Adam Smith Institute

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Close, nice try, but no cigar

There is an amusement in watching justification being built on the fly. One that’s being trialled at present is that all this concentration upon economic efficiency leads to an inability to respond to an emergency. Thus we should all agree to be more inefficient so as to be able to respond to an emergency like the coronavirus:

Coronavirus is our chance to completely rethink what the economy is for

Gosh:

The pandemic has revealed the danger of prizing ‘efficiency’ above all else. The recent slowdown in our lives points to another way of doing things

And this other way?

But there were also economists, such as the Englishman William Hutt, who went against the Keynesian consensus and pointed out that there were some things – fire extinguishers, for example – that were valuable precisely because they were never used. Having large stocks of PPE, underemployed nurses, or a lot of spare capacity in ICUs, falls into the same category. Idle resources are what you need in a crisis, so some degree of inefficiency isn’t necessarily a bad idea.

There is an element of truth here, of course there is. And yet which sector of the economy has just performed best? Where has that reaction to the current problems been absolutely stellar? That would have to be the supermarket sector. The entirety of the eating at work, eating out, sector closed overnight. All of that commercial supply system, thehowevermanycaloriesadayitwas, now needed to be redirected into the retail supply system, those supermarkets. There were stutters, certainly, and yet there’s been no actual shortage of anything. A shelf that’s empty until someone can get the lorry around from the depot is not what we’d describe as a shortage in this case - not given the experience some here have of the Soviet retail system.

Which part of the UK economy prioritises, measures itself near exclusively by, that efficiency? The supermarket sector with their just in time deliveries and all that.

That is, an organisation that is flexible can manage both that responsiveness and that efficiency. As we’ve just seen and as we’ve just spent a couple of months eating our way through.

Trying to manage a pandemic in a world of just-in-time production lines and precarious labour brings these issues into sharper focus.

Which is where we really do have to say nice try, close, but no cigar. Because the sector that relies most on JIT is the one that has done so superbly. Precisely and exactly because it is a flexible system, one designed to be able to respond in near real time to changes in demand and or supply - rather a feature of JIT systems.

The amusement? Labour that is not precarious is difficult to move around and retask, isn’t it? And labour which is precarious is, by definition, that labour that can be sent off to do something else as supply and or demand change. Workers only lightly attached to their current task is exactly what aids a system in being flexible to changing circumstances.

No, we’d not say that this justifies the precarity. But it is amusing to see someone claiming it as a constraint upon the necessary reaction to a pandemic when it’s actually part of the solution.