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I mostly agree with you, and you certainly offered a more rounded picture than my superficial example. But I think you're a little too focused in one direction.
"Efficiency is getting the most out of what you have. Sound great, unless the problem is that you already have to much of something. Production. So areas have to be expanded like health care and education and even leisure time activities to fill the gap and employee people. We need a less efficient society."
Wait, wait, stop. If you devote too many resources to industrial production at the expense of things like a healthy and well-educated population (and by implication, workforce) then you're using your national resources inefficiently. I mentioned in another post that it would be inefficient for a business to focus only on output and ignore safety, because the cost of an avoidable accident would exceed that of maintaining compliance with safety standards.
Same thing with healthcare - just because it's a cost doesn't make it inefficient. If you skimp on it and invest your resources elsewhere you might get a short-term boost to GDP but you'd be just storing up trouble because an epidemic of poor health later on will reduce the capability of the workforce and drive up the cost of labor while reducing demand (because the sick people aren't working and making money to buy other goods and services). Same, too, with education - if you don't subsidize it then later on you'll have an uneducated workforce which lacks the skills to adapt to technological or environmental change, thereby lowering your potential output. As long as the benefits of a healthy and well-educated population exceed the costs of treatment and schooling (which is usually the case) then spending money on those things is an efficient use of resources.
"The thing is the drive to efficiency also leads to economics of scale, and eventually leads to monopolies. And the whole argument against government inefficiency is they have no competition or need to be efficient. And yet the drive to efficiency can create monopolies which are far less efficient anyway. So even the argument that the private sector is more efficient is wrong, since without government breaking them up, they become predators that stop competition by buying up any group that could compete with them."
Almost, but not quite. Monopolies are generally bad. There are exceptions, but as you say monopolies have no competitors and therefore no incentive to improve; economists say that they devolve into rent-seeking, whereby they end up demanding far more from people than they actually need, simply because they can. It's true in the private sector (which is why we have antitrust laws) and its usually true in the public sector too.
for example, take phone companies. Back when a phone meant a landline, the first thing you did on moving into a new home was to get in touch with the phone company and have them hook up your service. I've lived in countries where phone service was provided by the private sector, with several companies competing, and in countries where where it was a public monopoly (more than 1 country in each case - sometimes the same country at different times). I vastly preferred dealing with a privately owned telephone company. You'd call or walk into their office, give them your address, and there'd be an engineer there the next day to hook you up because they wanted your business. In places with a single state phone company, it could take a week, or longer.
The last such experience was around the year 2000, when I was living in the Netherlands and the phone service was provided by KPN, then a state monopoly. 10 goddam days to hook up a phone line - in Amsterdam, the capital city! And this is a rich, modern country. I actually ended up buying a cellphone which I didn't really want just to be contactable. It got worse - I wanted ADSL service (which is piggybacked onto the landline) so I could have fast internet for work - dialup is slooow, and over there even local calls were metered by the minute. Can I get ADSL please? No, you have to wait 3 months. Why? Because you haven't paid your phone bill yet, so we don't know if you're a good customer or not, and we bill our customers quarterly (which is itself annoying - I'd rather smallish monthly bills than huge quarterly ones, so I can adjust my phone habits if I notice my bills are too high). Well, I said, I really need this. Let me pre-pay or give some kind of deposit. Sorry, no, we don't do that. You just have to wait 3 months.
Think this over. Here am I, offering to pay a decent chunk of money (I think I offered about $500) in advance for a service I need, but the monopoly phone company can't be bothered. So instead I have to wait 3 months doing all my internet stuff over a slow modem and racking up charges because it takes so long to download everything, not to mention having to buy a modem that I only used for 3 months. That's hopelessly inefficient - not because it was run by the government, especially, but because it was a monopoly.
Where I think you're going wrong is in arguing that since private companies would establish a monopoly if they could, the private sector is no better than the government. But 'would establish a monopoly if they could' is not the same as having a monopoly. In the meantime, most companies do have competitors, and the competition forces them to be more responsive to the needs of their customers, who have the choice of going elsewhere. So while the private companies' dream may be to achieve a monopoly and bleed their customers dry, the actual situation doesn't allow them to do that. The need to compete works in favor of the consumer who is buying their products or services.
Isn't it bad that they still dream of a monopoly? No, not really. As I mentioned, we have antitrust laws for those situations. George Bush publicly stated he dreamed of being a dictator, but fortunately our laws prevented him from realizing that dream even though he did enough damage just by being president. I dream of robbing banks from time to time, but your money is safe because the risks of pursuing that dream vastly outweigh the likely rewards and I'm not up for the possibility of getting shot or sent to jail.
My point is that monopolies are not inevitable, and competition itself is a limiting factor on the ability to establish one.
Backing up to one other point you made...
"Been that way for a few decades, when production went higher then demand, and the entire economic engine of capitalism had to switch from trying to supply for more demand then production, to creating demand by designing obsolescence into products, creation of scarcity with monopoly control, and other race to the bottom hardships."
I think this is a bit confused - you argue that capitalism results in oversupply and the attempt to manufacture demand, but at the same time you accuse it of attempting to create undersupply, which seems contradictory. Trying to manufacture demand is not a bad thing in and of itself. It you come up with a new invention (rather than an incremental improvement to some existing thing) then in order to profit from it you have to manufacture some demand, by the basic method of running around telling people of your terrific new invention and suggesting reasons they might want to use it, and give you money.
This happens all the time. When transistors were invented they were first considered rather pointless, since the same effect was achievable with tube valves. Later people realized that the much smaller size of transistors offered an advantage, and now there's about a billion of them in the computer you're using to read this. Similarly, lasers are ubiquitous in consumer and industrial devices now, but at the time of their invention they seemed like a solution in search of a problem. In the US right now, various companies that make trains and other equipment for high speed rail transit are trying to create demand by pointing out how much better - ie, more efficient - they are than certain other forms of transportation. This includes pointing out various environmental benefits of trains, which people didn't care that much about in the past (and about which many people are skeptical about).
My overall point is that efficiency aims for an increase in productivity, but that productivity is not limited to industrial output - it can also take the form of improving the education level of the population or its overall health, or finding new ways to move people and goods around while consuming less fuel and creating less pollution than existing methods. As productivity increases, so does the overall size of the economy, which results in an increase in demand (because now now surplus resources are available and people who have them wish to exchange them for other things they don't have). And as demand increases, people looks for ways to profit by supplying it, which is what creates jobs.
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