In reading Nassim Nicholas Taleb’s book Antifragile: Things That Gain from Disorder, I have come to realize how the subject of economic efficiency should be discussed.
The Republicans’ sell their idea on how to run an economy on the idea of economic efficiency. Who could possibly be against economic efficiency and in favor of “waste and fat” in an enterprise or in the government?
Well there is a reason to be hesitant about anything that is ultra-efficient. Something that is ultra-efficient produces the most output from the least amount of resources as long as everything is running according to its design. The problem is that such a system is extremely fragile. The more efficient the system, the less it takes to knock it off kilter. When the fragile system does get knocked off kilter, the disaster is much larger than anything that would have happened in a robust system.
Vulture capitalists, like Mitt Romney, come along and see an enterprise that they consider to be “inefficient and full of waste”. They buy the enterprise so that they can siphon off all the “waste and fat” into their own pockets. As soon as the event comes along that pulverizes the now fragile system, they abandon it to the public and walk away with all the wealth they siphoned off.
The next time a demagogue comes along to sell you on increased efficiency that will occur if we privatize a robust government function, remember to ask, “But will it make the function so fragile that it is bound to fail?”
Remember, economics (real life) is not binary – it’s not “all this or all that”. We must deal in a spectrum of real numbers rather than 1’s and 0’s. We don’t want to over engineer a system to make it so robust, that the added safety margins are truly unnecessary. However, we don’t want to cut away the safety margin so much that the system is too fragile.
If you rigidly apply a single dogmatic position (called Conservative or Liberal), you will either get ultra-efficient but fragile systems or you will get systems that are so robust that they are throwing away the chance to use some resources for other useful purposes. We need to work more wisely, not more dogmatically.