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23 January 2009


1. The word "Efficient" is a loaded one, all good and no bad. It is so loaded that it is often an argument-stopper. Once you say that "This is Efficient" or "This is the most Efficient way", there is no comeback, no way to argue further, for isn't the most efficient way always the best way? End of argument.

2. Today, it is time to examine this underlying and unspoken premise, maybe weave something of value into this essay, enough to be something of a first gift to the new President OBAMA, although a small one.

3. We can begin by stating a general theory of Zero Sum Game, which could be that "In Almost All Human Endeavour, One Party's Gain Is Almost Always At The Expense Of Another's Corresponding Loss. In Other Words, A Zero Sum Game."

4. Some examples. Suppose you manage a shopping mall and want to buy trash bins for it. You have to decide between buying many or buying 'just enough'. If you buy many and place them handily everywhere in your mall, the shoppers find it easy and convenient to dump their trash without having to walk far or hunt for one. It is Efficient for them, the shoppers, but means that you need more workers and more work to constantly clear them during busy times when many shoppers throw rubbish away, thus INefficient for you because you need more workers and more work. Thus Zero Sum Game. What is Efficient for your shoppers is Inefficient for you as mall manager.

5. Another example. Suppose you are a govt dept and you handle lots of phone calls daily. So you partially automate it like is common nowadays. You make each caller listen to several stages of menu, press the appropriate button, before getting to speak to a human, if at all. Very efficient for you but very inefficient for the callers. Zero Sum Game again.

6. Worse, if you as a govt dept decide that you have very few Teochew-speaking callers and therefore provide none to answer calls from Teochew speakers, you save money and convenience, therefore Efficient but thereby also totally shutting out any Teochew speakers from calling you. Efficient for you but therefore inefficient for them.

7. In almost every human endeavour, this is true. What is efficient for you is inefficient for your counterparty.

8. This general theory of Zero Sum Game has ramifications for govt because all modern govts strive mightily after Efficiency because efficiency lowers costs and saves much work. This explains why privatising public transport may be a very bad idea. Private operators operate for profit and this demands maximum efficiency since efficiency lowers costs thereby increasing profits. But my general theory states that someone loses correspondingly -- the commuter. For example, if metro trains run so frequently that you can always board one with less than 2 minutes wait, plus always find an empty seat due to the trains always being only half full, this means that the train operator is inefficient in terms of resource usage of trains and stations, etc, but efficient from the point of view of the commuters. And if you are pregnant, old, or with 2 small children in tow, being always able to board a train quickly and be seated is a godsend and saves you the taxi fare you would otherwise need since you cannot safely or comfortably commute by train. This could mean a wholesale improvement in the lives of the people who commute. An important improvement not to be underestimated. It could cut down the use of cars, even. Thus, govts have no business being efficient. Or private operators being efficient, either. The key word is Service to the people. That should be paramount although it rarely is.

9. This explains why democracies are usually inefficient whereas dictatorships are very efficient. People who have experienced living in the US or UK are often appalled at the many inefficiencies there compared with highly efficient Singapore, for example. But now, we know that Efficiency is no virtue and is usually a defect in govt. So there is no need for the US or UK to feel apologetic about their many inefficiences compared with highly efficient Singapore, which also has the overwhelming advantages of a tiny population squeezed onto a tiny 700 sq km islet -- probably measured at low tide. Efficiency is a loaded word, all good and no bad, which, as we have seen, is wrong. True democracies can never wander too far from the common good, unlike dictatorships, which are usually horrendously wrong. Thus, democracies, because they need to win the popular vote and govt every few years, have to cater more closely to Service To The People which dictators usually ignore in favour of whatever pet projects they are besotted with, which is high GDP in the case of the LIEgime, even to the extent of stupidly and incompetently building mega Bubbles which are now imploding.

10. One point established so far is that public transport should be inefficient, putting service to the people foremost and profits a distant second. This requires a new govt thinking. Similarly with every govt dept interacting with the public. This means that almost the entire govt should be deliberately inefficient. Sure, this costs more money but provides better service to the people, which should be paramount.

11. Once we drop the idea of govt needing to be efficient, possibilities emerge. For example, service to the people should be foremost but other goals could equally well be placed foremost. President OBAMA has pledged to create ~4 million jobs but mostly indirectly through bailing out industries, which in practice, means a couple of huge companies. This is like what is termed 'pushing on a string' because huge companies have so many divisions and complicated systems that billions could be sucked up by these black holes before a single additional job is created. Why not just hire more govt employees? There are ~22.5 million govt employees and if each govt dept is encouraged to hire say, 18% more staff, the goal of 4 million jobs is reached. Just like that. Pushing on a string is much harder and fewer jobs are created for the same money. Of course, it need not be 18%; can be less. Whatever is optimal and politically possible. You could channel these new hires into the perennially shorthanded important jobs like the police [non-uniformed jobs if cannot real cops], teachers, hospitals, social services, etc -- whatever does the most good for society. Once you drop Efficiency, you gain much in possibilities.

12. Thus, govts and even private companies have no business being efficient. We need to reorient our thinking and our fundamental premises. With that lead-in, we can now go further into questioning the undisputed Efficiency of Free Markets. This is important since this underpins much of govt, economics and the way we order society. We all know and agree that free markets are best to produce the best and most goods and services at the least costs [measured in dollars and almost always, leaving out such costs as environmental degradations, damage to land, sea and air, even the whole planet]. If we begin to question whether the Efficiencies of Free Markets are such a good thing, we will make much progress towards understanding and moving towards better alternatives, not totally rejecting free markets but tempering these with other important objectives and set goals.

13. This is a good time to question the Efficiency of Free Markets because the massive bailouts leading to quasi-nationalisation of banks, etc, has already led to a wholesale abandonment of ideology. Ideology is dying, maybe dead. In its place is an opportunity to question its premises. Should important infrastructural assets of society such as public transport, utilities or, to stretch the argument a little, if dangerously, further, even banks and mortgage companies, as is currently the case, be govt owned and operated? Once you accept that Efficiency is not the most important consideration, then why not govt run and operated infrastructural assets like these? Even if govts cannot be as efficient as free markets?

14. There is an oblique indication that this point is already proven. For example, for all of these important assets, there are govt Regulators who try to force some semblance of public good into what otherwise would be untrammeled free markets. The fact that Regulators are needed to moderate these free market operators and operations prove that virtues other than free market efficiencies need to be instilled, even legislated into being. From these Regulators, it is just a small step to govt owned and even govt operated assets, even banks as in today's environment.

15. Thus, arguments over Big Govt and Small Govt, Free Market Efficiency, Regulation and DeRegulation, etc, are all beside the point. When you ask the wrong question, you never get the right answer. What you need to ask and keep remembering, is what is the Best Public Good? The financial crises happened mostly because ideology triumphed over common sense. The ideology of free markets and capitalism led to un- or under-regulated banks and other financial operations leading to disaster. If Public Good had been foremost in the minds of govt and regulators, the disasters may not have happened. Divining the Public Good is not always easy. It may even require bold thinking and imagination. But we know by now, that leaving people and operators to pursue their own individual self interests does not lead to the best Public Interest.

16. To use an analogy, the free market is like the roads and highways. Everyone in the free market of stocks and other financial instruments is like the driver of cars on the roads. Every investor pursues his best self interests to maximise profits and minimise risks. Just like every driver tries to drive fastest and easiest to reach his destination without wrecking his life and car in an accident. This unfettered pursuit of self interests is supposed to result in the most free flowing traffic, meaning the most profits for the most people. After all, which driver would recklessly jeopardise his life and car by driving dangerously or recklessly? If this assumption is correct, there should hardly be any accidents on the roads. The fact is that thousands are killed in car wreckages every day proves that even when everybody pursues his own best interests at least risks, accidents happen. The financial crises are a pileup of humongous proportions.

17. I hope I have raised enough doubts about the supposed efficiencies of free markets and govt operations. Maybe even restore the rightful place of Public Good in all thinking and planning of govt and even private operators. The hardest thing to change is people's thinking. We have carried old thinking into a new century. The best thing we can do now is to rethink all of these old assumptions, theories and practices to see how they fit our needs in the new century. We really, really, need to.

[Added 3 Nov 2011, paras 18 to 26]

18. LIE KY LEEisms are exceedingly simple and simple-minded. They are not the result of deep thought, because LIE KY is too stupid and incompetent to think. All he does is operate on the basis of simple and simplistic observations and once pronounced, no LEEism may be questioned, withdrawn or repealed. LEEisms are forever.

19. One LEEism is the by-now [in]famous deliberate OverTax & UnderSpend policies, which manifests itself mainly in deliberate UnderSupply of govt goods and services like the undersupply of HDB public housing flats discussed in my essay "Stupidest Govt Of All Time". This deliberate UnderSupply also results in the tiny quotas of Singaporeans admitted to the Law and Medicine faculties, so that lawyers [of whom LIE KY is one, operating his hugely profitable law firm of LEE&LEE, which monopolises govt and GLC legal works] and doctors [several LIE KY famiLEE are doctors] can charge huge fees, etc.

20. Another LEEism is LIE KY pathetic [non]understanding of "Efficiency". To LIE KY simple mind, efficiency = reduce or eliminate Competition, which, to him, seems 'wasteful' and therefore 'inefficient'. To his pathetic stupid and incompetent mind, Competition is 'wasteful' because most losers in competition end up with losses or even bankruptcy, so therefore 'wasteful'.

21. It is obvious that one major LEEism is the elimination of Competition. For example, about 60% of Singapore economy are produced by a handful of GLCs, which operate monopolies, sometimes with token 'competition' between itself. LIE KY deems this arrangement 'efficient'. With monopolies, no losers in competition need run losses or end up bankrupt. Monopolies can charge anything the market can bear, so always profitable, usually hugely profitable, which makes them highly attractive for multi-millionaire Ministers and elites to invest in, to see automatic increase in wealth due to these monopolies ALWAYS making profits and thus increase in share prices and dividends to Ministerial shareholders.

22. Here, I will explode another torpedo under this LEEism, like I have done in "Stupidest Govt Of All Time". I hereby postulate that "Efficiency is an End Result, NOT a Process". What do I mean by this? It means that if you have lots of Competition, it only seems wasteful but is actually efficient, whereas if you have No Competition, like LIE KY ordering of Singapore economy and GLCs, the result is not efficiency but the opposite, meaning Humongous INefficiency.

23. This is because seemingly wasteful Competition ALWAYS results in extreme Efficiency while with No Competition, the result is ALWAYS humongous INefficiency. One proof is in Nature. In Nature, competition is the rule and animals, plants, every living thing, compete fiercely to survive and propagate. This is why lions, tigers, leopards, eagles, and ALL other predators are so brilliantly equipped for successful hunting and survival. Among the predatees, they develop speed, camouflage, cunning behaviour, to survive and thwart the predators. Thus, in Nature, Competition leads to extremely Efficient animals and plants. In those few areas without Nature competition, like in Darwin's Galapagos islands, no competition = dodo extinction. This same is true of human competition and competition among companies.

24. But to LIE KY simple mind, having losing companies losing money or going bankrupt is wasteful and therefore 'inefficient', so he has eliminated all competition among his govt companies and govt depts, thinking that all this thereby produces an 'efficient' society. He does not realise that without such seemingly wasteful Competition, his GLCs and govt depts become fat and lazy, MEANING THAT EVERYONE FROM CEO DOWN ARE ALL UNDERPERFORMING, RESULTING IN BIGGER INEFFICIENCIES THAN WITH COMPETITION. Without competition driving innovation and change, LIE KY GLCs from CEOs down to cleaners, all perform lackadaisical, mostly shuffling papers and Looking Busy. Nobody tries hard. Why strive to innovate and change when you can get steady profits so easily by simply increasing prices, which being monopolies, is so easy to do? When there are no regulators or the regulators, being comprised of the same PAP members, are in the same bed as the regulatees?

25. Thus, Singapore is one of the most INefficient societies on earth, since 60% of the economy are made up of govt monopolies, all helmed by the same PAP members who cannot be sacked or even sidelined [there is also no Competition among CEOs, etc]. This LEEism also extends to political competition. LIE KY and his crony Ministers are forever spouting that the political arena be orderly and non-critical, that if politics in Singapore becomes 'competitive', gridlock will result and govt thereby becomes 'inefficient', meaning that govt finds it harder to do anything it likes; that with competition, govt becomes distracted and drawn into competition thereby resulting in govt 'inefficiency', that Singapore is too small to allow Competition, whether in politics or the economy. Thus, this self-serving argument and Big Lie for a one-party state without any political competition, is a key political goal and LEEism. Famously, even the medias in Singapore are drawn into essentially one single govt group, so that everybody can sing the same praising hymns of LIE KY and his 'greatness'.

26. Thus, Efficiency is an End Result, NOT a Process. Meaning that if you start with lots of Competition, you end up with extremely Efficient entities, whereas without Competition, especially in politics, EVERYBODY UNDERPERFORMS, resulting in far more INefficiency than with Competition. Losses and bankruptcies from Competition are easy to see but inefficiencies from Underperformance, from CEO down to cleaner, is not easy to see. This is the Paradox of Efficiency. You read it first, here.