Economic Efficiency Can be Uneconomic, Inefficient
Economic efficiency sounds like a good thing. However, if it is measured in the wrong way, society can suffer tremendously even while so-called efficiency increases.
Here is a guest editorial, from the New Economics Foundation.
"The god of small things is angry"
It is getting on for 30 years since E. F. Schumacher’s book coined the phrase ‘small is beautiful’. Although he always claimed that the title, actually the brainwave of his publisher Anthony Blond, rather twisted the message. Even so, there was never a time when the smallness message was so ignored and so urgent.
Were he alive today, Schumacher would probably think so too. He would find himself living, as we are, through an era when most political debate is about the failings of public services – hospital mistakes, school alienation, late trains – yet the basic problem is never mentioned.
Of course there is a problem about resources invested in public services. Services in the UK have suffered from underfunding for generations compared with those on the continent, but the debate about resources obscures the real problem. It’s what economists call ‘externalities’.
We have created a generation of monstrous schools with over 1,500 pupils, controlled from Whitehall by the manipulation of dubious exams and league tables, and then we wonder why some pupils aren’t suited to the factory method. We have created a parallel generation of monstrous hospitals, and then wonder why they are beset by medical mistakes and super-bugs.
Anyone who has recently put themselves in the hands of these will know what this means. Different doctors with every visit. Long waits while you are ignored by indifferent and harassed staff. Impersonal service, enlivened by the occasional personality who manages to break through the atmosphere of creaking machinery.
According to narrow bottom line measures, factory schools and hospitals are more efficient. They are even supposed to provide better and more varied services. But the truth is that these measures leave out what’s really important – local knowledge, personal commitment, human-scale values.
The technocrats regard the mistakes, the hospital bugs, the general atmosphere of herding cattle, simply as difficult peculiarities that must be ironed out – and don’t seem to grasp that they are the direct result of abandoning human-scale institutions. And so it is that politicians debate the size of classrooms, but never the size of hospitals; they debate the measurement of hospitals but never their size.
That’s the key insight that new economics brings to the public services debate. Small has never seemed so beautiful than when you’re waiting in a queue in the merger between three factory hospitals.
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