Economic Efficiency
 

When people talk of economic efficiency, do they mean any more than the cheapest way to do something?

For example, designing clothes in the UK, having them made in China and shipped over to the UK may be cheapest but it is only in this sense could you possibly call it 'efficient'.

Not only does it take longer, but uses more resources.

Whilst I'm aware I've just answered my own question, I'd like to know what other think.

Re: Economic Efficiency
 

All systems ho.

Re: Economic Efficiency
 

Wow, that was nearly an answer. Not quite, but pretty close.

Keep trying, one day you might actually make it.

Re: Economic Efficiency
 

Efficiency is creating/doing a task by using the least amount of resources possible without any loss in quantity or quality (I have no idea what the dictionary definition is, but I'd assume it's something like that).
Time is a resource, but if the extra time incurred offsets any costs in production etc then it's an acceptable sacrifice.

Re: Economic Efficiency
 

Huh?

Re: Economic Efficiency
 

Factors of production

Re: Economic Efficiency
 

ASG, why do you ask questions like this then act like a jackass when people answer them for you? It just makes you look stupid :(

Re: Economic Efficiency
 

True. But then again no-one in this thread has actually answered my question, so I don't see what your point is.

Re: Economic Efficiency
 

Tomkat has somewhat answered your question and i've given you the terms needed for you to go and do further research.

Do a little research and then come back and tell us what you've learnt.

Re: Economic Efficiency
 

i thought i saw the words economies of scale pass right before my eyes just then but no it was just the forum gremlins at work o well never mind

Re: Economic Efficiency
 

perhaps it would have better he I had started this thread off with something along the lines of:

'Capitalist claims of efficiency are a myth created by the illusionary value of money. Discuss.'

Re: Economic Efficiency
 

i'm pretty sure that you'd look like a spastic either way

Re: Economic Efficiency
 

Those costs, time and resources, are also valued in money.

Re: Economic Efficiency
 

You seem to think that the time taken for products to arrive from overseas is a huge drawback for companies, and one which reduces their overall efficiency. This isn't true at all; any decent stock control system will mean this isn't a big factor.

Re: Economic Efficiency
 

Time was merely an example. When you take into account factors like the natural resources used transferring these products around the world for no reason other than it saves money (which I claimed to have an illusory value), then it doesn't seem very efficient at all.

Re: Economic Efficiency
 

I told you he'd end up looking the same.

Re: Economic Efficiency
 

Efficiency has nothing to do with ecological morals.

Re: Economic Efficiency
 

It does actually. However, the people who actually buy the fuel for those ships care more about natural resources then All Systems Go, who isn't willing to spend a single penny on it. If the world was filled with people like him then those natural resources wouldn't be worth anything at all.

In the situation that noone actually wants (to preserve) those resources it would cost even less to fill ships up, thus it would be even more money efficient.

Re: Economic Efficiency
 

I've not mentioned morals. I'm talking about the efficient use of resources.

By efficient I mean the greatest use of resources to seate the greatest number of useful things. Making things on one side of the world to sell on the other side only makes sense if you are talking in terms the creation of money. Money, unlike oil for example, has on intrinsic use value.

If people lose faith in money them it has no value (except for burning etc), whereas the value of oil doesn't change he people stop believeing in it.

Re: Economic Efficiency
 

I'd like to add to my rant that you can't preserve what isn't yours. If you want to save a rainforest, for example. Then you'll either have to buy it or convince the owners (financially) not to destroy them. It all depends on how much their worth for you and for them. You can't decide that others should preserve their property on the basis that you like the idea of having it around.

And ASG, you should see money as a (universal) tool to measure value. If we wouldn't use money then we would still compare the value of things, only in less convenient and accurate ways. If people would stop believing in money, or whatever you want to call it, then oil would be worth more and money less. If people stopped believing in oil, then money would be worth more and oil less.

Re: Economic Efficiency
 

Of course, there's absolutely no precedent of people losing faith in money. :rolleyes:

Re: Economic Efficiency
 

Whoever would have thought that the phrase "economic efficiency" might mean something other than "efficiency". Certainly not those of us who believe people go around making up phrases for absolutely no reason whatsoever other than confusing everyone.

Re: Economic Efficiency
 

Even in Zimbabwe, where money is practically worth nothing and they could just as well pay with toiletpaper, they still cling on to their money based system. It does affect it's value ofcourse. But the same would go for oil. Infact, oil is often used for burning etc, while money is not. I guess oil is worth shit.

Re: Economic Efficiency
 

Alright, I shall try to answer your question.

You seem to be under the impression that oil has a steady value. But your wrong in that. Oil is only valueable because it saves money compared to burning other materials as fuel. It saves money, it creates money. Burning oil is efficient, even if they burn loads of it. That’s why it’s wanted and that’s why it’s not worth even less. Often it's just more costly to burn less. Because that would mean, that you would have to spend more or sacrifice more valuable things, like time or money.

If people didn’t want to save or create money, if they didn't want to preserve or create wealth, then they could just as well burn something else then oil. Then oil wouldn't be worth anything either. However, not wanting to save or create money, and preserving things of little value while sacrifing something of more value, is not very (economically) efficient.

Re: Economic Efficiency
 

And if you start ranting about moral value. Moral value is only worth as much as you're willing to invest in it. Most people value their money more then most morals.

For example: I'd love to help that bum in the streets, but I wouldn't give him 10 euro. My money is worth more then that specific moral value. Maybe i'm willing to help him for about 1 euro.

How much is that moral value of yours worth when it comes to preserving oil? Proberbly not much, it's most likely not worth a lot to most people. But if you really wanted and it would have any value then you could start preserving oil tomorrow.

Re: Economic Efficiency
 

I've not mentioned morals.

You do realise that you're getting angry over something you brought up, right?

Re: Economic Efficiency
 

ASG, you need to be clearer in your posts. You say one thing then backtrack and explain that you meant something entirely different when questioned about it. Either you're talking bollocks or you aren't communicating your point well enough :crymeariver:

Re: Economic Efficiency
 

The only thing that i'm getting angry about is that I'm not able to punch you in the face through my monitor. But that isn't particularly relevant for this thread, is it?

Re: Economic Efficiency
 

Less manpower-hours used in the production of a certain piece of goods, the more efficient the production is.

Re: Economic Efficiency
 

Well, sort of. That would result in high productivity of the workforce (and probably low capital productivity in a Cobb-Douglas sense), however inputs in the simple notion of Factors of Production include Land Labour Capital and Enterprise. Some combination therein is used to produce an item, and an item that is produced with less resources is more efficicent than a combination that uses more.

Now, definitions of production vary, but usually essentially mean to "bring it to market", thus including transportation and packaging costs. However, more strict definitions would exist.

So, having established what Efficiency is, it then becomes a discussion as to what is meant by the term 'economic'. For example, by including economic (or implicit) costs, yet still being the most efficient method of production, that could be deemed economically efficient. however, only considering explicit costs, a different production set might be more efficient, which might be "accounting efficient". Or somesuch.

Re: Economic Efficiency
 

A society where most doctors and physicists do manual labour most of the day is far less efficient than one where its done by less educated people, even if the doctors and physicists can actually do it faster.

(efficiency isnt just about how one particular thing gets produced, its about the overall allocation of resources [any version of the labour theory of value which doesnt take into account that some people's labour is more valuable than others, is delusional])

Re: Economic Efficiency
 

I would suggest 'Economic Efficiency' is about obtaining the greatest profit from a set amount of resources (money).

Economic Efficiency isn't just about paying the least amount to produce something. For example there are three clothing chains. Chain A designs in Britain and produces the garments in China (cost to produce a garment = £1). Chain B designs in Britain and produces the garments in Rommania (cost to produce a garment = £2). Chain C designs and produces in Britain (cost to produce a garment = £10). For arguments sake all clothes produced retail at the same value. Now because China is 6 weeks away by the time the clothes hit the high street the fashion they're based on is already somewhat old news. The retailers only sell 30% of the stock they get. Rommania on the other hand is a week away and because of that they sell 70% of the stock from there. Now even though it's costing more to produce the Rommanian clothes your getting more profit so it makes sense to produce the clothes in Rommania.

Now initially it might look like a no-brainer to not make clothes in the UK but if you're selling every piece you make and are doing so at exhorbitant prices then you're going to make more money (i appreciate i said all items retailed at the same price in the original example but "whatever").

Now if you're making an item of clothing which isn't really "fashion-based", e.g. a plain work shirt or generic pants, then it makes sense to produce in China because it doesn't matter how long the clothes take to arrive because they're going to sell just the same.

Re: Economic Efficiency
 

You Are Gay; that's essentially opportunity cost though. If you include it in the notion of implicit costs, along with the other implicit costs, in producing goods, then the Romanian production process (in your example) would be the cheapest, and at a given set price (ie, price taking) then minimising costs of production (both explicit and implicit) are paramount.

No?

Re: Economic Efficiency
 

I thought the answer was simply that, in asg's example, 1) the time it takes to transport something may not matter that much in relation to potential cost savings, 2) and the lower cost of wage-labour in country x may heavily mitigate the cost of resources used in transportation.

Basically, the variables I assume asg's thinking about - time, transportation costs, wage labour - vary to such a degree that it's useless to talk about their efficiency without understanding the variables' cost ratios and the intrinsic value of the product (what you are gay's said).

If you're looking at that equation from an environmentalist's point of view cost ratios are irrelevant, however; but an environmentalist isn't an economist.