Perils of Prediction: Telephone Industry
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Regarding Nicholas Wade’s speculations on future economic developments by regions of the world, I recall that when I was young, the United States had an expensive and inflexible but relatively terrific national telephone system. Before its antitrust breakup in 1984, the Bell System was a regulated monopoly that provided unstylish but high quality analog telephone service (sound quality was so good that teenagers were notorious for spending hours on the phone), from installation of landlines to long distance to Bell Labs, where Claude Shannon invented information theory and Arno Penzias and Robert Wilson stumbled upon the origin of the universe.
Only a few other cultures, mostly in Northwestern Europe could rival the quality, reliability, and convenience of American telephony. Getting a phone hooked up after moving in, say, Rome or Moscow was a bureaucratic nightmare, much less in Cairo. In Mogadishu? Don’t ask.
Now, we could speculate about whether this grand achievement of American technology and, especially, organization was a matter of nature or nurture, but my point is that this is a case in which the past didn’t predict the future well, at least regarding phones. The introduction of cell phones over the last 30 years has been a godsend for low trust cultures. They simply don’t require the organizational coordination of the old landline technology.
Most famously, the cell phone industry flourished in Somalia even when there was no government. A typical Somali cell phone company would have 500 regular employees (salesmen, technicians, and managers) plus its own private army of 300 AK-47 wielding warriors. Now, that’s a lot of overhead, but it’s a price Somalis were willing to pay for cellphone service.
So a prediction from the past about the economic future of telephone industry in Somalia would have gone askew because it pays to develop new technological workarounds for regional deficiencies.
On the other hand, it’s still more pleasant in general to live in the kind of place that could run an old-style landline phone service, like Minneapolis, than to live in Mogadishu, as attested to by the number of Somalis shivering in Minnesota.
(Republished from iSteve by permission of author or representative)Follow @steve_sailer