Neglecting the Disbenefits of our Actions
All actions have benefits and disbenefits. Benefits are mostly associated with the problem to hand, but disbenefits can be in an entirely unrelated area. When proposing an action, it is sensible to assess the disbenefits and only proceed if they can be satisfactorily mitigated.
Nevertheless, in practice, we tend to have an optimism bias that causes us to neglect disbenefits. Once a beneficial action is identified we will repeat it time and time again in expectation of the same outcome. Not only will we repeat beneficial actions that we have taken ourselves, but we will also copy those of others. A positive feedback loop develops in which apparently beneficial actions become the cultural norm.
An article by Donald Sull, in the Harvard Business Review (Sull, 1999) describes, for example, how business processes harden into routines. However, this problem applies not only to businesses but to organisations of all types and scale, including nations and groups of nations, such as “the West”. The article states that “When a company decides to do something new, employees usually try several different ways of carrying out the activity. But once they have found a way that works particularly well, they have strong incentives to lock into the chosen process and stop searching for alternatives. Fixing on a single process frees people’s time and energy for other tasks. It leads to increased productivity, as employees gain experience performing the process. And it also provides the operational predictability necessary to coordinate the activities of a complex organization. … established processes often take on a life of their own. They cease to be means to an end and become ends in themselves. People follow the processes not because they’re effective or efficient but because they’re well known and comfortable. They are simply ‘the way things are done.’ Once a process becomes a routine, it prevents employees from considering new ways of working. Alternative processes never get considered, much less tried.”.
Extreme Super-optimal Behaviour
Super-optimal behaviour means doing something more often or intensively than is most efficient. If any action is performed many times, there is usually an optimum at which the net benefit, that is, the total of the benefits minus the total of the disbenefits, is maximized. Below this optimum, not all the potential net benefit is gained. Above it, the disbenefits grow and progressively reduce the net benefit.
One example is functional differentiation, whose benefit is increasing efficiency. Its disbenefits are: an increasing need for administration; an increasing need for communication; and increasingly boring repetitive tasks. Outsourcing in industry is a practical example of functional differentiation, which, when taken to its logical conclusion, would result in everyone outsourcing their entire function and doing nothing apart from administering the process.
Another example is centralization. Centralised customer call centres work well when the customers’ concerns are relatively simple and frequently recurring. No specialist expertise by call handlers is needed. However, when customers’ concerns are complex, diverse, and recur infrequently, then specialist expertise is needed. The customer can become frustrated when he or she does not receive it. This example suggests that there is an optimum to be found between centralisation and specialization, to either side of which an organisation functions less efficiently than it might.
Uncontrolled Feedback
Super-optimal behaviour is a particular problem when there is a threshold at which the disbenefits become part of a positive feedback loop or vicious circle. An example is climate change, in which the melting of glaciers and polar ice is accelerating global warming. In the social environment, feedback loops can occur in which disbenefits are copied and become culturally entrenched norms. This can lead to the failure of a nation. Such feedback can be complex, however, and is best demonstrated by an example.
Example of neglected disbenefits subject to uncontrolled feedback
This example describes the effect of consumer economics on the birth rate in Europe. Clearly, womens’ education, empowerment, and the availability of contraception have had an impact on the birth rate, causing it to fall.
However, I would argue that consumer economics has also had a very significant but less obvious effect. The need for economic growth has led to ever increasing production and consumption. Rightly or wrongly, to increase production, women have been encouraged to join the workforce. In general, however, they are poorly supported in their parental role by employers. (The Fawcett Society, 2023). To increase consumption, we have all been encouraged, via advertising, to express our individuality through the products we consume. We work more and consume more.
Added to this, the competitive nature of business means that there is a need to drive down costs. This, in turn, has led to a form of economic brinkmanship in which poverty levels due to low pay have increased.
Finally, the cost, time, and effort involved in raising children is steadily increasing, and this is in no small part due to advertising and the expansion of consumer economics into that area of life.
Interestingly, although procreation is an evolutionary imperative, it is not listed by Maslow’s or the ERG model as an existence need. Rather, reproduction seems to satisfy a relatedness need, which has a lower priority than, for example, the needs for sustenance and shelter. Furthermore, it is vying with other relatedness satisfiers such as friends and pets.
These factors have led to a situation in which fewer people are having children. The cost and time needed to raise them is now too great for many. It is, therefore, becoming a cultural norm to have two, one, or even no children. However, rather than recognise the above causes, couples frequently describe their decision not to have children as a lifestyle choice. Again, this is probably due to advertising.
Demographers cite a fertility rate, i.e., the average number of children born to every woman, as being 2.1 for a stable population. If the number is less than this, a population declines and ages; if it is greater, it grows and becomes younger. The fertility rate in the United Kingdom is currently (2023) about 1.6, in Germany about 1.5, and in Italy about 1.3.
Therefore, a demographic crisis is emerging in which the active workforce is becoming unable to support elderly retired people and those unable to work. Furthermore, unless a declining workforce is replaced by automation or immigration, this will cause a similar decline in the consumer economy. Taken to its logical conclusion we may end up with automated factories producing goods for people who do not exist.
There is evidence that progressive social policies increase the fertility rate. For example, in the mid-1990s Germany had a rate of 1.3. It then improved access to nurseries, extended school hours and parental leave and this is thought to have resulted in the rise to 1.5.
Nevertheless, fertility rates remain below the threshold of 2.1 and the declining and aging population will inevitably have an impact on the economic growth that the consumer economy has brought about to date. Without change, nations that rely on a consumer economy will therefore, ultimately fail.
References
The Fawcett Society, 2023. “Paths to Parenthood: Uplifting New Mothers at Work”. https://www.fawcettsociety.org.uk/Handlers/Download.ashx?IDMF=d73d0c92-19af-479c-a206-0807ec008bf1
Sull, D. 1999. “Why Good Companies Go Bad”. Harvard Business Review, 1999. https://hbr.org/1999/07/why-good-companies-go-bad
Further Reading
https://www.theguardian.com/world/2023/oct/07/italy-births-far-right-demographic-winter
Rational-Understanding.com 