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The fetishization of efficiency

by danps Sat Nov 6th, 2010 at 06:02:31 AM EST

Efficiency enjoys a nearly spotless reputation.  Business leaders invoke it to justify activities that would otherwise be frowned upon, while politicians use it to explain why policy must follow their pet theories.  Its limitations are once again being laid bare for anyone who cares to see, however.

Cross posted from Pruning Shears.

No Associated Press content was harmed in the writing of this post

In the wake of the Republican victories Tuesday there will probably be a renewed emphasis on neoliberal economics - at least as imagined by conservatives. Of course, "pure" neoliberal economics is one of those wonderful belief systems, like communism, that postulates an ideal end state. The world it sketches out never seems to come to pass though, so it is destined to remain, like communism, a system that cannot fail but only be failed. Look for it to be failed repeatedly for the next couple of years.

The mania for tax cuts will be back with a vengeance, and at some point liberals will have to figure out how to properly communicate to the citizenry that taxes pay for things that people like, and that when implemented by competent politicians (i.e. people who are not on principle hostile to government) are perhaps the most effective tool available to promote the general welfare.

The very idea that there are collective things worth having, and that cost money, seems curiously downplayed by neoliberal economics. Instead it is built on extrapolation from the most atomized level: imaginary individual transactions. (I have money, you have a loaf of bread. I pay you money for the bread. Now: scale to the whole country!) It tends to disparage anything that interferes with or slows down this fantasy capitalism, even if it provides a sensible, broad and basic level of protection. Yves Smith describes the dynamic on pp. 125-6 of her book ECONned:

The law in its various forms including legislative, constitutional, private (i.e., contract), judicial, and administrative, is supposed to operate within broad, inherited concepts of equity. Another fundamental premise is the importance of "due process," meaning adherence to procedures set by the state. By contrast, "free markets" ideology focuses on efficiency and seeks to aggressively minimize the role of government. The two sets of assumptions are diametrically opposed.
The presumed virtue of efficiency is insidious. For example, it is currently playing a central role in the foreclosure crisis. Stories and analysis of it is littered with references to it. MERS - the Mortgage Electronic Registration System - used to process mortgage documents was created specifically for that purpose. Tom Deutsch of the industry-backed American Securitization Forum claimed (via) MERS "makes the process more efficient, which helps keeps mortgage rates lower." Who could be against lower interest rates?

The implication here, per usual, is that efficiency is the result of gee-whiz computer technology automating drudgery - allowing the same work to be done cheaper. And of course gains in productivity are sold as the fruits of greater efficiency, when at least some of the time it simply means the same workforce is just putting in longer hours. But these supposed gains can be, like MERS, just new ways to cut corners and engage in questionable practices.

As Smith notes, the two positions cannot be reconciled. Wall Street's groupies claim (via) the problem is "antiquated, cumbersome property registration and foreclosure procedures," but as one judge who actually dealt with the issue noted, "Vague references to efficiency cannot be allowed to supplant the law: the basic requirements, rules and responsibilities for how we organize ourselves."

MERS is just the latest example. A couple years ago one of the remedies floated for checking stock speculation was a transaction tax. It would be a drag on large, quick movements of capital - and this is a good thing. Traders would be slower to empty holdings in one area to plunge into the latest bubble. It would reduce the tendency of vast sums of money to go sloshing around from one emerging market to the next in search of the latest quick hit. It would, in short, be better for the economy - and incidentally, help fund government. Instead we hear that high frequency traders (HFTs, or speculators) "play an important role in improving market efficiency" and must not have any friction in their games.

(Incidentally, HFTs are also credited with supplying "liquidity" to markets. This is a superb bit of doublespeak, because all you can really say about liquidity is that it is something that exists until it doesn't. When the earthquake hits, ain't no one looking to catch a falling body. The HFTs are scrambling for safety just like everyone else.)

Efficiency is neither good nor bad. Yet more often than not Washington embraces the kind of efficiencies that are at best a mixed blessing and at worst help set the table for crises. That no one dares question it is a sign of just how narrow the range of discourse is in the capitol. Until such claims start getting flagged and examined, conservatives will be calling all the shots in DC - no matter who has the majority.

by danps (dan at pruningshears (dot) us) on Sat Nov 6th, 2010 at 06:02:50 AM EST
I'd go further than you on this line.  Efficiency has gotten to a point that it is directly harmful to society as a whole.  In short, when the majority of people are not needed to produce the goods and services which they, and the wealthy, would like to consume, then they are irrevocably reduced to the position of slaves, as they simply have nothing to bargain with.  When the last weapon of the proletariat, the ability to withhold labor, is no longer meaningful due to the massive gains in efficiency and productivity thanks to modern technology, then their bargaining position in society as a whole will inevitably decline and they will be inevitably impoverished, as the distribution of wealth is primarily a political matter of power.

At its heart, efficiency is about cutting as many people out of productive transactions as possible.  But is a world where Central Asia has no purpose (where it was once a home to the great synthetic societies of the silk road), where the small shopkeeper and small farmers have been squeezed out by Walmart on the one hand and Archer Daniels Midlands on the other, or where the masses subsist on gruel handouts while squatting illegally in great camps of the dispossessed really an improvement?

In Japan, I see around me the decaying remnant of the boom time economy, one composed of hundreds of small businesses, small shopkeepers, and small farmers all tied together in economic networks of general equality and reciprocity.  Sure, this was not terribly efficient, but it worked, and created a livable society.  Now Japan seems dead set on following the lead of the US, with big box stores selling imported goods to customers who drive in from miles away.  It's sad.  

by Zwackus on Sun Nov 7th, 2010 at 02:09:29 AM EST
The "efficiency" of gross centralisation is entirely based on ultra-cheap energy (i.e. fossil fuel).  It's actually grossly inefficient in any real sense.  Only the wonderful (and transitory) EROEI of fossil fuel (as good as 100:1 initially, now falling off sharply) made all this maze of transport and energy-intensive processing look "efficient".

Then again, when "efficiency" is mentioned -- even in a discourse narrowly and artificially limited to dollars -- we have to ask "efficient at what or toward what end?"  Capitalism, for example, is very efficient at concentrating wealth and ownership in the hands of a small elite, and at pillaging biotic and mineral resources in record time.  Whether these are desirable goals is not really discussed;  all we ever discuss is how much more efficient we can be in achieving them.

The fetishisation of Efficiency goes back to the early industrial revolution and the invention of machine-based mass production (though it was already established as early as corvee labour, thousands of years earlier, it took the engineering/mechanistic mindset of C19 to blossom into its full cultic prominence).  The guy to google is Taylor (Frederick), who at first seemed to be helping the worker (who in those days was often paid by the piece or unit) to earn higher pay by getting more done in a day.  But the principles of "Taylorism" rendered factory work more and more mindless, compartmentalised, and insanely boring;  a win for the bosses, as this meant that the labour force could be nearly skill-less and completely replaceable/interchangeable (i.e. more machine-like and controllable, more "efficient" to manage and exploit).  And so on.

If we started with the goal of making people's lives happy, satisfying, and interesting, we might have a whole different notion of efficiency -- call it "Efficacy" perhaps -- something more oriented to Quality than Quantity, and more oriented to the whole/organism rather than the rigorous analysis of decontextualised, atomised parts.  But if one starts down this path one is generally accused of "sentiment," "luddism," anti-scientism etc -- despite the tantalising and maddening fact that almost all the recent advances in bio and neuro science come to the same conclusions:  a) "it's more complicated than we thought," b) "it's far more interconnected than we thought," c) "actually, it seems to be nonlinear."

recommended reading:  S Dehaene's "Reading in the Brain" -- for a glimpse of the massively parallel processing (not a linear assembly line as previously modelled by C19 thinkers) done by stacks of neurons as you and I read these little squiggly marks and render them into more-or-less shared meanings.  not an assembly line, but a semi-anarchistic crowd of peers, far more similar to the traditional Japanese village economy than the Toyota plant.  fascinating stuff.

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Sun Nov 7th, 2010 at 12:01:17 PM EST
[ Parent ]
I enjoy reading anything about the mind and brain (any species),  for a review of the misperceptions as well as the insight. We are still in the coastal waters of mind - we don't yet have robust enough ships nor the navigational skills to cross any major tracts of awareness.

But there is this anecdotal 16th C feeling that there are definitely other lands to explore. For the moment, we are still putting 'there be dragons' on our maps. But that's just rorschach projection. To which we are prone.

You can't be me, I'm taken

by Sven Triloqvist on Sun Nov 7th, 2010 at 12:14:37 PM EST
[ Parent ]
The "efficiency" of gross centralisation is entirely based on ultra-cheap energy

What makes you think that centralisation is, in general, less energy-efficient than decentralisation?

Centralisation allows you to take advantage of economies of scale (such as running a furnace 24/7, thus saving the energy required to re-heat it after cooling down overnight), and it makes the distance you need to ship intermediate goods much shorter.

Further, centralisation allows you to organise your production around energy sources and modes of transportation that require expensive infrastructure to work - which is the case for almost all sustainable energy sources and almost all modes of transportation powered by sustainable energy sources.

Centralisation also enables a much more fine-grained division of labour, which enables organised knowledge and technology to be brought to bear on the production process in much greater detail. So it is less than perfectly clear that centralisation is always less energy efficient than decentralisation.

The fact that these advantages have in the past been used to optimise production for man-hour efficiency at the expense of energy efficiency does not necessarily mean that this is how they will be used in an energy-constrained economy.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Nov 7th, 2010 at 12:33:18 PM EST
[ Parent ]
It's not all fossil fuels.  There were huge gains to efficiency to be made in international transportation to be gained by the shift from overland caravans to long-distance sailing ships in the 1500's.  That's what killed the silk road - buying directly from the producer, and selling directly to the consumer, while cutting out the middlemen.  Then the Dutch went a step further, and vertically integrated the producer by setting up slave-run spice plantations.

Energy consumption is one way to compensate for man-hours, and thus create "efficiency," but there's another sort of efficiency to be had by squeezing people out of the trade.  Middlemen who formerly had a cut of a particular enterprise are squeezed out, and their profits accrue to one side or the other.  That's all fine and good for the end producer and the end consumer, but in the end whole societies are wiped out as inefficiencies, un-necessary to the transaction.

by Zwackus on Sun Nov 7th, 2010 at 10:55:49 PM EST
[ Parent ]
where the small shopkeeper and small farmers have been squeezed out by Walmart on the one hand and Archer Daniels Midlands on the other

The life of a traditional small shopkeeper or small farmer is grueling. Frankly, as a choice of two evils, most people in the West today would find being a WalMart employee earning crap money far less unpleasant than being a small traditional farmer.  Heavy physical labour in the hot sun or freezing rain, day in, day out, is not most people's idea of a good life.  

There is absolutely no reason why the same sort of process which turned the industrial working class from horribly paid individuals working horribly unpleasant and dangerous jobs with insane hours to decently paid individuals working unpleasant jobs with decent hours can't work for the new service sector jobs which, as bad as they are, aren't as horrible as the industrial ones of a century earlier. What we need is government action and a new empowered union movement. Not that these are on the horizon, but reacting to that by romanticizing an even worse past is not helpful.

by MarekNYC on Sun Nov 7th, 2010 at 11:18:35 PM EST
[ Parent ]
I'm not so sure that in the proper conditions, the small shopkeeper is so much worse of than the Walmart employee. VietNam is only starting to have supermarkets, and when I see the small shopkeeper, the shop is essentially an extension of the house, rather than a place where "normal life" is put away eight hours a day. And the comparison between small farmer and factory worker doesn't hold that much here, either ; many factory workers go back to the family farm after a few years....

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Mon Nov 8th, 2010 at 05:37:12 AM EST
[ Parent ]
And the comparison between small farmer and factory worker doesn't hold that much here, either ; many factory workers go back to the family farm after a few years....

And many don't. This when the comparison is between old school style factory labour and traditional farming.  Given the choice between WalMart type work, for WalMart type PPP adjusted wages, my guess is that the number who would freely choose farm labour over the WalMart option to be rather low.

by MarekNYC on Mon Nov 8th, 2010 at 08:06:15 AM EST
[ Parent ]
Actually, for the factory workers, my guess would be that most go back to the farm. The figures I have seen was that a fifth to a third of the employees do not go back after the Tet vacation... Each year.

As for US-Walmart type work, I guess nobody in Vietnam would go for it at anything like minimum Vietnam wage. A consequence of low wages is that in most service employement (restaurants, supermarkets, even most offices) you will find about 3 times the number of employees you'd expect in the West. And that means much, much less intensive work. Much more time to take a break, etc... compared to the typically hurried service worker in the West. And even at a PPP-adjusted wage, which could be 2 or three times the VN minimum wage, you don't see people working as hard as they'd have to at Walmart.

Also, the real reason people left the countryside for the factories in the west isn't so much that they liked factories, but that there wasn't that much land available - Vietnam having had a thorough land redistribution not that long ago, land ownership is much more equal than, say, in 19th century France.

The dream in Vietnam is the small shop, not walmart. A major difference between Vietnam and the West is that startup costs for the small shop/restaurant are still very small, and usually included with having housing, whereas in the West this requires high investment, and habits and housing patterns mean people will go to the mall, not to a small shop...

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Mon Nov 8th, 2010 at 09:07:06 AM EST
[ Parent ]
The minimum wage in the US is $7.25. Adjusted using the PPP multiplier that would be about $3 in Vietnam.  At forty hours a week that's $120 or roughly double the monthly minimum wage in Vietnam's urban centers.  You're saying that your typical Vietnamese peasant or worker wouldn't be interested in working a moderately physically demanding and very mind numbing job at eight times the minimum wage for forty hrs/wk of work?
by MarekNYC on Mon Nov 8th, 2010 at 10:34:00 AM EST
[ Parent ]
First, at PPP indeed the Walmart wage would be double the monthly minimum wage ; considering the social realities of Vietnam, Walmart would indeed be paying minimum wage, not twice the minimum wage.

And considering cost of living differential between the big city and the countryside, and the Vietnamese taste for living close to home (which remains in the countryside ; the Vietnamese don't like to be away from their ancestral home), yes, the typical peasant would rather stay on his farm, the typical worker would prefer to own a family shop.

The monthly minimum wage is not enough to live in Hanoi, for example, except in the faraway suburb ; and the combined cost of housing and the loss of the family support network means that wage isn't that attractive for someone not otherwise attracted to city life.

And anyway, at that level of wage (ie from minimum wage to 2x minimum wage), such job as parking lot attendant (which are much cosier than Walmart...) are available.

Also, the 40h Walmart job is much less attractive when you realise the flexible work hours mean an "effective length of work" away from home much closer to 50h or more.

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Mon Nov 8th, 2010 at 10:43:13 AM EST
[ Parent ]
It's eight times the minimum wage, not double. What kind of unskilled jobs are available that pay 8x minimum wage?
by MarekNYC on Mon Nov 8th, 2010 at 10:53:28 AM EST
[ Parent ]
Sorry, misread the 120$ per week as 120$ per month. But PPP is a poor adjuster if it considers comparable 7.5$ in the US and 3$ in Vietnam. For similar standard of living, and considering the differences in mandatory costs between the US and Vietnam, 120$ is closer to granting the same social status in Vietnam as that of a Walmart worker in the US.

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Mon Nov 8th, 2010 at 11:06:29 AM EST
[ Parent ]
PPP is simply based on prices, so it says nothing about social status. And are you saying that food, energy, transport and housing (the primary expenses for most households) are more than two and a half time cheaper in Vietnamese urban areas than in generic American sub/exurbia or rural areas?  Given the cost and necessity of cars, I wouldn't be surprised if you have a point, but cars do offer a rather big increase in quality of life to anyone who doesn't live in a very high density urban area with great public transport above and beyond the basic necessity aspect.  Also, it's not like the other stuff is a minor matter.  
by MarekNYC on Mon Nov 8th, 2010 at 11:32:12 AM EST
[ Parent ]
I'm pretty certain that food, energy, transport and housing is more than two and a half time cheaper in Vietnam than in rural US. The street restaurant serves a meal for about 75 cents, transport is done by motorbike (which you can get for a few hundred bucks, and are used all across VietNam, even the most rural parts ; after a few weeks in Vietnam, you start wondering exactly what's the point of a SUV, since the average motorbike has exactly the same uses), energy means a ventilator for A/C and some coal for cooking (plus more electricity for the TV, an impressive amount of which are large and flat) - the real expense is housing, which will require a 200$/month rental if you aren't a homeowner ; note that most people of Hanoi origins got the land (and potentially the house) for free at the time of de-collectivisation.

Another point ; you'll find quite a lot of westerners settling for 500$ to 800$ a month in Vietnam. The only problem is that a few years later they realise they can't buy a plane ticket to go back West...

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Mon Nov 8th, 2010 at 12:15:53 PM EST
[ Parent ]
$2000 a month ($800 x.2.5) in actual average spending will provide a quite adequate standard of living in much of the US for a childless single person absent health care costs.  
by MarekNYC on Mon Nov 8th, 2010 at 12:37:21 PM EST
[ Parent ]
If Walmart pays minimum wage in the US, why would they pay eight times minimum wage in Vietnam?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Mon Nov 8th, 2010 at 11:24:43 AM EST
[ Parent ]
They wouldn't.  The original question was whether a typical Vietnamese peasant's life is better than that of a minimum wage employee in the US working at WalMart.  Linca says yes, I say no and now we're playing with numbers.
by MarekNYC on Mon Nov 8th, 2010 at 11:34:23 AM EST
[ Parent ]
It's not nature of the job, but the economic and political status of the overall situation that's important.  The small farmer or shopkeeper is infinitely more than a paid employee - they are owners of functional capital, and as such have an ownership stake in society as a whole, and thus greater political clout.  And, as Linca mentions, there is a level of integration into the entire society that is different from that endured by the wage slave.
by Zwackus on Mon Nov 8th, 2010 at 07:41:10 AM EST
[ Parent ]
European Tribune - The fetishization of efficiency
The very idea that there are collective things worth having, and that cost money, seems curiously downplayed by neoliberal economics.

That neoliberal economics downplays the value of collective goods is to my mind not nearly so curious as the fact that all other political parties in the west that have a hand in legislative processes are too frightened to stand up for their value.

But I guess that's just me...

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt ät gmail dotcom) on Sun Nov 7th, 2010 at 05:40:31 AM EST
 "...so curious ... the fact that all other political parties in the west that have a hand in legislative processes are too frightened to stand up for their value."

  Actually, it makes a certain vile sense.  The parties and the elected officials are bought and paid for.  Not every single one without exception and not always to the extent of being completely and perfectly managed but the vast majority are so to an extent which places their patrons in a fully effective management position for nearly all practical purposes.

 So, if public education, civil infrastructure, the quality of news and information, the general welfare of both the poor and middle and upper classes (the top 2% excepted) are in a state of decay, feebleness and continuing deplorable decline these are not "bugs" of the system, they are rather the intended "features" of a ruling elite who are wealthy enough not to need universal health care, or publicly-funded education, or much better up-keep of the material infrastructure or the welfare and civic rights and liberties of most of the ordinary general public.

   In the society as it is now being fashioned, such advantages to the average populace represent disadvantages to those who'd more firmly and fully manage, observe, monitor and control those ordinary people.

   After all, what's "efficient"?  From the narrow point of view of certain extremely privileged, most "efficient" is that (they,) the most powerful(,) take the "lion's share" and leave the scraps they aren't interested in to the rest of the others.  

  As they might put it in an unguarded moment,

     "We're healthy, they don't need to be (especially at our expense); we're wealthy, and the less they have, the more we can capture and keep for ourselves; we're educated and knowledgable--because we spent the time, effort and resources to obtain our education and training, their possessing comparable strengths merely complicates our exercises of power and control.  Those who want, need, expect more--be it from government or what-have-you ought to and must fight us, beat us, outmanoeuvre us, to get it and if they can't, well then, they lose out, don't they?"

---etc, like that.

  http://widget.yodawork.com/book/editis.swf?ean13=9782707164193&bookshop=ladecouverte&url=htt p://widget.yodawork.com/book

   Le nouveau gouvernement du monde:
Idéologies, structures, contre-pouvoirs
 by  Georges CORM

      explains this and more about the times we live in.

  http://www.editionsladecouverte.fr/catalogue/index-Le_nouveau_gouvernement_du_monde-9782707164193.ht ml


  RE: Readers' Comments on:

"The Crossroads Nation"


  link: http://www.nytimes.com/2010/11/09/opinion/09brooks.html

From Bill Clinton's bridge to the 21st century to President Obama's new foundation, the next American century is often described vaguely. Here's why.


 NY Times (Reader Comments)  

 HIGHLIGHT (what's this?)

StephenNew Haven, CT
November 9th, 201011:07 am

This story line assumes a stable and thoughtful government, rational citizens, and abundant & cheap energy to make all that global economic stuff happen.

I wish it were so. The problem, of course, is that we have an unstable, petulant, and thoughtless government that can't see past the next election, a large chunk of our citizens are disengaged, nativist, naive and clueless about how government (any government) works, and we are entering the decline of cheap, abundant energy (oil) to make the economy glide along.

Now is the time to re-scale the economy by reinvesting in the regional and local production of goods, services and food; to educate our citizens so they can be the thinking persons Mr. Brooks envisions to help in this transition, and to elect people who actually care about the direction of the country instead of themselves or their pet ideology.

I'm not holding my breath. The midterm elections are only the tip of the iceberg. The truly crazy people will now feel empowered. Sharon Angle is not an isolated case.

When those born today reach, say 40 years old, they will live in a much scarier America than the one we're seeing develop now.

  Recommended by 452 Readers


"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge
by proximity1 on Wed Nov 10th, 2010 at 10:38:42 AM EST
[ Parent ]

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