[Plura-list] Efficiency is very inefficient

Cory Doctorow doctorow at craphound.com
Thu Jun 3 13:08:18 EDT 2021


Tomorrow, Jun 4, I'm appearing with David Dayen in the Second Life Book


And next Monday, Jun 7, I'm helping Terry Miles launch his debut novel



Today's links

* Efficiency is very inefficient: Resiliency is not a market good.

* This day in history: 2011, 2016, 2020

* Colophon: Recent publications, upcoming/recent appearances, current
writing projects, current reading


🧦 Efficiency is very inefficient

Doctors use the term "crisis" to refer to the crossroads where the
patient improves or goes into terminal decline. In that sense, we are
living through a major crisis, a juncture revealed by the pandemic that
we have yet to traverse.

For 40 years, the gospels of market efficiency and shareholder value
have demanded that we dismantle the state (because markets are
efficient, while states are not) and hollow out companies ("trimming
fat" to serve the almighty shareholder).

Thus state capacity has waned while companies themselves became more
brittle: their employees turned into contractors, their cash-reserves
liquidated as dividends and buybacks, their supply chains stretched over
impossible distances with multiple critical points of failure.

Human civilization became increasingly fragile, while the threats it
faces increased in suddenness and severity.

Today, "the world has run out of everything" from microchips to lumber
to housing to running shoes to specialised resins used in car paint. As
Peter S Goodman and Niraj Chokshi write for the New York Times, these
shortages share a common underlying cause.


In the name of efficiency, companies have offshored their manufacturing
or outsourced it altogether. Chasing cheap labor and lax regulation
while shifting of risk to subcontractors half a world away works great,
but fails very badly.

Now, companies whose entire production has ground to a halt because the
distant factory that is the sole source of a key input are scrambling to
introduce slack and buffers into their "lean," "just in time"
manufacturing systems.

But they're hamstrung. First, because it costs a lot to build new
onshore capacity, especially after four decades of dismantling the
supply-chains that serve domestic manufacturing and sidelining the
skilled workforce that operated them.

Intel, for example, is spending $20B to build new chip fabs in Arizona -
sounds great until you learn that Intel spent $26B on socially useless
stock-buybacks in the two years leading up to the pandemic.

But it's not just a lack of funds that stands in the way of onshoring
production (after all, the corporate-friendly Trump stimulus poured
trillions in public money onto the largest companies' balance-sheets).

The hard part spending on measures whose benefit is broadly shared,
among workers, customers, and society, rather than providing immediate
benefit to shareholders who don't care if the company folds, so long as
they get to liquidate their shares at a profit first.

And this shareholderism extends to the insurance industry and other
risk-mitigating systems like default swaps, whose own shareholders and
issuers and regulators have shown repeated willingness to sacrifice
long-term health for short-term gains.

Whether that's AIG writing policies on garbage CDOs to maximize
quarterly revenues despite trillions in exposure, or Deutschebank
underwriting the mass fraud of Greensill.

As the Harvard Business School's Willy C Shih told the authors,
"Consumers won’t pay for resilience when they are not in crisis." What
Shih means is, "Shareholders won't accept lower returns for resiliency,
which means the burden must be carried by consumers."

Despite papering over that difference, Shih isn't wrong. Companies -
increasingly responsible to just a handful of private equity barons and
reps from massive index funds - are in no position to put their
long-term health ahead of those powerful, unaccountable shareholders.

And yet, the crisis is upon us, and even if we weather it, there are
more crises on our horizon. Wildfire season is almost here, more floods
will come this summer and fall, and the eviction mill is about to go
into overdrive.

The last time we faced a crisis of this kind was after the 2008 crash.
Boy did we fuck that one up. Take California: facing a budget crisis as
state taxes collapsed, the legislature cut everything it could lay its
hands on.


One of those cuts was to the Health Surge Capacity Initiative, created
after the 2006 bird-flu scare: a $200m stockpile of 50m N95 masks, 2400
portable ventilators, 21000 on-demand patient beds, and the gear to
establish three vast emergency hospitals on a moment's notice.

The stockpile came with a $5.8m/year upkeep bill - charging the
batteries in the ventilators, paying for the warehouses, etc - and in
2008, California decided it couldn't afford that bill anymore so it sold
off the stockpile for pennies on the dollar.

One thing we learned (again) during the pandemic is that deficit
spending isn't itself inflationary: when there is slack in the economy,
the central bank can create trillions of dollars without inflation risk.

After 2008, we gave banks a blank check, but told the states they were
on their own. California saved dollars (created by typing zeroes into a
spreadsheet at the central bank) and lost ventilators (created in
factories that ran out and then shut down during the pandemic).

Today, the GOP is stalling Biden's infrastructure bill, and their anemic
counteroffer is to claw back the money committed to the states - to
force the states to jettison whatever stockpiles and buffers they have
managed to cling to, to tee up the next crisis.

The doctrine that governments *can't* do anything to prepare for the
future and that businesses *shouldn't* do anything to prepare for the
future has produced fantastic wealth for a tiny handful of people and
put the rest of us in mortal peril.

That's the crisis and the crossroads - not a chip shortage or even a
runaway virus; but rather what we *do* about these facts. Do we reform
our markets and rebuild our states, or do we surrender to a future
spiral of worsening emergencies with no end in sight?


🧦 This day in history

#10yrsago Unauthorized designs for a line of 1971 Walt Disney World
merchandise https://disneydesignerland.blogspot.com/

#10yrsago $10,000,000 in venture capital for grilled-cheese sandwich
“platform” https://venturebeat.com/2011/06/01/the-melt-flip-sequoia/

#5yrsago Defense lawyers: the FBI made us use a copy-shop that made
secret copies for the government

#5yrsago Canada Post drops legal claim over crowdsourced postal code
database https://www.michaelgeist.ca/2016/06/crowdsourcedpostalcodelawsuit/

#5yrsago Neil Gaiman on Douglas Adams

#5yrsago Flintnation: 33 US cities caught cheating on municipal water
lead tests

#1yrago Why protests become violent


🧦 Colophon

Today's top sources: Kenyatta Cheese (https://finalbossform.com/).

Currently writing:

* Spill, a Little Brother short story about pipeline protests.
Yesterday's progress: 269 words (3657 words total).

* A Little Brother short story about remote invigilation.  PLANNING

* A nonfiction book about excessive buyer-power in the arts, co-written
with Rebecca Giblin, "The Shakedown."  FINAL EDITS

* A post-GND utopian novel, "The Lost Cause."  FINISHED

* A cyberpunk noir thriller novel, "Red Team Blues."  FINISHED

Currently reading: Analogia by George Dyson.

Latest podcast: How To Destroy Surveillance Capitalism (Part 06)

Upcoming appearances:

* In conversation with David Dayen (Second Life Book Club), Jun 4,

* Book launch for Terry Miles's Rabbits (Book Soup), Jun 7,

Recent appearances:

* Get Your News On With Ron/Ron Placone:

* Seize the Means of Computation, Consensus 2021

* How to Destroy Surveillance Capitalism:

Latest book:

* "Attack Surface": The third Little Brother novel, a standalone
technothriller for adults. The *Washington Post* called it "a political
cyberthriller, vigorous, bold and savvy about the limits of revolution
and resistance." Order signed, personalized copies from Dark Delicacies

* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet
analyzing the true harms of surveillance capitalism and proposing a
(print edition:
(signed copies:

* "Little Brother/Homeland": A reissue omnibus edition with a new
introduction by Edward Snowden:
https://us.macmillan.com/books/9781250774583; personalized/signed copies

* "Poesy the Monster Slayer" a picture book about monsters, bedtime,
gender, and kicking ass. Order here:
https://us.macmillan.com/books/9781626723627. Get a personalized, signed
copy here:

Upcoming books:

* The Shakedown, with Rebecca Giblin, nonfiction/business/politics,
Beacon Press 2022

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provided that you attribute it to me, Cory Doctorow, and include a link
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"*When life gives you SARS, you make sarsaparilla*" -Joey "Accordion
Guy" DeVilla

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