Sometimes inefficiency is good for you

[eridani]

http://www.truth-out.org/stop-them-eating-my-town65481

This homogenization of stores and restaurants and banks across America is a recent phenomenon; it was not the case for the first 200 years or so of our nation’s history.
Other countries are wary of making such stupid blunders.

India, for instance, has a complex of national and local laws that functionally makes it illegal for a business or person to own multiple retail locations anywhere in the country. Thus, while the retail sector accounts for a whopping 14 percent of GDP, 98 percent of the stores are what economists label “unorganized”—owned by single families or businesses. (There is tremendous pressure right now from international corporate oligarchs—being led by Wal- Mart and Microsoft—to change these Indian laws.)

<snip>

This local ownership of small businesses is relatively inefficient. India right now has “the highest shop density in the world” at “11 outlets for every 1,000 people.” And that inefficiency is just the way most Indians like it. Products are locally sold and locally consumed - often by people who locally produced them. It is revealing that India has roughly 11 million retail outlets, with 96 percent of them less than 500 square feet in size, and America has fewer than 1 million retail outlets, but they are, in sales, 13 times the size of the Indian market.2

That “inefficiency” in the Indian market also means that local money stays in local economies. A local purchase from a local store goes into the pocket of a local shop owner, who deposits the money in a local bank, where it can be loaned out to local people to buy local homes. The local business is also buying products locally to sell and is supporting services like accounting, cleaning, and maintenance. These local businesses in turn keep and spend their money locally.

The result of this “inefficiency” is a nation full of economically healthy local communities and healthy local small businesses. But when the economic theorists and the big corporations behind the so-called Reagan revolution surveyed the American retail landscape in the early 1980s, they looked at those healthy businesses the way a cancer cell looks at the rest of the body - wide open and ready for a takeover.

[notesdev]

1. it's inefficient

not to strip mine people of their wealth and bind them to indentured servitude

[bemildred]

2. Well, efficient for whom is the question?

The US economy is horribly inefficient, except at shoveling money to the top.

[Blue Meany]

3. It all depends on how you measure "efficiency"

It is mostly measured by currency, largely as a proxy for labor. For example, I get far more produce from the space in my backyard garden then an Agribusiness would be able to in the same amount of space. I use no oil products for fertilizer, pesticides, or to run equipment. But I put more human labor into than an Agribusiness would. Measured on the basis of land use and energy use, my garden is far more efficient. Measured by hours of labor, it less efficient.

As available land and oil become more and more scarce, however, I suspect that human labor will be seen as more efficient. Then, perhaps, we will not have such an unemployment problem.

[bemildred]

4. Good point, "efficiency" is all about reducing the number of good jobs.

Whenever they talk about making something more "efficient", it is always about putting people out of work.

[AnneD]

5. Been to India....

shopped in India. Yes there were no Wal-Marts, and if they every let one Wal-mart in-it will totally ruin the economy.

India has a large young workforce. They need to be employed and PM Singh knows this as most other leaders. People of any education level can do a job-from selling things on the street to fetching food for office workers. There is a low mandatory retirement age (60 I think)so that younger people can be worked into the system. Companies have to give a pension to workers that have worked for them. Some of that 'inefficiency' is to cover pensions but also to pay bribes-the true grease of the Indian economy.

It is truly an interesting place.

[GliderGuider]

6. Efficiency is the inverse of resilience.

Systems become more efficient by reducing the number of discrete pathways through them. This reduces resilience because the functioning of the system is more easily disrupted by failures in the consolidated pathways (there are fewer ways to work around the failure point). Efficient systems lose resilience as they become more vulnerable to single points of failure. "Failure cascades" can result, which in extreme cases can bring down the entire system..

[bigmonkey]

7. Hear, hear!

Well said!

[eridani]

8. Really good succinct explanation

Was trying to think of a good way to make that point, but gave up. That's the reason we only "use" 10% or so of our brain cells, and why the NASA moonshot used 5 computers to keep the rocket on course (4 of them "voted" on the correct answer, and the 5th was a tiebreaker).

[bemildred]

9. "Efficiency" == Bottlenecks == Single points of failure == "Brittleness".

As we see so often in out economy.
:thumbsup:

[jtuck004]

10. Here's to inefficiency! n/t