efficiency and the economy

[mellowtigger]

I recently read an article from that "post-autistic economics" movement that I mention occasionally.  It spoke plainly about an idea that I hadn't considered in quite the same terms before.

"The Efficiency Myth"
Efficiency, it seems, is entirely contextual. ... So I hate efficiency because it feels and looks like a fool’s game. I say keep something in reserve. Because you never know. ... The problem is that other people adore efficiency. But uncertainty is relentless. And the past no map for the future. So learning and adaptation are necessary for survival or growth. Whereas efficiency allows for neither.
- http://rwer.wordpress.com/2011/03/16/the-efficiency-myth/

I think they're trying to tie "efficiency" to the often used economics term "productivity".  I doubt the common wisdom of measuring economic health in terms of worker productivity, and I blame the efficiency game for some of that error.  While I think that efficiency and productivity are related, I'm having a hard time isolating what exactly they are in my mind, how they differ, and why I feel this confusion in the first place.  Do my readers have any ideas?

I agree that it's wise to "keep something in reserve".  As I've been saying recently, I disapprove of conditions that require workers to "wear too many hats".  Or, in yet another common phrase, "jack of all trades, but master of none".  I think there's a long-term danger in keeping people so busy that they can't either rest (stockpiling for the next surge) or experiment (learning for the next new scenario).

I think I'm trying to figure out the Virtues Of Inefficiency.  I think that dictatorship is a lot more efficient than democracy... but surely there are virtues to be found in such inefficiencies?  I don't know.  Thoughts aren't flowing well tonight.

Comments

[litch.livejournal.com]

There are lots of virtues in inefficiency:

redundancy provides excess capacity for when things go tits up. The more efficient "just-in-time" supply chain means that auto plants in Ohio get shut down because of earthquakes in japan. Having more people employed than than you need means your people can take vacations, get sick, or even be trained.

Having overqualified people doing a job is "inefficient" but if something unexpected happens they're much more likely to be able to respond positively.

Hiring a hundred guys with picks and shovels to dig a ditch is more expensive and takes longer than hiring one guy with a backhoe but produces much more secondary economic growth and invests them all in the project emotionally.

[mellowtigger]

I wish I could find a direct scribd link to this article, but it seems the author has prevented the indexing of it. I have to view the document within his own webpage. I think he tries to mathematically model this intersection of efficiency, redundancy, and long term fitness (sustainability). Bookmarked so I can give it proper attention on a better day.

Quantifying Sustainability: Resilience, Efficiency and the Return of Information Theory.
http://www.lietaer.com/2010/02/quantifying-sustainability/

[maradydd.livejournal.com]

I think the article's actually talking about the efficient market hypothesis (http://en.wikipedia.org/wiki/Efficient-market_hypothesis). It also alludes to, but doesn't explicitly come right out and talk about, extending Hayek's economic calculation problem (http://en.wikipedia.org/wiki/Economic_calculation_problem) to market economies.

[mellowtigger]

Interesting. I've heard of ideas from the economic calculation problem mentioned in previous years when people described the soviet collapse, but it's good to find an actual name to the concept.

Reading some of the comments to that original article have helped me a little this morning, but I'm still unsure of the article's primary intent. Some of those comments eventually led me to a 2009 TED talk from Bernard Litaer. His presentation also addresses the idea that economic sustainability requires a balance between efficiency and resilience. This concept seems appropriate to "post-autistic economics", so perhaps this preconception is why I seem determined to pursue my mental detour.
http://www.youtube.com/watch?v=nORI8r3JIyw

I think the video is an overview of an article that delves into his mathematical model of inefficiency as a long-term virtue for ecological sustainability. (Link in the other thread in this post.)

[bluebear2.livejournal.com]

Inefficiency makes the world go around.

[pi3832.livejournal.com]

The best way to get the most productivity out of most workers is to assign them more tasks than they could ever possibly complete. Being constantly behind on everything, they're less likely to waste time, or wander off on tangents.

At least, that seems to be the operating theory of many employers.

Then there's the evils of accounting. Anyone with half a brain can deduce that it is more cost effective to have a secretary to do the typing, filing, scheduling and such for executives or, indeed, anyone with a skill set more valuable than typing, filing and scheduling.

But, the cost of a secretary is very easy to point to on a general ledger (as is the cost of hiring a professional to program your phones). The cost of non-secretaries spending their time doing secretarial things, instead of more value-creating things, is hidden, so no one complains about it.

Indeed, lately, I've been kind of obsessed with this idea of "hidden costs". I suspect it ties in with ideas of "efficiency" and definitely with the idea of "competitive advantage."