When discussing markets, “efficiency” is a trick word. In everyday use or in disciplines like engineering, efficiency has a positive meaning, typically implying wise allocation of resources. But in economics the word is what translators call a “false friend,” a term you think you recognize but which others aren’t using in a way that matches your definition. Markets are frequently said to be “efficient” when they are in fact wasteful, chaotic, unethical, and harmful to the people they’re supposed to serve — as long as they swiftly deliver profit to the top.
Thankfully, the mix-up is becoming more visible to some influential economy watchers. In her book Homecoming: The Path to Prosperity in a Post-Global World, journalist Rana Foroohar hopes that “Panglossian ideas about the efficiency of unregulated markets will begin to fade.” She observes that industrial agriculture has an almost universal reputation for being efficient, when in fact its so-called efficiency “has come at great cost to everything, from our health to our food security to working conditions . . . not to mention the treatment of animals, and of course the disastrous consequences of it all for our environment.” What passes for efficiency often comes at the expense of resilience, Foroohar writes, and as a result severe system-wide fragilities have been introduced into the global economy, which guarantee supply-chain issues whenever there’s a disruption like war or a pandemic.
Foroohar is not alone in her...
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