Efficiency… At What Cost?

As I noted before, pure capitalism is extremely efficient at producing large amounts of goods and services at low costs. But it’s also efficient in other ways that people, especially its proponents, tend to overlook or minimize.

Capitalism is extremely efficient at concentrating wealth and maximizing income inequality, and, without regulation, it also maximizes the costs of production placed on everyone else, from workers to the environment. These two “efficiencies” have been known for decades and resulted in a fair amount of government regulation, and, in the case of income inequality, possibly a great deal less than optimal.

But there are other downsides to this relentless efficiency. One of these occurs in the efficiencies of food production. Factory farms are efficient at producing meat at low costs, but they’re also efficient at creating and spreading antibiotic resistant bacteria quickly, not to mention the coronavirus. Pesticides and fertilizers are efficient in producing more grain and produce, but that efficiency has also been effective in creating agricultural runoff that is quite successfully making large sections of the Gulf of Mexico uninhabitable to almost any form of marine life.

Another is our efficient air traffic system which is a highly effective way of spreading the coronavirus.

And the great efficiency of just-in-time supply chains creates highly efficient slow-downs and bottlenecks, if just a single supplier fails – and that was one of the causes for the lack of PPE, the other being the unwillingness to create stockpiles because inventory is money wasted in a just-in-time economy.

And, of course, there’s the Boeing Max groundings, the result of relentless efficiency in eliminating “redundant” sensors and not wanting to conduct greater pilot training in the new systems.

Then there’s the efficiency of the part-time and “gig-economy,” which not only reduces costs for businesses, but also leaves millions without affordable health care… and that certainly increases the effectiveness of the coronavirus and other diseases in spreading.

And because of our oh-so-efficient economy, states and businesses have to open up before it’s really safe because, otherwise, the economy will totally crash and millions will go hungry… or worse…

And, in even in short run, that’s efficient?

5 thoughts on “Efficiency… At What Cost?”

  1. Tom says:

    Efficiency relates to a system and is measured according to an identifiable product or goal. We humans pursue wealth because in our minds that will give us power through independence (which we tend to interpret as freedom). Unfortunately what you have described is evidence of our general inability to consider efficiency of a system in light of the now, the future, the microenvironment, and the macro environment. Some few leaders are recognizing the result of the pandemic on our societies as you described and as opportunities to improve. Most of our leaders are repeating the pursuit of wealth and power as exemplified by Jair Bolsonaro in Brazil. As you realize from your government experience – it is not easy to improve efficiency without cost of some kind.

  2. Wayne Kernochan says:

    One of the things I was looking at before I retired was the concept of the agile organization. It’s tough to summarize, but in project terms it more or less means focusing on being able to change directions rapidly in the middle of a project and constantly seeking input from the target customer.

    I did a survey 7 years ago that established that in software development, projects that focused on agility did 20-50% better on cost than projects focused on cost, ditto on projects focused on quality, speed to market, revenue, profit, or customer satisfaction. Granted, there are lot of bad agile stories out there now, but as far as I can tell those are of bad implementations of agile.

    My point in mentioning this is to say that I believe what agile is showing is that capitalism is not only obsessively cost/efficiency focused, but that this focus is actually leading to a loss of effectiveness and efficiency. And this is covered up by our using project-based instead of outcome-based metrics.

    Apropos of nothing, I sometimes wonder what a science-fiction portrayal of an agile military or an agile battle plan would look like.

    1. Tim says:

      @Wayne. I also retired after a career in software which also embraced agile techniques for some programmes of work. The results were a mixed bag as you say.

      In my observation, if the developers are trained formally, then agile can work. If they come straight from university or are evangelists (who believe anything but agile is inefficient and slow) then they have little idea of the consequences of cutting corners which is what agile is essentially about. And so the project enters difficulties.

      As to your military scenario,. The agile objective ‘fail fast’ would likely apply 🙂

  3. Wayne Kernochan says:

    Hi Tim. I am guessing that in “consequences of cutting corners” your emphasis is on “consequences”, since certainly things like doing the user-interface shell first, deconstructing object-oriented code, and keeping track of technical debt are the opposite of “cutting corners”. Imho, many implementations of agile involve layering SCRUM over existing practices, which I think is putting lipstick on a pig.

    As for your military thoughts, you remind me of Steven Brust’s remark in Dragon that battles are won when somebody fails to make a mistake at a critical time.

  4. Kevin says:

    Capitalism is extremely efficient (and effective) at what it was intended to do – allocating tangible and intangible resources for the goal of maximizing margin (aka profit) in the short term.

    However, as noted, it ignores all externalities not part of its system (social welfare, environmental concerns, long term resource husbandry, societal well being, …).

    One of the many roles of government in a Capitalistic economy is to somehow internalize those externalities so that capitalism can include it in it’s math. How effective any government is at that role is certainly open for debate (and has been the subject of many of Mr. Modesitt’s blogs). Other economic systems have their own sets of strengths and weaknesses.

    I am not sure it can be said that Capitalism is very efficient at poisoning the Gulf of Mexico as that implies that the poisoning was an objective to be achieved. As this is an externality to Capitalism, it isn’t part of the system unless government makes it so. However, intentional or not, the effectiveness of the system at poisoning the Gulf leaves little room for debate.

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