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Joe Barbieri has Bachelors' degrees in both Civil Engineering and Commerce from the University of Toronto. He has worked in the Financial Services field for over 13 years, with over 10 years on the institutional side of the business. He has covered positions from Fund Accounting to Investment... More
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  • Is Efficiency Always A Good Thing? 0 comments
    Mar 9, 2014 12:35 PM

    Efficiency is defined as using the least amount of resources to produce the highest amount of goods, but no timeframe is specified in this definition. Since an indefinite timeframe would yield the most goods in any situation, this yardstick could be used to measure efficiency. Why? If you can recycle the same resources over and over again, this would mean an infinite yield of production from a limited series of inputs. If this is true, shouldn't input and output costs be calculated over an indefinite time period? The way efficiency is being managed will be very different than what is practiced today. Another way to say this is that goods should be produced in a sustainable way.

    The current idea of efficiency is defined as using least amount of resources to produce the highest amount of goods immediately. What does this mean? Anyone who follows rules or procedures instead of creating something different each time will become obsolete. This includes government workers, legal support, technicians, servers, administrative, data entry or machine operators of most kinds. It has already happened with bank tellers, pickers and packers, gas attendants, telephone operators, and some cashiers to name some examples. Robotics combined with the internet, standardization and customers doing everything themselves means even fewer jobs will exist in the future. (1)(2) Is it possible that manufacturing may be transferred from the facility with the cheapest labour to the one with the highest amount of automation, since a machine is deemed to be cheaper than a person much of the time? This is already happening.

    One way to ensure that resources get recycled is to distribute the outputs in a balanced way, and allow the inputs to replenish themselves. Since the inputs and outputs are related, distribution is how the relationship is nurtured. How? If wealth keeps getting redistributed or "recycled" then the production of goods can be done indefinitely. This is like a farmer who keeps the soil nourished naturally, allowing the soil to keep on producing more food. Another analogy is a worker who uses their experience for decades rather than retraining a new employee every year and losing production in the process. Think of a monopoly game when one person owns all of the property and has all of the money. The game is over and a new game is started with everyone getting a new round of wealth.

    Back in the 1980's, when computers were being introduced to the public, it was said that the average person would only need to work 3 days a week and have a lot of leisure time. Did this happen? The wealth was created, but the distribution was not there. (3)(4)(5) This is the debate of the 21st century.

    Sources:

    1) http://www.spiegel.de/international/business/speed-of-innovation-and-automation-threatens-global-labor-market-a-897412-2.html

    2) http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs/

    3) http://www.theglobeandmail.com/life/relationships/the-three-day-weekend-a-dream-deferred/article580605/?page=all

    4) http://www.processedworld.com/Issues/issue2001/pw2001_5-14_FarceorFigleaf.pdf

    5) http://www.bloomberg.com/news/2011-11-03/americans-work-too-much-for-their-own-good-de-graaf-and-batker.html

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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