist, there were old fashioned classified adverts and garage sales which weren't as convenient as a single giant market, but gave us options.

From the sounds of it, our luck with Craigslist/ second hand sources was just about as good as his was in Ecuador with one out of our many purchases being a bit of a disappointment.

Also, this paragraph bothered me:

> Here, the process always involves a drive to a big-box store (few of these are convenient via transit, especially if you need to make multiple stops), a credit check, some paperwork to commit to a multi-month payment plan, a scheduled delivery a week or two out, and often some hassle with the delivery company requiring a phone call in which I sit on hold.

I don't pay for anything other than my car/ house on monthly payments and nobody should. This article is more a criticism of the US culture of debt rather than looking at what options we genuinely have. We've always had the option to pay in cash and not deal with the financing, it's just a bit less convenient. Likewise, if you are willing to deal with second hand goods, we have the option to get second hand goods, you just have to search a bit harder to find them.

Really, the big difference between experiences is the expectation in the US that you will have your own transportation, and that is the real story here in my eyes. In Ecuador public Transportation and casual truck rental works. In the US, it's quite a bit tougher to exist without a reliable car or truck.

I also don't understand why he dismisses CL, yard sales, and recycling stores out of hand because they are right up his "Inefficient, but Smart" alley.


> I don't pay for anything other than my car/ house on monthly payments and nobody should

You should if there's no additional cost for doing so, because that's a free loan. The same quantity of money a few months down the road will be worth a little less than it is today, so you should give it to them then instead of now when you can do slightly more with it. If you can get either 1X and 2Y now or 1X now and 1Y later, you'd be foolish to do the latter.

And if you're thinking "but prices go down, not up", you're both wrong on average and also probably thinking about the exact category of goods (tech gear) that tends to offer interest-free financing.


I mean it's "smart" and "efficient" but it's also fragile. The simplest way to manage your finances is to avoid debt wherever possible (especially consumer debt). Very hard to go into bankruptcy when you don't owe anyone anything!

The "smartest" way to manage your finances is to use credit cards that give you points and pay you back via a few hundred dollars worth of free flights a year. But there's a bunch of opportunity costs associated with pursuing that route, and a level of diligence that frankly most people do not have.

The best thing about debt is that it lets you move really really quickly - if you don't have $2k for that furniture set, you can just finance things and pay it off over 2 years. But that's the worst thing about debt as well - you now have a monthly obligation that's going to be a line item expense for the next 24 months. If you'd spent 12 months saving up for that furniture set and paid cash, the day you buy the goods is the day your financial obligations start and end.

I am not opposed to debt entirely, and think it can be a great strategic lever (I used a credit card to finance my initial move to America which has done wonders for my income and my career, far exceeding the interest costs that I paid). However I think for most consumer purposes it's less of a help and more of a hindrance. Take the new 84 month car loans. That's 7 years! That's a long time to assume that your life will have no material changes, or that nothing will go wrong.


Yeah, this is smart.

The most dangerous thing about debt is the tacit assumption you can keep making money as a functional adult. Full stop.

If you pay attention to the life stories of everybody who lives around you, that's actually a very dangerous assumption - it's about as dangerous and unreliable as a farmer assuming he'll never, ever, have crop failure. Some really informal guesstimation for me actually gives kinda comparable rates - 1/10 or 1/5 chances of it blowing up, every year. Just this very year, in fact, I've watched it blow up on half of my coworkers as they got laid off in the pandemic. They may have to default on their mortgages - loans that assumed the "working adult" party would just go on uninterrupted.

Yikes.

Debt can be useful, but man, people really need to only "sail out of sight of land" with a damn good reason. Don't just do it casually to pay for routine things like houses and cars.


Yeah that's 100% the truth. You also have to assume that multiple things happen at the same time - what happens if you buy a house two weeks before you get laid off at work and that's swiftly followed by your wife finding out that she's pregnant. Suddenly having 6 months worth of cash in the bank gives you a TON of breathing room.

The more we specialize, the more life becomes fragile, and the smaller the gains become. A Formula One car is incredibly fast, but the amount of attention and money each car requires is orders of magnitude higher than say a Ferrari road car, which is comparatively simple to manage.


Spending a large amount at once can also be fragile. They say many families don't have a few thousand set aside for emergencies. If you have a few thousand and spend it on a dining room all at once, you won't be able to handle an emergency even if your income would have easily handled the monthly payments.

Obviously, it's preferred to have both the thousands saved as well as the thousands needed to buy a new car or furniture, but one might not be able to delay forever.


> If you have a few thousand and spend it on a dining room all at once, you won't be able to handle an emergency even if your income would have easily handled the monthly payments.

Just as a single purchase can wreck your short term budget, a purchase spread over multiple months can wreck your long term budget. If that same family has an emergency that causes them to go into debt, they are now saddled with 2 debt burdens and can't pay rent/ make car payments/ eat.

If buying a choice dining room set will wreck your ability to handle an emergency, you are almost certainly better off not buying it either way. There are plenty of options for buying inexpensive furniture that isn't going to threaten your emergency funds.


> You should if there's no additional cost for doing so, because that's a free loan.

On the small time scales that interest free financing works, you're probably better off using a rewards based credit card and getting 2% back on purchases rather than handle the overhead of tracking eventual payoff date on various expensive on household items, or risk missing those and paying very high interest and penalties. A credit card payed off at the end of the month is after all a short term interest free loan.

After all, if you kept $1K in your investments by borrowing interest free for 1 year for a TV purchase, how much are you realistically going to make in the best of conditions on that $1K? 4%? So $40.

Not worth the overhead of managing it IMO, to say nothing of the credit damage that comes from excessive borrowing.


depends on how good you are with your finances.

You can easily get too much debt if you are not careful doing those kind of things. Most people just check that the debt payments fit in their budget, but they forget their budget might shrink.

US families are drown into debt, in fact most families live paycheck to paycheck, so i wouldn't give that advice of using debt event without interest. I would only give such advice to people I already know that can take care of themselves financially. (As in know how to actually manage money, not about being rich or poor)

And there is another benefit of paying in the act: its off your mind, one less thing to worry about. Might not be the most efficient but is the the one that makes you worry less.


> You should if there's no additional cost for doing so, because that's a free loan.

Any time you take out a loan, you are making a promise your future self must deliver on. The implicit assumption when you base your decision solely on interest rates is that your future self will always be capable of fulfilling that promise.

> The same quantity of money a few months down the road will be worth a little less than it is today,

If you are talking about furniture here, we're talking about saving a few pennies, maybe a couple bucks at most. Also, often places where you can get "zero percent interest", there are string attached. The perfect example is when you get a smartphone from your carrier and they don't charge you interest. You save a couple bucks over the length of the contract, but now you can't change carriers or upgrade your phone for the life of the deal.

TANSTAFL... or free interest either.


Only if 1) you are certain you have the means of repayment, and 2) the time to fill out the application is free.

Yeah, his "Inefficient, but Smart" argument doesn't seem smart, it seems painstakingly luck-based.

In the US, we used to call this "knowing a guy" or "fallen off a truck" purchasing. It's highly inefficient, super unpredictable (in both cost, delivery time, quality, etc), and is highly inequitable. (What if you don't know a guy? What if your guy doesn't like you?). Your Craigslist description is a perfect example of this from the buyers side too -- sometimes you find a great deal, but sometimes the seller is crazy and threatens you with physical violence, or raises the prices after you already agreed and arranged to pick it up, or sometimes they sell you something with bedbugs in it.

This style of purchasing "works" if you are a wealthy expat with tons of time to play with (as a StrongTowns blogger living in Ecuador would be). But it sure doesn't seem "Smart" in any way.


Having a dishwasher and clothes washer and dryer can mean the difference between having time to work and not. Labor-saving devices bought on loan make perfect sense to me. From my perspective it's funny that you give yourself permission to buy a car on credit since to a car-free person that's nuts, but to a person who needs a car to access their place of work it's obviously sensible.

> Having a dishwasher and clothes washer and dryer can mean the difference between having time to work and not. Labor-saving devices bought on loan make perfect sense to me. From my perspective it's funny that you give yourself permission to buy a car on credit since to a car-free person that's nuts, but to a person who needs a car to access their place of work it's obviously sensible.

If buying on credit or going without were the only choices, I'd agree with you in a heart-beat. But they aren't. You can get a decent, running washer/ dryer on craigslist for about $150 each. Dishwashers are even less. Buying new and financing is going to cost someone $40-60/ month for 2+ years which is a pretty big burden for someone who is struggling.

> From my perspective it's funny that you give yourself permission to buy a car

I'd love to be car free, it's a great choice if you are urban, but we've lived semi-rural for quite a while.

Also, since I almost always keep cars for well past the end of the loan (or in some cases bought used for cash) I usually don't have a car payment.


The argument is definitely there for a laundry machine, but a lot of people buy sofas and TVs on monthly payment plans as well.

I agree that going into debt to buy a new car is nuts. Some places are terrible to live car-free though, and not everyone is willing or able to relocate.


Most US cities have or at least used to have the same scenario of a few furniture stores in the same district where you can browse several selections. I remember Schenectady having several stores in one spot each dedicated to lighting (and exhaust fans and doorbells, because of NuTone's business).

The big box thing is, in my opinion, relatively recent, and I felt like it started with Home Depot. That was the cause of the closing of the independent hardware stores in Schenectady, such as the venerable Wallace Armer. In other places they attribute it to Walmart's but that came late to the Northeast.

Now, small stores tend to carry boutique items and everything costs a lot more than the big box stores. On the one hand we have a very efficient furniture-making-selling system in the big boxes, that produces stuff that can be set up once but usually does not survive a move well. On the other we have expensive, one-of-a-kind type crafts that are able to become heirlooms but are out of the price range for most people who just want a coffee table or a couch.


> Most US cities have or at least used to have the same scenario of a few furniture stores in the same district where you can browse several selections. I remember Schenectady having several stores in one spot each dedicated to lighting (and exhaust fans and doorbells, because of NuTone's business).

The impression I got from this article is that most of the stuff he bought was second hand. There are a lot of decent ways to buy second hand goods in every city I've lived in.


>In Ecuador public Transportation and casual truck rental works. In the US, it's quite a bit tougher to exist without a reliable car or truck.

We have that. It's called Uber pool/Lyft Line. I argue with people on my city's reddit about this. Ad hoc point to point transit is the future but they want to spend billions on rail that won't be operational for decades.


> We have that. It's called Uber pool/Lyft Line.

In big cities where congestion is a problem, you have to look at space efficiency. Cars—including Uber & Lyft—are extremely inefficient in terms of the amount of space required to move a person from one place to another. In a big existing city, it's impossible to add traffic capacity, the roads just can't get wider. The only way to increase capacity is by using more space efficient forms of getting around. Buses, trains, bicycles, scooters, and foot traffic are space efficient. Uber and Lyft are not.

Uber and Lyft are also not economical for a lot of people which is one of the other big reasons you don't see them taking off in many places.


>In big cities where congestion is a problem, you have to look at space efficiency

At least in my city we don't need to go from 100 cars -> 1 train to solve the issue. Going from 3 solo drivers -> 1 Uber/Lyft will cut congestion to 1/3-1/2. That's enough to alleviate the worst traffic.

>Uber and Lyft are also not economical for a lot of people which is one of the other big reasons you don't see them taking off in many places.

The shared services are pretty comparable to what public transport costs in my city. A single bus/train trip costs ~$5 when taking all taxes/fares into account. Most journeys from point A to B require a transfer so the cost is more like $10. $10 in a Uber/Lyft shared ride gets you pretty far.

Even if it nets out to be more expensive it's at least something that people will use. The current riders are mostly those too poor to own a car and have no other choice.


> At least in my city we don't need to go from 100 cars -> 1 train to solve the issue. Going from 3 solo drivers -> 1 Uber/Lyft will cut congestion to 1/3-1/2. That's enough to alleviate the worst traffic.

This isn't true. Even if you assume every Uber Pool ride is full, you aren't achieving anywhere near a 50% drop in congestion. Legs where there are 3 passengers are offset by legs where the driver is alone.

> The shared services are pretty comparable to what public transport costs in my city. A single bus/train trip costs ~$5 when taking all taxes/fares into account. Most journeys from point A to B require a transfer so the cost is more like $10. $10 in a Uber/Lyft shared ride gets you pretty far.

I have no idea where you live, but your numbers seem way off. Pretty much everywhere I've lived, bus/ subway/ BART pricing is way cheaper than Uber. I can get an in-town day pass for $3.50 and can to the next town 20 miles away for less than $5. In the California Bay Area, you can take BART from one end of the line to the other for under $8. Uber's fare estimate for that same route is over $50. Oakland to SF? $3.70 versus $26. There is no single route were the prices are remotely close.

> Even if it nets out to be more expensive it's at least something that people will use. The current riders are mostly those too poor to own a car and have no other choice.

My original point here was that in Ecuador, bus service does work and it's crap in the US.


>This isn't true. Even if you assume every Uber Pool ride is full, you aren't achieving anywhere near a 50% drop in congestion. Legs where there are 3 passengers are offset by legs where the driver is alone.

This is just quibbling about exact numbers. You don't address the main point that we don't need the space efficiency of trains.

> Pretty much everywhere I've lived, bus/ subway/ BART pricing is way cheaper than Uber. I can get an in-town day pass for $3.50 and can to the next town 20 miles away for less than $5

BART's farebox recovery rate is 2/3 so up those by 50% to get a better idea of actual cost.

And yes, long trips on the train are likely cheaper than Uber. But most trips aren't that. At least, in my city they aren't. If you look at something in the 3-4 mile range the price of mass transit and shared Uber/Lyfts are pretty close.


> This is just quibbling about exact numbers. You don't address the main point that we don't need the space efficiency of trains.

I gave your hand-wavy explanation of how Uber reduces congestion more credit than it deserves. Most evidence suggest that Uber actually increases congestion, not the reverse.

> And yes, long trips on the train are likely cheaper than Uber. But most trips aren't that.

There is no trip by Uber which is less than twice as expensive than BART or 3 times as expensive as a bus here in Oregon. A short hop on BART is about $2.00 versus the $5.80 base rate on Uber. If your Uber gets stuck in traffic which is common in the Bay, the math gets even worse.

And again, this is in a country with rather mediocre public transportation options. Other countries have vastly better funded and run public transportation which is even more cost effective.


>I gave your hand-wavy explanation of how Uber reduces congestion more credit than it deserves. Most evidence suggest that Uber actually increases congestion, not the reverse

Ok, well let me know if you want to actually address the point.

>There is no trip by Uber which is less than twice as expensive than BART or 3 times as expensive as a bus here in Oregon. A short hop on BART is about $2.00 versus the $5.80 base rate on Uber. If your Uber gets stuck in traffic which is common in the Bay, the math gets even worse.

(1) The BART may be different than my city

(2) You're looking at the fare and not the actual cost. What's the actual cost of providing those short trips?

(3) You're not looking at the cost to develop new service. What would the actual cost be of creating a new line in the heart of the city?


Also, regular commuters would typically buy travelcard, and pay a flat monthly rate for unlimited number of rides.

I'm curious about your arguments for how Uber/Lyft is preferable to rail.

I don't presume to know the right answer to this question, but it seems unlikely that Uber/Lyft will continue to exist in their current form indefinitely. Rail, on the other hand, appears to be a proven solution in many large cities.


> I'm curious about your arguments for how Uber/Lyft is preferable to rail.

There's just not the density to support rail at a level to make the system fast an reliable. To make it work you need trains every ~10 minutes or so and enough coverage where people only have one transfer. Otherwise, your commute time becomes too variable based on your luck missing the connection and it becomes too long on average because of transfers. The infrastructure to create that coverage is extremely expensive and only makes sense if you can keep the trains mostly full. It's also sometimes flat out impossible because if you add stops to increase coverage you get slower travel times due to increased stoppage and loading time.

In short, to make a rail system work you need ~100 people going from point A to point B at any given time. For an Uber/Lyft style system to work you only need ~10.


When I was in Tunisia a while back I experienced the low-tech variant of Uber/Lyft.

We wanted to visit another city, and ended up in a kinda bus depot except it was filled with cars. One lane per destination. We paid, got in the first car in "our" lane, and when the car was full the driver headed off.

It was cheap (in local terms) and flexible. Waiting time was reasonable, and the driver stopped when people wanted off.

Meanwhile back here in Norway they're talking about expanding the railroads around the capital. The projected cost is just insane, and I'm 100% confident the estimates are not at all realistic due to difficult terrain, and politicians not being sure about exact placement of certain track segments yet. Should it go through town, or on the outside?


The cost of labour in Tunisia is not comparable. The environmental impact is also an issue. Capacity is also an issue.

Of course, it's not close to an apples to apples comparison. But it struck me as being not entirely disimmilar to Uber/Lyft in principle. Don't forget rail is _heavily_ subsidized here.

Capacity is certainly a strong point for rail though.


I guess I wasn't clear. What I meant to ask was, how is Uber a better option after they go out of business because their business model is fundamentally unsustainable? If the TNC model eventually reaches some steady state, the cost per mile will be significantly higher than the prices that Uber customers are currently accustomed to. That is not a viable solution for everyone.

Uber/Lyft's business model is fine. Both earn money on providing rides and Lyft will probably become profitable this year.

Even if their model is not profitable, public transportation in my city is subsidized to the tune of half a billion a year. So there's plenty of room for subsidizing.

And even if we end up spending more money it's worth it for a system that people actually want to use. With a viable alternative to car ownership more people will give up their cars and use public transport. That will spur demand and maybe make a train system justifiable in the future.


> We've always had the option to pay in cash and not deal with the financing, it's just a bit less convenient.

Yes, true. But from watching what happens at those stores, it seems to me that most people do debt. Perhaps they don't have to, but they do.


I feel like this is the sort of story you hear from a diplomat about how great it is that in some other country they can hire a gardener, nannies, and etc for very cheap. Then they move home to a different country and they bemoan their lack of cheap help.

Is this a great thing? I'm not sure for the folks getting paid very little it is ...

Granted every system somehow relies on cheap labor somewhere so there is more to it than that.


I recently moved back from living in Ecuador for four years and I can say the inequality there is far far less than it is in the US. Your point is totally valid in many places, but Ecuador is a weak place to make it.

Carpenters seem to make a fair wage there, it is the norm to buy things that were manufactured by the shop you are buying from and that can range from inexpensive to bespoke and higher end.

As someone else mentioned Ecuador works really well as an economy for the things it gets to keep within its borders, which is a lot since they have a surplus of oil, great agricultural resources etc..

But once you start importing things the gap widens a ton. Cars are very very expensive (the few manufactured locally a bit less so) due to import tariffs. iPhones just aren't really a thing. And getting a big LCD monitor there wasn't even an option at any price, I lugged one in in a suitcase.

The craziest bit is that Ecuador is dollarized, so they don't even get to print their own money!


Cheapness of labor is not necessary for the system the author is describing to work (although it's probably a factor in how that system is able to be the present equilibrium). The system in Quito may be less efficient (i.e. there may be waste, like extra guys with trucks waiting for customers), but it's also less efficient at concentrating capital. Whether wages are "low" depends on the ratio of those inefficiencies. I can imagine a world where the latter "inefficiency" is maintained as the waste is reduced and wages rise. It would require "gig economy" coordination tools to match capacity to demand efficiently, but the market tech would need to lack power over the workers, whether because of competition or regulation.

Reminds me of Japan's "busy jobs". People paid at doing essentially nothing as a form (and instead) of welfare.

I'm not sure the gig economy really is a good example of positive things as far as wadges / benefits and etc goes.

For the "gig economy" to become a good example of positive things as far as wadges / benefits and etc goes, the market tech would need to lack power over the workers, whether because of competition or regulation. That's why I'm not saying "look at Uber, Uber is wonderful." I'm saying I can imagine a system with the best of both worlds. The American political/economic climate hasn't got us there.

I'm really skeptical of the idea that you could have everyday people hire other humans for cheap... and at the same time somehow they would make a good income / benefits / etc.

You see this a lot in VC-land too. I've lost count of the number of Twitter threads from VC "thinkfluencers" bemoaning how much more exciting the startup scene is in China, and usually when you dig into those threads you realize what they really mean is that labor in China is so cheap that it's a lot easier to start some useless delivery business with a fancy app.

Duh, of course you can do more with human labor when human labor is cheaper, but that isn't something to strive for.


Cheapness of labor is also indicative also of the purchasing power of the place. Yes you'd be able to hire people for cheap, but it also means the people getting paid little are able to afford the basic necessities. Also, cheap labor equates to more demand and therefore means a higher net income.

>Is this a great thing? I'm not sure for the folks getting paid very little it is ...

It's not like the employees in big stores in the US, IKEA, B&B, Ashley, Home Depot, etc, all the way to Walmart and Amazon have it any better...


> Every great society was built on the backs of a disposable workforce

~ Bladerunner

The question is what could those other people do instead? Are they happy with the pay?

$7/hour might seem chump change to you but as a high school kid getting $7 bucks to build websites at an agency I was fucking ecstatic. Nowadays I’d laugh at that rate and yet I still think it was the best thing I couldve done for my career at the time.


I'm not sure "happy with the pay" is a good measure if the alternative is not working / serious problems. So yeah they'll take what they can get.

I'm also not sure the cheap delivery guy is likely working themselves up to much more for each table they carry like you were with each website.


Yeah so if you pay someone $7/h in a country with $5 minimum wage. Are you paying well or not for a menial job?

This is because your parents were subsidizing that wage by covering your expenses

No $7/h was a damn good hourly rate in my neck of the woods back then. Still is for people in menial jobs.

Minimum wage is $5.2


With so few data points in the anecdote, there are many narratives you can apply to it that all fit, each with it's own little facet of truth.

One that resonates with what I'm going through in my life right now is that it seems that US culture optimizes for preventing unexpected bad experiences with the consequence that unexpected good experiences are lost too. There is very little serendipity to life in the US today. When you get a couch from Ikea, you know exactly how it's going to go. Every meal at McDonald's is like every meal there you've ever had.

There are, of course, pockets of delight you can find. But, overall, it seems that our culture has trended towards risk-aversion, safety, familiarity. There's a sort of constant infantilization going on where we're trained to believe we can't handle surprises and thus we should avoid them. Millions of adults read nothing but "Young Adult" fiction. All of our biggest box office movies are comic book adaptations. Millions are on anti-anxiety medication.

Because we avoid taking risks, we never learn to handle them. We never witness ourselves being resilient and gain the self-respect that that garners. So the feedback loop keeps us nestled tighter and tighter in our bubbles.


There might be some truth in this, but it's also true that we're really bad at avoiding risks.

The pandemic is a good example of that. Nearly everyone in the US, nearly every business in the US, was almost completely unprepared for it.

A better way to look at it might be that we optimize for being comfortable. It's not so much risk aversion, but since risks make us uncomfortable, we avoid them.


I think we're so bad at avoiding risks because most of us are so averse to risk that we're not exposed to any mild risk, so we're completely unprepared and incapable of handling greater risks.

Most children are shielded from risks growing up, since good parents don't want their kids to get hurt. They end up reaching adulthood lacking any risk awareness or crisis management skills.


We're good at avoiding small, mundane risks. We struggle to prepare for large, novel risks.

For the most part, people who don’t address Covid as a risk do so because they don’t see it as a risk. That’s different than choosing to avoid risk.

Speaking about pandemic, I was very surprised at the cultural differences about face masks. And I don't mean whether people want to use them or not, because you find both kinds of people everywhere. The surprising difference was at behavior of people who thought that using a face mask was a good thing... what was their following step?

My American friends typically did some research, found which types of face masks offer the highest protection, and refused to settle for anything less. Then they complained on social networks about the good masks being sold out.

My Eastern European friends typically found some DYI videos, and then either started making their own face masks at home and selling them on social networks, or just bought them if someone else was faster. In a week or two, everyone had as many masks as they wanted to have. Lower quality, sure, but way better than nothing.

Of course, I am generalizing here, but this was the pattern I noticed, and it quite surprised me, because I honestly expected the opposite thing to happen. I expected Eastern Europeans to beg their governments to do something about the situation, and Americans to handle the situation using their entrepreneurial spirit. But somehow I saw Americans complaining about why Trump didn't do this or that, and Eastern Europeans taking initiative in their own hands; and even the statistics show how the latter approach saved thousands of lives.

Seems like living in a country where you know that everything is unreliable, especially the system (whether you use this word to mean goverment, market, or whatever other power greater than you and your neighbors), provides some valuable survival skills. Now I guess the question is how to develop or maintain those skills when your environment improves. Because, obviously, most people would like to see their situation improve and the environment become more reliable.


I'm sure there's some perceptual bias here because you notice the Americans complaining but have no easy way of noticing the Americans who did just silently figure out a way to make do and get on with their lives.

> but it's also true that we're really bad at avoiding risks.

I think we're good at avoiding individual risks but bad at avoiding systemic ones. Some mixture of American individualism and capitalist-driven consumer culture has led America to a place where we belong to few groups aside from our family and job, and where we relatively rarely work together to solve problems.

If we don't know how to fix something by spending money on it as individuals, we just don't know how to fix it.


As someone who deals with anxiety I sometimes wonder if this is to blame for the wave of anxiety and depression that we've seen in recent decades, as well as the rampant personal insecurity (across the entire political spectrum, despite what some would tell you). And whether those might be partly to blame for our ongoing political meltdown, as people lash out against others in order to fortify their own identities, because they don't feel enough confidence and stability in them otherwise.

This is exactly what I'm going through in my life. A couple of family members have anxiety, which causes us to avoid getting out of our comfort zones and pushing ourselves. And I'm finding that over time my own anxiety increases too. I think a big part of that is because I'm losing my own experience at seeing myself be resilient and handle situations.

And I worry a lot about how this generation raises its kids. We're told that you always need to support your kids so that nothing tears their self esteem down. But I think in the process we've lost giving them the chance to build their esteem up. They don't get many experiences they can look on where they say, "Yeah, I really rose to the occasion and did this difficult thing."


This is spot on. I feel like this bubble mentality extends to our online and social interactions too. We used to have to deal with our neighbors whether we agreed with them or not, now we just find out comfy communities online where we aren't challenged to think outside the box!

I disagree with the risk-taking part.

Our system is built on predictability. You can trust things to work a certain way, and you can build on top of that.

A predictable world affords you tighter tolerances and fewer verifications. This allows you to spend your risk tokens on what you build, and not on compensating for the shaky foundation.

I crossed central asia alone on a motorcycle. I couldn't trust the drivers, the police, the food, the water, the border guards, the petrol, the exchange rates, or anything else really. It was very stressful. You couldn't possibly build great things on such a shaky foundation.


Yes, this is a great point. Predictability is efficiency and efficiency lets you accomplish more with less. That's a good thing when it comes to conserving resources, fighting climate change, or even just making the most of your time on Earth.

However, like most things, the optimal point is probably not at either extreme. Maximum predictability and efficiency is how you get monocultures, authoritarian conformism, and a life so indistinguishable from everyone else's that there's little point living it.


This is similar to the Hygiene Hypothesis for allergies and autoimmune disorders: https://en.wikipedia.org/wiki/Hygiene_hypothesis

Nassim Taleb's Antifragility concept is relevant here as well: https://en.wikipedia.org/wiki/Antifragility


> it seems that US culture optimizes for preventing unexpected bad experiences

This is a pretty good definition of human agency in general: We as a species wanted fewer bad experiences when traveling, so we developed roads and made maps. We wanted fewer bad experiences with sickness, so we developed medicine and improved it.


Humans are generally risk averse. I thing given the chance it is a choice most people make.

And it's not just about not learning how to handle risk, but at this point it's gotten to the point of not believing that risk exists! That's the only way I can explain the militant anti-mask brigades out there. The virus cannot happen to them!

> That's the only way I can explain the militant anti-mask brigades out there.

90% of seemingly crazy human behavior can be explained by group dynamics.

Humans are a social animal. We evolved in tribes that worked cooperatively to survive. We hunted in groups to take down animals larger than ourselves. We protected each other at night from predators. And we fought other tribes for access to the best resources.

Because of this evolutionary history, we are hardwired to prioritize belonging above almost all other concerns. We talk about food and shelter on Maslow's hierarchy of needs, but the top of that pyramid should really be "part of the group". Because for most of our evolutionary history, if you were alone, that meant you weren't going to find shelter or food. Exile was a death sentence.

We don't need tribes to survive now, but the wiring is still there. We still wake up needing to belong to an in-group and worrying that there is some out-group out there in the night coming to take our possessions from us.

The anti-mask thing is a tribal signal. For people surrounded by Republicans, being part of that in-group means publicly signalling alliegance to it. Trump wants to downplay COVID-19 because it makes him look bad. And because he's the leader of that tribe, it means being anti-mask shows you are part of that tribe. The way human brains work, being part of a tribe feels a lot safer than wearing a mask to protect yourself from a disease.


That was a depressingly good argument to read. This idea may extend to wealth inequality. If you're whole like has been in the safety of comic book heroes and YA Fiction, taking calculated risks may be an incredibly daunting task

Thanks for the revelation ! Never understood before the love for chains in everything in the US (notably for hotels and restaurants) vs things like stars in France :)

> Never understood before the love for chains in everything in the US (notably for hotels and restaurants)

That is partially a consumer desire for predictability, but this is also driven very heavily by market forces and economies of scale. Large corporations are very good at driving out or buying up smaller ones, so the market tends towards homogeneity even if it's not what consumers want.


Massive amounts of boring, repetitive, blandness.

Funny that anyone would choose to live in a hellscape, innit?

It's a hellscape of boredom, not of pain.

And many do choose boredom.

A life of boredom was preferential to the alternative for much of human history.


> It's a hellscape of boredom, not of pain.

> And many do choose boredom.

Then maybe it isn't a hellscape for them.


Obviously it isn't a hellscape. That was a term meant to evoke the negative consequences of suburban sprawl. There are plenty of positive things about it for people that live there.

> You don't find many small proprietors selling furniture and appliances in the U.S.; it works in cities like Quito because of the physical model of an open-air marketplace with many small retail spaces in close walking proximity to one another.

I'm very skeptical of this claim, it seems like the author has the cause and effect backwards. The physical marketplaces don't exist because there just isn't as big of a market for small furniture makers since labor is much more expensive in the US. (Plus as other commenters point out, few metro areas in the US are as large and dense as a city like Quito, so whatever selection there is will also be scaled down proportionally in most areas).

My now-wife and I still talk about the time years ago when we first moved in together. We needed a couch and walked into a small boutique furniture store in Brooklyn. They had this oversized, soft leather couch that I still to this day remember as the most comfortable couch I've ever sat on. The salesperson came over and started explaining how these are hand-made by one guy in North Carolina, we can choose the exact leather in the color/style we want and the craftsman will sit down at his bench and begin building the couch specifically for us. It was quite a compelling pitch but the couch was almost $6000 which we couldn't afford, so we thanked her and went over to Macy's where we bought a still very nice leather couch for under $800 to be delivered 3 days later.

You can absolutely get a boutique, small-batch, hand-made version of almost anything in the US. But we're so used to the prices that mass-production make possible that the vast majority of people are unwilling to pay for it.

One interesting thing though, is with the internet and direct to consumer brands, and improvements in manufacturing (or at least in easier access to cheap manufacturing), it seems like there are more affordably priced alternatives to big box stores now than there have been for the past few decades. It's a little weird to write an article about furniture buying habits in 2020 that ignores the massive rise of companies like Casper, for instance. The last time I bought a couch I bought it on Wayfair, which was incredibly simple and it arrived just as I expected. It sounds like the author had quite a memorable adventure in Ecuador, but it definitely also sounded like a stressful day of running around, and at least to me ordering online is a much more pleasant alternative.


My impression of Brooklyn is that there are a lot of small (but high-end) "makers" based there, or at least selling their goods there. It is not so different from what the author is describing, but on a higher tier of affluence. You can start a small operation in whatever small space you can find, and have many potential customers within walking distance.

This reminds me of an essay on Ribbonfarm about legibility[1] and the construction of cities based on a false sense of order. See [2] for a discussion on this.

[1]: https://www.ribbonfarm.com/2010/07/26/a-big-little-idea-call...

[2]: https://news.ycombinator.com/item?id=21996377


This is pretty much completely anecdotal, and not very useful, to be honest.

The informal stuff doesn't work well. I'm guessing they went to buy their furniture off the informal buses during off peak hours. So they didn't have to deal with the crowds the majority of people have to deal with during regular rush hours, where you will find people hanging off the buses, and others struggling to get in. Sure, the bus may come every 5 minutes, but you may have to wait a few buses to get in.

Further, these are private buses. In the US you can get a cab exactly where you want that takes you exactly where you want. You could also "rideshare". The reason you dont have buses to do that in the US is because people can afford single occupancy cabs. What the person is really complaining about is the fact that the US is richer and things are more expensive.

A cab is a proper analogy to the private transport that is being compared to. And the real complaint is that earning dollars and then paying in dollars in the US is more expensive than earning dollars and then paying in local currency in the 3rd world.


> The reason you dont have buses to do that in the US is because people can afford single occupancy cabs.

It's much more complicated than that, though.

Public transport is looked down upon in the US—not just in the same classist way it is looked down upon in many places, "that's for the plebes", but like many public institutions, it is viewed by many to be inherently worse than private solutions, both ideologically and practically.

To a large extent, it is a victim of the deliberate practice of the American right wing, over the course of at least the last several decades, of reducing funding for public services (because Big Government Bad), then decrying their ineffectiveness (well, duh, they're not doing great because you took away half their budget), and pushing for them to be privatized.


NIMBYism is about the only thing that unites political parties in the US these days.

Most roads in the US are public, and funded with taxation. Granted, it requires a private car to benefit from them. Still, this suggests that anti-government sentiments can only partially explain this aspect of US transportation.

When Huey Long was governor of Louisiana, he wanted to build roads. His opposition did not want to pay for roads. But he managed to wrangle enough budget for 60 miles of road. Then he paved one mile of road in each parish. After having experienced the difference between the single paved mile and their existing mud ruts, the populace voted for a much more substantial road-building program.

(another unusual Louisiana political stunt: https://www.athensnews.com/news/local/louisiana-gov-huey-lon... )


Something seems wrong about this analogy.

Scarcely any U.S. city can compete with Quito—a place I was told would be poor and dysfunctional—in the ease of getting around on public transit. The network of these informal bus lines has not been coordinated from above.

These aren't "public transit". They are private bus lines. The right comparison is how easy it is to get around the US using private transit like Uber.

In the US, it's also quite possible to furnish your house over the internet, by getting furniture and other items delivered. Far more efficient than traveling about, either on public or private transit.


> These aren't "public transit". They are private bus lines. The right comparison is how easy it is to get around the US using private transit like Uber.

I agree they aren't public transit in the classic/ US sense, but comparing them to Uber/ Lyft isn't right either since the cost difference is an order of magnitude different. Uber and Lyft very wasteful compared to a busy bus line. Bus transportation in Quibi is $0.25-0.50 by comparison, an affordable amount even where incomes are much lower. If Uber was $1-2, then it would be more comparable.

For lower income workers, the $5.80/ trip minimum Uber fair is simply not an option for daily transportation.


Income is also an order of magnitude different between the US and Ecuador. So the cost is pretty similar between the two options in terms of peoples' ability to pay.

> The right comparison is how easy it is to get around the US using private transit like Uber.

In my experience (Santa Ana, El Salvador), it's still not even close. The bus routes are smart and frequent, the city is eminently walk-able, and you can always just hop in a Bajaj rickshaw ("tuctuc") if you need to go somewhere far off a route. You'd never pay more than 50 cents for any trip in town.

Uber can be extremely slow (I've waited up to an hour and often around half an hour for trips in some big US cities). It's also absurdly expensive, and it seems that the more expensive it is the slower it will probably be (cities with low driver counts).


Public transport generally means group transit accessible to the general public, not "publicly owned".

Uber is private transit because of its individualised nature, and that's what the author is talking about here.

And it's definitely true that the US, in many places just lacks in that regard even compared to poorer countries.


Here's a photo essay that is somewhat focused on the same subject:

https://granolashotgun.com/2019/07/22/the-show-horse-and-the...

It was also discussed on HN:

https://news.ycombinator.com/item?id=20497711


This is an article about someone who was forced to shop in a way they found surprising and sub-optimal before trying it, and found out that there are upsides to it as well.

Then they proceed to say that they could have done a lot of this via Craigslist, etc, but there are hefty downsides to that.

Yeah, there are hefty (possible) downsides to thgis experience, too.

I'd bet that if there were no big box stores and no small market like this article has, they'd use Craigslist and write an article about how wonderful that experience was after all.

I don't consider myself a big risk-taker, but it seems to me that I'm more of one than the person in the article. I often buy things dirt-cheap and take a chance that they might not be quite right for my needs. I'm often happen with them, regardless of cost. Sometimes I have to take the price into consideration, too, before I'm happy. And rarely I'm just out some money for something that didn't work right.

As for the transportation, I'm betting if the price was higher they'd be unhappy with it. We actually have at-will transportation in all our cities: Taxis. And now that we have Uber/Lyft/etc, there are actually alternatives that are cheaper and arguably better. We even have for-rent bikes and scooters that will often be better than any automobile ride in the city.

Yes, I agree that people should open their eyes and welcome surprises more often... But I don't think the author has really taken that to heart themselves.


There are only 10 cities in the USA with populations equal to or greater than the size of Quito's.

I suspect, living downtown in any of those, your furniture-buying experience would likely be quite similar to the Quito experience in terms of the size of the vendors visited and the modes of transportation used for people and furniture. You probably wouldn't legally be able to ride in the pickup bed next to your fridge, though.


Yeah, I was going to say you could absolutely recreate most of this experience in a large US city. They will all have furniture districts, with custom made furniture you can look at and buy.

Now, most people don't go to them, because IKEA is cheaper and easier


It seems like a bit of a contrived example. If I wanted to outfit a house, I could easily go down to the local appliance store (a small one, maybe a couple thousand square feet of retail space), and have something delivered in a couple hours. There are a number of random furniture stores in town that carry a variety of items nothing like the big box stores. And if I did want to go to a big box store, like Home Depot, I could just rent their truck for the afternoon. If I needed to hire some help, that's pretty trivial too.

I'm absolutely fascinated by the bus system in Guatemala and other central american countries. It's incredible and blows away any system in the US, in terms of price and convenience, if not in safety and comfort.

Even the most remote places have regular bus service, and there's a whole economy around bus stations and vendors selling things on buses. You can get from one end of the country to another for a couple of dollars and for not very much more, there are pullman bus routes between major cities that are a better traveling experience than amtrak.


The buses are often just American school buses which have been bought second or third hand, painted garishly, and reused.

That just underlines the point. Second-hand American school buses can be put to great use... in a different country... but something prevents using the same solution in USA.

Well I think a big part of it is that Americans are a lot taller than Guatemalans.

The biggest difference is bureaucracy and control/power it exerts. They have less of it, we have more of it.

They may seem chaotic, but they are more agile because there is no (or little) bureaucracy. In the US things are standardized and predictable but at the cost of inefficient bureaucracy. Over there they have inefficiency of variability.

Neither is good or bad, they just work differently and some people like one over the other.


Not taking a stance is sort of weak. Most of the time bureaucracy exists to crush those who don't have the time and money to play by the rules; think of regulatory capture. Similarly in CS, you'll see a lot of companies with "standardized" overly complicated Java business code so they can hire fresh devs out of college and not actually have to invest a lot of money in hiring and retaining a development team. Something that could be written in 1k lines takes 400k and is actually very difficult to work on, but at least they don't pay any devs over $100,000, which is really what they're optimizing for.

> Neither is good or bad, they just work differently and some people like one over the other.

They like one over the other when both work out the same. If some accident happens and the bus explodes, killing the passengers, nearly everybody wants more regulation.

People want the standardization and predictability, but they don't want the associated cost and lack of flexibility. That's understandable, but it's also naive.


It really depends on people’s tolerance for the negative results vs positive impact.

Drug manufacturing, food product, yes you want more regulation because of impact. Where someone sells furniture and whether or not they have a valid business license much less so. Light regulation means more people are self employed.

As economies develop and mature they also develop more regulation. When economies are less i institutional then they have less regulation. We can even see that within the CHOP.

If you overregulate an emerging economy you risk suffocating it.


> If you overregulate an emerging economy you risk suffocating it.

Oh, absolutely, I agree. I believe the comparison with more developed economies is often in a "why can't we have this flexibility here"-tone, and the answer is that we could and had, but we've discovered that it's better not to.

It feels a bit like thinking "hey, if I leave my tent at home, I'll travel much lighter and hiking will be more fun", which is true, but sleeping won't if the weather isn't in your favor.


I have to laugh at the author's delight in the informal bus system. At home I'm sure he'd love to shout about the evils of "illegal ride sharing" but in Quito:

"if there is demand for a trip (in the form of overcrowding on buses between points A and B), someone is going to figure it out and capitalize on it."

Imagine that!

The words "regulation" or "law" do not appear anywhere in the article. Why are there no open air appliance markets in the US selling maybe-working gas stoves? Surely not safety or consumer protection laws. No, the obvious explanation is that the owners of capital are wish it to be so.


Life definitely is easier when there is a large underclass of disenfranchised poor people willing to do anything. Why has no-one considered this before?

(On a serious note, this is basically a meme at this point. Someone sees a thing, blames it on corporate greed. You may be a worker in a big-box store but you will make more money, you take less risk, and you get the opportunity to retire with some dignity rather than work yourself into a coffin. Poverty tourism is great fun but it is quite tragic when you see other people suffering and think there is nobility in that.)


You might have misunderstood the author. The author showed us that you can have an efficient system without the vertically integrated middleman corporate structure. He described how it is a novelty and runs differently than what he's used to, but it is the natural course of business in many parts of the world. He did not participate in poverty tourism and Ecuadorians are not disenfranchised poor people just because they don't follow the lifestyle that you're used to.

I think that you misunderstand HogFeast. The author drops in to town with American style money. The people who are serving him, for example, driving the furniture delivery pickup truck, are all almost certainly working for very little money. The convenience he experiences is possible because there are a bunch of underemployed drivers with pickup trucks all waiting for someone to buy furniture. Then they drive across town and come right back.

The IKEA model would be to load up a truck at a distribution center, have a preplanned route, and a big truck, and knock out a whole bunch of deliveries at once. This is less convenient for the customer, because they don't get instant gratification, and they have to wait at home for the delivery in some 4 hour window. On the other hand, it's much more efficient for the delivery company, because they're probably delivering about 4x as much furniture per driver per day. That will lead to some combination of better wages for the driver, cheaper delivery, or more profit for the furniture company.

You certainly could call up a moving company, have them come to IKEA with you, load up the furniture, and take it home, but it would cost a lot more than what he's paying in Ecuador. The reason is that the driver in Ecuador doesn't expect to make very much money by the standards of the author's western salary.


"That will lead to some combination of better wages for the driver, cheaper delivery, or more profit for the furniture company."

Realistically: the driver will be paid close to minimum wage because he doesn't have any rare skills, and the customer will be charged as much as possible. The owners of the company will probably get decent return on their capital, though.


It depends on the economic and political climate. The efficiency aspect is undeniable -- the IKEA style driver is able to deliver more furniture in a work day.

As for who that efficiency accrues to, under properly competitive conditions, the customer should get most of it, and in fact, this type of furniture delivery is generally pretty cheap in the U.S.

What the driver gets depends largely on the aggregate supply/demand for low skilled labor, and labor's ability to bargain. Fifty years ago in the U.S., for example, low skilled labor, particularly in the trucking industry could do a lot better than today.


That strikes me as an uncharitable reading of this article. The guys transporting appliances in a pickup truck are, in some sense, forced to do that to survive. However, the author's point concerns the opportunity they are capitalising on. In this environment, one can start an appliance transport business with a truck and some strong men. The environment of the USA has many more barriers to entry, and that influences the types of enterprises that exist there.

They're inextricably linked, though. It's always much easier to start a small business in a relatively-unregulated environment, but that's because nearly zero thought or protection is being given to the drivers' or loaders' living wages, healthcare, eventual retirement, actual health (as in long-term occupational stress on the body), or even ability to be compensated for severe workplace injuries. All of the things we privileged Americans complain about in cases like Amazon's treatment of their warehouse and shipping workers are orders of magnitude worse, in practice, for most of these opportunistic workers in Ecuador.

I lived in Ecuador, all these people will have retirement and healthcare thru the IES(https://www.iess.gob.ec/), equivalent to the US Social Security. It's not a perfect system but neither is US retirement if you don't have 401k or some kind of private retirement plan, the healthcare could be slow sometimes and you spend 30 mins to an hour to see the doctor but it works.

That's a good point. I suppose in countries like the US there is already a middle ground in play: small businesses are often exempt from certain onerous regulations.

In the US, the truck and strong men exist, one just has to know where the local "day labour" hangout may be.

Those sorts of operations are generally not compliant with regulations. This would seem to reinforce the parent's point. While it is great to have low barriers to entry, it is not so great to sacrifice worker protections, and to depend on people living in precarious financial situations.

I'm just a tourist, but from what I can tell, Ecuador has done a fabulous job of righting its ship economically and politically over the last 20 years. There is still a "large underclass of disenfranchised poor" because of Venezualen refugees though.

Their govt is very close to default right now.

The only thing that has saved Ecuador was Correra not managing to bind his successor to his policies. Correra borrowed a ton of money, gave it out to win elections, and left the people with the bill. I am not sure how this can be called a success (it is true that lots of people think Ecuador is successful because they borrowed a ton of money and gave it out...this hasn't created a wealth, it has just created massive debt that can't be repaid).


This reminds me of "Fast, Cheap and Out of Control" https://en.wikipedia.org/wiki/Fast,_Cheap_%26_Out_of_Control

Spoiler alert: the FC&OOC approach to robotics did not succeed. It has been superseded by more expensive, more sophisticated, more reliable systems that have gradually come down in price through economies of scale.


Very roughly speaking, fast and cheap things can be great end products, but bad ingredients.

If you want to buy a cabinet for normal use, fast and cheap is probably better, as long as it doesn't fall apart. But imagine that you would want to buy hundred cabinets and build a huge block out of them, or something like that. At that moment the weaknesses of individual pieces add up, and the whole structure is likely to collapse. To make the structure not collapse, you need to build it from reliable and thus more expensive pieces. (And, as you said, economies of scale can sometimes do something about the high price.)

I think the frustration many programmers feel at their jobs also has a similar origin. We use dozens of "fast and cheap" tools, and each of them individually is better than nothing, but using them all together means you spend a lot of time angry about this or that problem. (And when finally most of the annoying problems get fixed, a new programming language appears, and everything needs to be rebuilt again.)


Many buildings in NYC require people delivering furniture to have certificate of insurance, and to schedule deliveries 48 hours in advance. This creates a lot of overhead, and makes it hard for 2 guys with a truck to compete, as they often lack the administrative skills necessary to operate in this environment

The American suburban model of separating structures out by usage type is not efficient in the least. It is orderly, but that is about it.

It's funny that the United States prides itself on being the heart of capitalism, where anybody can allegedly strike out on their own and make their own way thanks to The Market.

But in reality, Ecuador sounds much more capitalistic (in the positive sense) than the United States. Today's United States is just as elite-ruled and hostile to the little guy as the next developed nation - possibly more so - it's just that in our case, many of the elites are overly-powerful capitalists instead of government officials or (nominally) oligarchs. But the end result is the same.

I think the basic fallacy that so many voters have in their heads is that that big businesses and small are on the same side politically. But the reality couldn't be further from the truth.


> There are of course now online options for small vendors—Craigslist, Facebook Marketplace, etc.—but that model has its own substantial downsides for something you really want to be able to touch and test out before purchase.

While in general I am a fan of the "small l" hyper-local libertarianism of Strong Towns (I'm a contributor), at least when it comes to things like housing zoning and small scale commerce, I think this demonstrates that the writer has a fundamental unfamiliarity with how Craigslist works for used goods purchases today.

Here's my recent anecdote to support this: I just sold a clothes dryer and furniture set on Craigslist. Both transactions involved meeting potential buyers on site and demonstrating to them that the goods were functional, and even helping them load the goods into their vehicles. One of the items was loaded into a beat-up pickup truck either borrowed or rented by the purchaser from another individual.

The biggest issue with the Craigslist process was that as a seller I received multiple scam requests, and as a buyer at other times, I've found that the item I inquired about was a scam.

But it's very much an in-person commercial experience.

Where I do think Latin America is leaps ahead is in creativity in using items in design that our US-based market-segmented big-box consumer mentalities don't get a chance to ponder. Examples are the Acapulco chair - made of simple plastic PVC thread and a metal frame [1], which was turned into high design (vs the terrible PVC lawn chairs designs of the 70s and 80s in the US), and the many examples of use of upcycled materials to build homes in Mexico [2]

1. https://www.patioproductions.com/blog/patio-furniture/iconic...

2. https://www.youtube.com/watch?v=52TLLZz6lq8

https://www.youtube.com/watch?v=6Hl6iDHm3yk

https://www.youtube.com/watch?v=kVqM6ZTaXbE


This is not a compelling article. It doesn't even rise to the level of anecdata.

The "Bureaucracy vs Markets" or "Top-Down vs Bottom-Up" debates are stale.

These ideas had purchase a generation ago, when these ideas were proxies for Soviet vs American ideological sparring. That ended 30 years ago.

Meanwhile, it seems trite to have these conversations in the abstract... comparing Ecuador to the US. It's not like these ideas haven't penetrated the political realm. They've been paramount in politics, policy and political thought for decades. Local, National & International.

This is positively naive:

"a swing back toward a messy city and a messy marketplace full of small proprietors—what I've heard called "capitalism with more capitalists""

We need to either find new ideas, and importantly, new terms. At the least, we could mine some new old ideas. How about Khaldun instead of Smith for a change... he was the original anyway.


Both the Soviet economy and capitalism as we know it are centralized economies; neither are bottom-up planned. Sure, maybe capitalism has some competition between large companies, but that's the extent of it.



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