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Efficiency is dangerous and slowing down makes life better

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Re: Efficiency is dangerous and slowing down makes life better

#161

Post by Nasrudith »

mkoubaa wrote: post #30
david_draco wrote: post #27

Insurance is the opposite of a lottery. If you think buying lottery tickets are a waste of money because you lose out in the long run, the same argument should lead you to think having insurance is a good thing.

If insurance was cost effective in the long run, insurance companies wouldn't be profitable

That is only true in a zero sum system. If insurance can get say 3% profit margin but allows for others to take a riskier approach which overall produces 7% more profit by allowing slimmer margins both can profit. There are risks to that sort of leverage for both parties, especially in black swan events.

It is akin to loans essentially - the one taking them may be giving profits to others but that doesn't mean it isn't cost effective.

Re: Efficiency is dangerous and slowing down makes life better

#162

Post by clairity »

civilized wrote: post #146
bschne wrote: post #2

I've found "efficiency as the opposite of stability" a very powerful concept to think about - even though it's fairly simple, it seems to be almost a fundamental law. Whether it's about the economy at large, your own household, a supply chain, what have you - as soon as you optimize for efficiency by removing friction, you take all the slack/damping out of the system and become instantly more liable to catastrophic f…

> efficiency as the opposite of stability In statistics, there is a slight variant of this thesis that is true in a precise formal sense: the tradeoff between efficiency and "robustness" (stability in a non-ideal situation). For example, if you have a population sample, the most efficient way to estimate the population mean from your sample is the sample mean. But if some of the data are corrupted, you're better off…

i stumbled on "stability' too, because it's a static quality.

rather than robustness, i prefer to use the term resilience, a dynamic quality, since efficiency is also a dynamic quality. you can trade efficiency for resilience and vice versa (as the parent poster switched to later).

edit:

i should add that i don't entirely agree with the thesis of the article, which exhorts us to slow down, thereby trading efficiency away for resilience. there are a number of ways to add resilience (and trade away efficiency), and in some cases, slowing down might be the best, but it's certainly not the only, or best, option in most cases.

for housing, an example used in the article, we could add more housing to create resilience, which requires reducing friction, like increasing the throughput of permitting/inspections while generally reducing zoning/regulations.

Re: Efficiency is dangerous and slowing down makes life better

#163

Post by choward »

pdonis wrote: post #50
yathern wrote: post #38

Earlier quoted context omitted.

I think you have it backwards - insurance and lottery are (sort of) equal. In the long term, you'll lose money in the lottery. You'll also lose money paying for insurance. If you have extraordinary "good luck", you may come out ahead in the lottery. And if you have extraordinary "bad luck" you may come out ahead in insurance. Insurance of course has a more practical value, and a much better return on investment (even…

> You'll also lose money paying for insurance. Only if you put zero value on the peace of mind that comes with having insurance against risks that, if they happened, would bankrupt you. But if you put zero value on that, you wouldn't buy insurance.

> Only if you put zero value on the peace of mind that comes with having insurance against risks

Only if you put zero value into seeing your savings go up with the amount you saved on insurance.

Re: Efficiency is dangerous and slowing down makes life better

#164

Post by roughly »

indigochill wrote: post #139
roughly wrote: post #128

Earlier quoted context omitted.

> Fragile systems are often very successful for a long time because they ignore hidden risks and then collapse due to the unexpected. There's another interesting aspect to this in that things that are failures from some perspectives may not be from others. If stripping resiliency out of a company nets enough savings in the short term, it may still be profitable to the owners it even if it's long-term fatal. As a hypo…

Although I lean towards seeing killing the company as short-sighted, suppose you then invest that money back into a new venture. You have far more capital than you would have had you let the business remain healthy. This may give you even better value in the long-run (say 200 years) if you let this new venture live. But if you kill this venture too and invest its earnings into yet a third venture...

Right - and I think that's generally what you'd see people doing.

I'm not even sure it's necessarily an intrinsically bad pattern - there can be short-term opportunities and circumstances that make a strategy worthwhile for a number of years but not further. I think the issue broadly is twofold. First is the collateral damage - companies forming and dissolving is fine for the investors but murder for the employees, who's livelihoods and health insurance become precarious. Second is that we've applied this to the entire economy in a way that makes us incredibly vulnerable to systemic shocks - see America's toilet paper supply between the months of March and July. Again, on an individual company-wide basis, it might still have been more profitable for Procter & Gamble to do whatever the hell it is they did to make 2-ply an impossible technology to reproduce domestically in 2020, but on an economy-wide basis, the fact that Everyone did it was a goddamn disaster.

Re: Efficiency is dangerous and slowing down makes life better

#165

Post by rdtwo »

unilynx wrote: post #134
rdtwo wrote: post #109

Earlier quoted context omitted.

Just in time is synonymous with always late. Might work well with simple fungible goods but breaks down on complex stuff

complex stuff like building cars?

I think but you’d have to ask insiders if it works for them or inspite of it. In my industry it the latter where product arrives late and there is enormous recovery costs that are rarely mentioned or properly accounted for, everybody up top just sort of pretends it’s not routine when it actually is. Typically these sorts of things don’t make it out to the general public in press releases though. Holding a bit more product and some spares would have been far cheaper then the constant recovery effort.

Re: Efficiency is dangerous and slowing down makes life better

#167

Post by mcguire »

Jtsummers wrote: post #147
mcguire wrote: post #53

Earlier quoted context omitted.

Rather than stability, think of it as robustness or flexibility. Past a certain point, efficiency is an enemy of robustness. Buying in bulk is cool. If you buy a big package of paper towels, it's cheaper and you don't have to worry about running out. The fact that you have a cabinet full of paper towels isn't a big deal. But suppose you find a really great deal on a semi-trailer load of towels and stock up. Now you h…

JIT isn't the problem in your last example, it's a weak supply chain. If you have a singular source for some critical or necessary thing, you have a risk whether you're using JIT concepts or not. Though higher if you take JIT to an extreme. Your sources need to be that, source s , and ideally geographically separated. See the various industry crises following natural disasters in Taiwan for why. The proper, though no…

Right.

But, having a single source is more efficient than multiple sources---you can integrate tighter with their ordering system, packaging, product quirks. Until it stops working.

Having all of your sources in one country is more efficient. Until it doesn't work.

Managing all of your materials just-in-time is more efficient. Until a backhoe hits the gas main in the street outside and you can no longer get trucks into your factory and have to shut down the line for the duration.

A company with a weak (but not completely idiotic) supply chain will have a significant margin over a company paying extra for a strong supply chain. Until something goes wrong.

Re: Efficiency is dangerous and slowing down makes life better

#168

Post by Nasrudith »

not2b wrote: post #112

The article repeats a commonly believed myth about money being invented as a replacement for barter. Adam Smith thought so, as do many economists, but they forgot to ask anthropologists. See https://www.theatlantic.com/business/archive/2016/02/barter-...

I thought there were some hints of barter of sorts in palace economies from shipwrecks - no currency but incoming exotic commodities they couldn't produce and outgoing ships of commodities well beyond any personal use implies some trade relationships.

The fact Palace Economies all died out doesn't mean a barter economy never existed, just that it wasn't stable enough to leave any isolated "time capsule cultures". Granted palace economy commerce isn't on a personal level unless you count the ruler who allocates everything.

Re: Efficiency is dangerous and slowing down makes life better

#169

Post by iak8god »

kazinator wrote: post #107

Same-day delivery isn't efficiency; it's made possible by inefficiency, like using more delivery people and vehicles who cover inefficient routes, and using more warehouses closer to delivery areas. Actually we can't discuss efficiency without making it clear what parameter we are optimizing, at the cost of what (if any) other parameters. However, usually, if we reduce the time something takes not by cleverly elimina…

Right. Same-day delivery is fast, not usually efficient.

Neither is multitasking using three different devices at the same time efficient. Again in this example the author seems to be confusing rush with efficiency. I didn't make it past those first few incoherent lines, so I don't know whether this confusion persists into the rest of the article.

Re: Efficiency is dangerous and slowing down makes life better

#170

Post by javert »

civilized wrote: post #146
bschne wrote: post #2

I've found "efficiency as the opposite of stability" a very powerful concept to think about - even though it's fairly simple, it seems to be almost a fundamental law. Whether it's about the economy at large, your own household, a supply chain, what have you - as soon as you optimize for efficiency by removing friction, you take all the slack/damping out of the system and become instantly more liable to catastrophic f…

> efficiency as the opposite of stability In statistics, there is a slight variant of this thesis that is true in a precise formal sense: the tradeoff between efficiency and "robustness" (stability in a non-ideal situation). For example, if you have a population sample, the most efficient way to estimate the population mean from your sample is the sample mean. But if some of the data are corrupted, you're better off…

Wouldn't this be better described as a tradeoff between accuracy and robustness?

Interesting concept.

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