My View On The Concept Of Efficiency

Efficiency is a concept that one that Marx finds it not very useful. So let me give you a word about it as to why. For a philosopher, especially for a philosopher who's interested in Mathematics, the concept of efficiency is absurd. It is an empty set. It's one of those things which when you look at it, dissolves. Let me explain.

What does it mean to say that something is efficient, basically there's a lot of reading about it but here's what you'll get. To identify if something is efficient, here's what you do. You say: "Ok, I'm going to do this thing, it's efficient. And by that I mean, the good things that happens as the result of it outweigh the bad things. Let me give you an example. A debate among Obama's advisors, should interest rates be lowered by 1%. If some of his advisor say yes we should, and the president said: "Well, why?". The answer is: "It's efficient. What do you mean? Well, the good things that'd happen if we the interest rates, here they are, when you add them all up, are better than the bad things that'd happen. Or to use the language of efficiency, which is often called cost-benefit analysis, you measure the benefits, you measure the cost, and if the benefits are larger the costs it's efficient, and you do it. And if the costs are larger than the benefits, you don't do it. Are you all with me? Should the hospital in your neighborhood build another wing for cancer patient?

Big public meeting yes no. The hospital comes in said: "Ok, we understand this controversy. We're going to bring in … a cost-benefit analysis team. I've been on those. They have one very good virtue, lots of pay, you get money doing it. Here's what we do: "we count the costs, and we add them up. We count the benefits, and we add them up. And, this is very hard, if one, when added up, is larger the other one, you'd got your answer. If the costs are larger than the benefits, it's inefficient. Don't build it. If the benefits are larger than the cost, it's efficient, build it. By the way, this is presented by the hospital as a non-debatable issue. This isn't about point of views or public opinions, this is an objective matter, nuh nuh… who can… If the benefits are larger than the costs, and you still oppose the project, you're sick. I mean, we've just did the work here. The benefits are larger than the cost. Who could object?

Ok, what's the problem here? The problem here is, and you've known this already, so I'm just gonna pull it out to the forefront of your brain than it already sits. What are the consequences of an act? Building a hospital wing, raising the interest rate, what are the consequences. The answer? The consequences are infinite in number. C'mon, the consequences of building a wing to a hospital? They're going to change the temperature of the surrounding environment, they're going to change the traffic patterns, they're going to change the wind directions, they're gonna make a speeding ambulance go on this street rather than that. You know how many things happen when you change something in the world, an infinity. Not only that, they don't all happen now. some of them only happen two years from now, six years from now, a years from now. What are the consequences of an act? Nobody knows. You couldn’t possibly know what all of the consequences are, building a hospital, or raising the interest rates. Nobody has ever known all of them. Because they stretch infinitely into the future. If you build another wing of the hospital, there will be people coming in for cancer tests who didn't used to come. They're going to change the use patterns of the roads. That's gonna mean the roads has to be refinish at a certain point. That's gonna cost money to the neighboring area. Who knows all of this?

It'd take you a life time to list all the possible consequences. And by that time, you'd be a very old man or women. And you haven't got to the beginning of your task. Because not only do you have to know what all of the consequences are, but you have to add them all up. Value them. How're you going to do that. What exactly is the value of the extra four accidents a year that's going to happen because the ambulance is running on this route in this route rather than that one? What? You can't do it. And same goes for the costs, as to the benefits. They're infinite in number. Nobody can measure them all, nobody can know them all. So when you hear, I've measure the costs and benefits, you're listening to a liar. He or she couldn’t have done that. And you actually sit down with the cost benefit analysis, you'd see it immediately. They looked at, I don't know? 20? 30? Whatever the budget allows for. Not 512, not 6400. Just a handful/bunch. But here's the worst of it. I refer as if I knew what the consequence of building that wing of the hospital or consequence of lowering the interest rate. And I said for example, accidents of an ambulance. But of course, what I call the consequence of an act that I'm going to measure the efficiency of. I can't do that. I can't say it's the consequences of just what I'm measuring. Accidents over there happens because of wind direction, visibility, tire pressure. Wait a minute, all the thing I say are consequences, or costs and benefits resulting from something I'm measuring are never the result of only that. Other things play a role too. So you don't know whether the consequence of that thing you're measuring, the cost or the benefit, is really attributable to that 60%, 80%, 90%? In other words, you can't do it. Nobody knows what all the possible costs and benefits of something are. And nobody knows whether those costs and benefits are the results of many other influences which they usually are. Therefore, the statement: "I've measured the costs and benefits, so that I can tell you whether something is efficient or not, is a mathematical and philosophical nonsense.

Some of you have heard the funny story. About how very learned teachers in the Roman Catholic Church, in the 13th century, held debates all over Europe, over the following questions: "How many angels can dance on the head of a pin?" And the reason they had this debate was, that angels were conceived of having no dimension. So they have no with and length, which raise the question, millions of them because they have no dimension. And people debated over this. We look back on that and go woah, smart people, with a very strange question. Well, submit to you, long after we're all dead, people will go back and say in the 20th and 21st century people got really excited about something they called efficiency. Haha hah… And don't feel bad, it's all of us that they'd be make fun of. Because it is preposterous. It's nothing there. It's a concept that has no meaning. So the question is, why did smart people. You, me and our colleagues, why did we believe in something so vacuous? And the answer is, it provide a philosophical and sociological need, and even an emotional need. We live in a society, particularly in modern western society, but in other society too, that has a hard time dealing with conflict. Let me go back to my example with the hospital. There are people who want that hospital wing to be built people who will have a job there. People who want a job building that hospital wing. People who worrying about cancer. Whatever it is. And there's people who don't want that hospital wing to be built. People who don't want the pollution, the traffic jam, all of that. And they're fighting it out. And then the question is that this has to be resolved. But the problem is that you have to resolve a struggle between to side, is that one side win, and the other side is pissed off, and there's a danger that those who lose will be resentful, and angry and do something. What you need is a way to defeat people that makes them then, properly, shut up. To accept being defeated. Efficiency, does that. We are going to smack you. But, it isn't because we win and you lose. Neither of us win or lose. It's that which is the universal truth which we should bow down to. It's efficient.

Efficiency in our culture, is what in other culture is said as follow: "God wants it to be" So let's not fight you and me. This is gonna be resolve, not you or I lose, it's fill in the blank wants it. In other words, efficiency, is our god. And it has as much substance in reality as of the other. If you're not a religious person, efficiency should not be a word that passes your lips. Where if you're deeply religious, efficiency is just another way of spelling god. Especially in economics.