The case against efficiency

All incentives, and all government policies, have been directed towards growth. Amorphous, directionless growth.

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“Cecil Graham: What is a cynic?

Lord Darlington: A man who knows the price of everything, and the value of nothing.

Cecil Graham: And a sentimentalist, my dear Darlington, is a man who sees an absurd value in everything and doesn’t know the market price of any single thing.”

— Oscar Wilde, Lady Windermere’s Fan

The modern economy has become relentlessly cynical. Indeed Cecil Graham’s sentimentalists appear to have evacuated every building in which discussions about economic policy are held.

As they are wont to do, economic producers have sought — and been encouraged to seek by the liberal growth junkies in the halls of power — ever greater efficiency in order to bring us ever cheaper goods. After all, it’s human nature to look at the price tag of an item and only to make a judgement about the immediate monetary value that’s displayed on it. One can hardly blame the average consumer for that. A price tag is, after all, a heuristic used to display a product's ostensible value.

The problem arises when one starts to think about many of the goods we’re buying, and the fact that many of them are not actually that good. They’re not good quality. They’re not contributing to the greater good of our society or local communities. And they’re not good for the environment.

And yet, through the power of marketing, social pressure never to be seen in the same thing twice, the convenience of big box stores and online shopping, and the rush of endorphins one gets when one clicks ‘buy’ on a product to the point where some have become addicted, we’ve all become convinced that this is normal and both superior and preferable to the alternative: more expensive goods.

The problem isn’t only that it’s wasteful, which it is on an absolutely epic scale (one need only look at the mountains of discarded clothes in the Atacama Desert in Alto Hospicio, Iquique, Chile – all products of the fast fashion industry.) Rather, that we are also often getting shoddy products designed to have a finite lifespan, and at the expense of localised cultural economic uniqueness, and communities built up around shared mutually beneficial economic production.

That’s not to say mass production is always bad. For cars, phones, fridge freezers, toasters et cetera, it’s probably not only a good thing, but absolutely essential. But for fashion and artisan goods from cutlery to furniture, I’d argue the price we pay for monetarily cheap access to those goods is not worth it.

We now have an incredibly centralised economy, hooked on cheap (or often not so cheap) consumer goods – the hoarding of which has become a measure of our success. (Indeed, there are now videos dedicated to showing off how much stuff one has. Shoe collections frequently, or sometimes videos hiding under the guise of ‘spring cleaning’, or ‘organising my closet’. Influencers do ‘try on hauls’ at the same frequency at which I eat hot dinners). Everyone dresses the same – badly! – and every community has the same chain stores selling the same rubbish.

This has been allowed to happen because it’s kind of a way of hacking the economic system. Producing more stuff, more quickly, and selling it equals economic growth. The quality of the stuff produced need not matter. The environmental damage done by the production, transportation and disposal of the stuff need not matter. The bland uniformity induced by the cross-regional, all-encompassing marketplace need not matter.

But is this really the world we want? A world in which every town has the same shops, selling the same products – everywhere one goes, from Aldershot to Amarillo. A world in which everything we buy is made by a handful of mega-corporations, largely for the benefit of people who sit in skyscraper boardrooms so their feet don’t need to touch the ground where the regular people walk.

Or would it be better to have a different type of economy? One in which things may be a little more expensive, but they are better quality and more unique. They’d have been lovingly crafted by the skilled hands of craftsmen and women, not thousands of miles away, but locally. Your money wouldn’t be going into the offshore bank account of a mega-corporation located in the same building as 6,000 other mega-corporations, but into smaller, independent, family-owned and local businesses within your community.

I’m in favour of the latter. I also don’t think it’s unachievable. Everything is a matter of incentives, so if the latter is the type of economy we want, the incentives – market regulations and tax breaks – have been wrong.

Up until now, all incentives, and all government policies, have been directed toward growth. Amorphous, directionless growth. And they couldn’t even be described as good for that.

I’m not suggesting that growth is a bad thing, nor that price doesn’t matter. I’m not the sort of sentimentalist who “doesn’t know the market price of any single thing”. I just think markets are incredibly adaptable. As long as they’re functioning with the correct set of parameters, with incentives that drive desirable, satisfying and high-quality production along with community and societal benefits (or at least a lack of harm), they are the best tool we have for achieving something approaching the type of country and society we want whilst providing goods for those who buy at every price point within it. Markets optimised for efficiency of production as their main concern often do it at the expense of other desirable things we want and need them to deliver.

My argument is that we ought to be directing growth to the places we want it, incentivising people to build an economy full of regional variety and specificity, to produce good quality “buy once cry once” products.

None of the figures I’m about to throw out are particularly academic; consider them placeholders until more accomplished economists and policy wonks than me can determine exactly what they ought to be. This is just to show that we could easily incentivise the type of economy envisaged above.

Firstly, increase VAT on mass-produced rubbish by 30/40/100 per cent. Especially if it’s made in a foreign sweatshop 3,000 miles away. That immediately raises the price and lowers the desirability of poor-quality tat. There are, of course, going to be arguments that the less wealthy need these cheap products. But there are ways to counteract the detrimental impact this may have on them. VAT discount cards for those earning under a certain amount as part of the benefits system, for example. And market forces will eventually drive down the prices of high-quality goods, anyway (the buying of which would also save the less well-off money in the long run because it would last longer).

Secondly, make independent and small chain businesses (those, say, with no more than three to five stores within a 50-mile radius) tax-exempt up to £1.5million in annual profit. Reduce VAT on artisan goods (those we want to encourage) to five per cent, and two per cent if they’re using 80+ per cent British-produced materials (100 per cent if they’re using 100 per cent British-produced materials).

And finally, give those in the professions one wants to encourage – independent tailors, cutlers, furniture makers, potters, cordwainers, watch and clockmakers, restauranteurs, publicans, and so on – a significantly higher tax-free allowance; perhaps 25 per cent or 50 per cent more than the standard figure (£12,570 in March 2023).

High streets should be packed with independent artisan businesses, from coffee shops to clockmakers – all with their own regional quirks. Every town ought to have numerous tailors, seamstresses and cordwainers, and every housing estate a little shoe and clothing repair shop. Independent art galleries where local artists can showcase and sell their work must also be permitted to flourish. With this, regional and cultural variety will come back.

Wouldn’t it be nice to see a return of the little mesters in Sheffield? The resuscitation of old traditions which are now precariously on their last legs, sacrificial lambs to the free market’s quest for ever greater efficiency and ever cheaper goods.

(Perhaps cutlers and toolmakers should have an increased tax-free allowance specifically in Sheffield, and those involved in the ceramics and pottery industry should in Stoke-on-Trent?)

One also mustn’t forget the community that builds up around localised industry. Friendships, trust and good relationships which form between suppliers and customers, craftsman and clients. Localised commerce and mutually beneficial trade create and contribute to community cohesion and to a sense of belonging. That’s a value in and of itself – one that’s immeasurable by economists.

Within five to 10 years, incentives such as these would create a completely different economy. This would be more sustainable and less subject to global shocks. People would feel much better about the things they buy.

Looking forward, we must also increase the value of “human-made”, because if you think mass production and automation is bad now, it’s about to get a whole lot worse. The machines are coming!