Here is the truth about efficiency. We all know that efficiency is good, but like most things that are good, there are bad sides too. This blog is about some of the bad sides.
First, a little story. Consider that you are a farm worker who owns a mule you hire out too farmers to plow their land. You have been doing this for years and using your earnings to care for your family. One day another a guy down the road buys a tractor and competes with you charging half the price that you were charging. This means that now your labor is worth 50% of what it was. You just got a cut in pay of 50%. Follow that?
Here is what happened. The farmer now makes more money because he only has to pay half as much to get his land plowed. Is that clear? It is a fact that efficiency tends to make the economic pie larger. The farmer can now plow land that was uneconomical to plow before. This means he can grow more and sell more. Look at the down side. The farmer now makes more and the farm worker with the mule makes less. This is the basic mechanics that has caused the difference between those on the top and those on the bottom to keep getting bigger.
What is the solution? The guy with the mule has to figure out how he can make himself more valuable! If the farmer or a company made the worker more efficient, the company gets the benefit, not the worker. That is the way it works and that is the right way. I used to work on the basis of "piece work". That is where you were paid by what you produce. If you figured out how to produce more, you got the benefit. If the farmer came up with how to produce more by purchasing a tractor, it was the farmer who got the benefit. It may even be that the farm worker got paid less to drive the tractor than driving a mule because the work was easier. That seems fair to me. If you are understanding the simple logic of the above, you will see that if the worker wants to be paid more, then the worker needs to figure out how to make themselves worth more. Simple!!!!
Given the state of the world's economy, the only way that a worker can make themselves more valuable is by increasing their "skill". The more scarce that skill, the more valuable it tends to be. Learning how do drive a car or truck is a very easy and common a skill to gain and as a result is not very valuable. Advanced technical skills are more difficult to develop and thus are more valuable. Isn't this simple to understand? If you are in the worker group, education and gaining special skills is about all you can do to get ahead. If you stand still, you will actually go down and that is what many of us have done. You can't do what your parents did and expect the quality of life that you had as a kid. That is a fact of life, so get used to it. Efficiency makes the rich, richer and the poor, poorer while it makes the economic pie bigger. Hard to get your head around that isn't it?
PS---I think that it has been a big mistake to have gotten away from "piece work". With "piece work" the worker was incentivized to participate in finding ways to produce more "pieces". In a company of 250 people, you would have 249 workers trying to figure out how to produce more, but with work paid for on the basis of "time" you only have the one, the boss. I think that in China, most of their work is based on "piece work". If that is the case, we don't have a chance against them using our "time' based system.
