I read an article in the paper today that posed the question: "Is your life efficient?"
The standpoint of the author, a religious counsellor, was that living your life by the rules of efficiency was bad - or at least, not optimal. She bemoaned companies that abided only by the rules of economics and competition, and wished more people were generous - truly generous, giving for the sake of giving, without expecting anything in return.
Articles like this give me the shits, because they misrepresent the fundamental purpose of economics; economics is NOT about maximising profits, competition, downsizing, streamlining, or any of the other buzzwords that were thrown into the article. No, economics is simply the study of how people deal with limited resources and unlimited wants. That's all. There is no fundamental goal to economics: it does not inherently promote maximum production, or efficiency, or profit-seeking. These are inherent assumptions in the use of economics tools, given - but economics would function just as well without them. While it unlikely that many people who've studied economics will have encountered a model that did not seek to maximise production, that's only because someone, somewhere - probably a politician - decided it was everyone's best interests to do so.
Let me repeat that: someone, somewhere, at a time far in the forgotten past, decided it was better for everyone if the scarce resources were allocated to best satisfy humanity's unlimited wants, and applied economics to that end.
Now, a perfectly valid argument could be made that the goal of best satisfying unlimited wants is so fundamentally tied up with our understanding of economics that it would be, at best, a semantic decision to claim otherwise. Fair enough. But the linking of a goal with the tools used to achieve that goal, until the two become inseparable, is the foot of the precipice to which that argument forms the peak. And it down that very slope that this author is steering her evangelical bobsled.
She argues that it is disturbing when companies hire consulting firms that advocate cutting staff, as no-one carries the responsibility: the company can point at the recommendations and blame the consultants, who are long gone and probably haven't give a second thought to the company. This is a classic case of confusing the tool with the goal: the consultants were hired, no doubt, to make the company more profitable. They did this - end of story.
Oh, but it's bad that people got fired - well, why weren't the consultants given the task of maximising profits without reducing staff. It's that simple.
Well, what about the managers - they were simply acting upon the accepted economic impulse to make more money, weren't they? Rubbish - economics doesn't say that at all. Economics tells them how to get there, but it didn't suggest the target, remember?
"Why is money so often the goal of human endeavour?", is perhaps a relevant question at this juncture. I don't rightly know; or at least, not to the extent that I could present a proper answer. Money is closely linked to goods, certainly, which in turn have always held an association with happiness. Ah, happiness - there we strike the variable that, more than any other, defines economics as a social science. For, if we stand atop our precipice and declare that the goal of economics is to 'best' allocate scare resources to satisfy our unlimited wants, we remain on solid footing if we introduce 'happiness' as the criterion by which we judge what is 'best'.
Our position at once becomes nebulous, though, since as yet there is no way to quantitative way to measure happiness. Economics could be used to satisfy Party A's wants (= make them happier), or Party B's wants - but how is it to know which to choose? Even if we take another step along our peak and decide maximising total happiness is now our goal, we still don't know which option that is. Does choosing the least happy person guarantee the greatest net increase? Not necessarily. Note, also, that maximising happiness, given a limited (scarce) set of resources, is a question of efficiency. We'll come back to that.
Let's give roles to our parties: Party A is now a worker, and Party B is now a shareholder sin the company Party A works for. Management could fire the worker, and give the money saved to the shareholder (let's assume, for the sake of simplicity, that the other workers can compensate for their lost comrade without a decrease in their happiness).
Now, the worker is unhappier, and the shareholder is happier. Which change is greater? Not proportionally, but absolutely. The question is unanswerable. Maybe the worker hated the job, was too craven to quit, but now enjoys the free time; maybe the shareholder used the money for an operation to drastically improve the quality of his life; without some quantitative scale, how do you measure something like that? And if it turned out the shareholder's happiness increase was greater than the worker's decrease, would you advocate firing him on that basis? It would certainly be an efficient use of the resources, if you want to look at it that way.
Economics doesn't make those choices. The people using it do. The management that fired those workers the author was complaining about were simply using economics tools to achieve their goals efficiently. The argument that, because the goal is undesirable, efficiency (or economics) is undesirable is ludicrous!
The author's argument that competition is bad, again, hinges upon the assumption that the parties involved are competing on points that undesirable aspects. That they are even competing on those points means that someone doesn't regard the aspects as undesirable, and the author should concentrate her efforts on changing the attitudes of whoever that is.
A succinct rebuttal of the author's points is thus:
Efficiency, in and of itself, is neither good nor bad - even if the purpose for which is it used is. Ditto for Economics, and competition (though the latter requires a more complicated extrapolation, the principle is the same).
Finally, what if her 'truly generous' folk applied the principles of economics and efficiency to their giving: wouldn't their gifts have a much greater effect?
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