economies of scale

If we take it as a given that many of our societal ills are due to overextension of various institutions (e.g. "big" government, "big" business, etc), the obvious conclusion is that it's a result of various forms of subsidization causing an artificial inflation of the natural economies of scale. Businesses, governments, et al become artificially inflated by externalizing costs in ways that are absorbed or accumulate in other areas. Put more simply: they get bigger than they "should" be in a "naturally" competitive capitalist economy (whatever that hypothetical beast might be). This seems to be accepted by a lot of "progressive" (anti-status-quo) types: particularly by libertarians/anarchists, obviously, but I think even many left-leaning liberals, as well. The former tend to focus on big government, whereas the latter tend to focus on big business; but "big" is the unifying negative attribute.

But it seems that the backlash found in a lot of those outlooks sometimes has swung too far the other direction. That is, it has culminated in the operating assumption that everything is better if it's small, local, or exceedingly individualistic. It's important not to forget that economies of scale really are a valuable thing. People do really work better in groups; specialization is a good thing for efficiency, and quality of life does go up when we work together. You know, our entire civilization is sorta based on that fact.

I think this occurred to me when I was attending a meeting last week about urban gardening. The emphasis in the CSA/local agriculture movement seems to be focused tightly on locality as a measure of negative or positive impact -- that is: the more local, the better. This isn't always strictly true. Granted, our food distribution system is really messed up in a lot of ways, but that doesn't preclude the possibility that sometimes, in the right economic conditions, it might make more sense (that is: be better for the environment, people and economy) to ship a truckload of oranges from Florida than to grow them here. Similarly, the idea that growing a self-sufficient garden on your personal property in the nooks and crannies of your urban yard may be pretty cool, but it's probably actually not all that efficient. A community garden is probably a much better idea and use of time and resources (environmental and economic).

  • Blake

    Interesting observations. But I’d like to add a couple of thoughts…

    The former tend to focus on big government, whereas the latter tend to focus on big business; but “big” is the unifying negative attribute.

    Except that big government can take away your rights more so than big business.

    it has culminated in the operating assumption that everything is better if it’s small, local, or exceedingly individualistic.

    From a governmental standpoint, I think different rules apply. An overgrown, centralized government (or just a centralized government that is too strong) tends to become less in tune with the people or states they are governing over. Even with the “new media,” we still have a central government that is completely out of touch. Having a more localized government (at least down to a state level) is better because they don’t get as far from the people, and it’s easier to make your voice heard. If the centralized government takes away that power, then the voices become fainter. Because we were founded as a Constitutional Republic, it is important to keep the balance and not let it tilt toward a stronger centralized power. Unfortunately, we are already there, and there may not be any going back. So, what you are seeing is a backlash of the final realization of this on a large scale.

    the idea that growing a self-sufficient garden on your personal property in the nooks and crannies of your urban yard may be pretty cool, but it’s probably actually not all that efficient.

    Except that some people may be doing it as a hobby because they enjoy it and not as a creation of a “localized” or “individualistic” outlet. I started mine because I grew up having a garden with my family, and I wanted to get back to “my roots” if you will. Unfortunately, everyone else started doing it at the same time, so now I get thrown in as being a part of some type of “movement.” Lovely.

  • http://jaxn.org Jackson Miller

    Great post!

    In theory, size doesn’t matter. A market inefficiency is the same thing as a market opportunity. If there is a way to do it more efficient someone should see and take advantage of that imbalance and create value (thus making money). The problem is when big equals authoritative power. That is why we have anti-monopoly laws. Of course, that doesn’t take into account lobbying, which left unchecked equates money to power allowing big companies to defend inefficient market positions. The same is true when the government competes with private enterprise.

    Something else is going on too though and that is marketing “authenticity”. Here are two great TED talks along that line:
    http://www.ted.com/index.php/talks/malcolm_gladwell_on_spaghetti_sauce.html
    http://www.ted.com/index.php/talks/joseph_pine_on_what_consumers_want.html

    So yeah, local foods are inefficient but they are “authentic”.

  • Ashley

    Have you heard of the book about the $64 tomato? Apparently that’s what one guy figured it cost him to grow each tomato in his backyard garden. You’re welcome for helping you prove your point. http://www.64dollartomato.com/

    Alternatively, I’ve been reading this book about the other end of the spectrum. (http://www.fatalharvest.org/) It’s pretty activist in its tone and makes some claims that I would like to investigate further but is still interesting.

    As usual, I’m left wondering where the appropriate middle ground lies.