Elimination Of Waste And Improvement Of Efficiency. What Are The Economic Fundamentals?'

THE main objective of everybody, individually and collectively as the people of nations, is to earn their living and improve the scale thereof as much and as rapidly as possible. We are able to earn" our living only by working and producing. We I are able to rise to higher standards of comfort only by increasing our production of goods, or diminishing the waste of those that we do produce, or both. This statement is trite. It is equally trite to dwell upon the importance of increased production to be derived from increased efficiency of labor and improved manage-ment; and the good results that would accrue to every-body if employers and employees would work together to secure the maximum of production at the minimum of cost. All of this is nothing more than platitude, to which every intelligent person subscribes in the abstract; but what concerns us especially, and what is neither so easy nor so understandable, is to translate the expres-sion of the abstract principle into formulas for action. The national net income obviously may be increased in two ways, or by both together. One is to diminish the waste of the goods that we already have made available. The other is to increase the supply of goods. .Increasing the supply of goods may involve the elimina-tion of waste, but a distinction is to be drawn between the waste of things that we have and the failure to obtain those that we might have. If we limit the term "waste" to the careless and profligate use of the materials that have come into our possession, together with the absorption of labor in doing obviously unnecessary things; and if we character-ize by the term "inefficiency" the failure to accomplish in our industrial operations the best of which we are capable, we shall create a distinction that will be pro-motive of clear thinking. In this paper I am going to deal with inefficiency, not waste, observing the distinc-tion, arbitrary if you please, that I have made. Without any doubt the greatest inefficiency that exists in our economic affairs is that which causes hundreds of thousands, perhaps millions, of men to be idle a good deal of the time. The major reasons for such idleness are two-fold. One of them is the conse-quence of what for convenience may be called business cycles, although I do not hold to the hypothesis of business cycles as it is now being rather widely expounded. That hypothesis involves the idea of rhyth-mic undulations due to causes unknown, but which it is hoped may be ascertained. The movement of busi-ness in waves up and down is undeniable, but that there are recurrences of cycles every so often is purely imag-inary, I think. It is unnecessary-to digress into that subject. The extents of the rises and falls above and below a median line undoubtedly is less than is commonly supposed.