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  • Effi­ci­en­cy kills


    Konrad Wakolbinger

    US economist William J. Baumol found out why the efficiency principle is killing the service sector - and ultimately contributing to the COVID-19 mortality rate.

    In the midst of the COVID-19 pandemic, our collec­ti­ve hopes and fears are pinned on the effi­ci­en­cy of our health care system. The fact that cri­ti­cal­ly ill relatives would be denied treatment because of over-capacity strikes terror in each and every one of us.

    In the report “Die Kran­ken­fa­brik” (The Hospital Factory) broad­cas­ted by ARD in 2014, one can already witness an unnamed hospital in Germany at the limit of its capacity. As impres­si­ve­ly exposed there, the cracks were beginning to show. The reason for this is obvious: the incre­a­sing eco­no­mi­sa­ti­on of services for the common good that has been going on for decades. In accordance with business manage­ment dogma, the rapidly rising costs in this area are countered with savings pro­gram­mes that are “sold” as measures to increase effi­ci­en­cy. However, William Baumol’s theory, titled Baumol’s Cost Disease, reveals that the apo­lo­gists of opti­mi­sa­ti­on and effi­ci­en­cy have sorely missed the crucial dif­fe­rence between commodity pro­duc­tion and services.

    Increase in effi­ci­en­cy in the pro­duc­tion of goods is achieved through technical inno­va­ti­on. More goods can thus be produced at the same (or in less) time. Often, less people are also needed to produce them, which further reduces costs. This mechanism is only effective to a limited extent in the provision of services, because it is not machines but people who provide the bulk of the service. Although a hair­dresser, a nurse or a mechanic works according to a different principle, the logic of commodity pro­duc­tion still applies to them. The result is work inten­si­fi­ca­ti­on, fewer staff, falling wages and, crucially, if a certain point is passed, a defective “product” for the service recipient.

    William Baumol who died in 2017 coined a poignant image for this. He asks us, how can you make a string quartet or a symphony orchestra more efficient? Well, by per­forming with fewer musicians, or the musicians play faster. Iro­ni­cal­ly, in Austria we have been doing the real expe­ri­ment on this for two years. In the eternally cash-strapped Austrian Armed Forces, the military bands were cut in half. In this case, the audience was only tortured by an amputated Radetzky march, but in the health sector, the “error” pointed out by William Baumol reaches a gravely exis­ten­ti­al dimension.

     

     

    Die Krankenfabrik – Patienten in Not, Schwestern am Limit Regie: Sylvia Nagel, Thomas Reutter Reportage ARD 2014 

    Cost Disease and Emergency Medizine 

    Simon Bolivar Youth Orchestra @ Oslo

    Tags

    Effi­ci­en­cy kills

    Konrad Wakolbinger

    US economist William J. Baumol found out why the efficiency principle is killing the service sector - and ultimately contributing to the COVID-19 mortality rate.

    In the midst of the COVID-19 pandemic, our collec­ti­ve hopes and fears are pinned on the effi­ci­en­cy of our health care system. The fact that cri­ti­cal­ly ill relatives would be denied treatment because of over-capacity strikes terror in each and every one of us.

    In the report “Die Kran­ken­fa­brik” (The Hospital Factory) broad­cas­ted by ARD in 2014, one can already witness an unnamed hospital in Germany at the limit of its capacity. As impres­si­ve­ly exposed there, the cracks were beginning to show. The reason for this is obvious: the incre­a­sing eco­no­mi­sa­ti­on of services for the common good that has been going on for decades. In accordance with business manage­ment dogma, the rapidly rising costs in this area are countered with savings pro­gram­mes that are “sold” as measures to increase effi­ci­en­cy. However, William Baumol’s theory, titled Baumol’s Cost Disease, reveals that the apo­lo­gists of opti­mi­sa­ti­on and effi­ci­en­cy have sorely missed the crucial dif­fe­rence between commodity pro­duc­tion and services.

    Increase in effi­ci­en­cy in the pro­duc­tion of goods is achieved through technical inno­va­ti­on. More goods can thus be produced at the same (or in less) time. Often, less people are also needed to produce them, which further reduces costs. This mechanism is only effective to a limited extent in the provision of services, because it is not machines but people who provide the bulk of the service. Although a hair­dresser, a nurse or a mechanic works according to a different principle, the logic of commodity pro­duc­tion still applies to them. The result is work inten­si­fi­ca­ti­on, fewer staff, falling wages and, crucially, if a certain point is passed, a defective “product” for the service recipient.

    William Baumol who died in 2017 coined a poignant image for this. He asks us, how can you make a string quartet or a symphony orchestra more efficient? Well, by per­forming with fewer musicians, or the musicians play faster. Iro­ni­cal­ly, in Austria we have been doing the real expe­ri­ment on this for two years. In the eternally cash-strapped Austrian Armed Forces, the military bands were cut in half. In this case, the audience was only tortured by an amputated Radetzky march, but in the health sector, the “error” pointed out by William Baumol reaches a gravely exis­ten­ti­al dimension.

     

     

    Die Krankenfabrik – Patienten in Not, Schwestern am Limit Regie: Sylvia Nagel, Thomas Reutter Reportage ARD 2014

    Cost Disease and Emergency Medizine

    Simon Bolivar Youth Orchestra @ Oslo

    Tags


    The unsung sing

    The unsung sing

    In the second part of his trilogy about people in unsung professions, "Secondo Me" (2016), Pavel Cuzuioc accompanies three cloakroom attendants at three European opera houses and welcomes the everyday to stage.

    Comparative work studies with the camera: Darcy Lange

    Com­pa­ra­ti­ve work studies with the camera: Darcy Lange

    With his camera, the artist Darcy Lange provided important scientific material on work and education, which still begs to be analysed in social and educational research.

    Forced labour even after death

    Forced labour even after death

    A capitalism-critical reading of the zombie film on the occasion of the release of Zombi Child (2019) by Bertrand Bonello.

    The bossy Apps

    The bossy Apps

    What remains of the great promise of the gig economy: freedom through autonomy.

    Society without connection

    Society without connection

    The new film "Please hold the line" (2020) by Pavel Cuzuioc loosely follows the work of service technicians in the telecommunications industry in the far east of Europe while actually portraying their customers more. Those who are in danger of losing their connection to society.

    Forklift-Conflicts

    Forklift-Conflicts

    In the Aisles (2018) by Thomas Stuber is the ultimate warehouse-worker feature film. There has never been so much 'workplace' featured in a movie, set in a wholesale market, with so much insight into learning the ropes of an unskilled job. On top of that, romance.

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    About this blog

    By selecting a film or an image, this blog literally illus­tra­tes the vast sphere of work, employ­ment & education in an open collec­tion of academic, artistic and also anecdotal findings.

    About us

    Konrad Wakol­bin­ger makes docu­men­ta­ry films about work and life. Jörg Mar­ko­witsch does research on education and work. They are both based in Vienna. Infor­ma­ti­on on guest authors can be found in their cor­re­spon­ding articles.

    More about

    Inte­res­ted in more? Find recom­men­da­ti­ons on relevant festivals, film collec­tions and lite­ra­tu­re here.

    About this blog

    With picking a film or an image, this blog literally illus­tra­tes the vast sphere of work, employ­ment & education in an open collec­tion of academic, artistic and also anecdotal findings.

    About us

    Konrad Wakol­bin­ger makes docu­men­ta­ry films about work and life. Jörg Mar­ko­witsch does research on education and work. We both work in Vienna. Infor­ma­ti­on on guest authors can be found in their respec­ti­ve articles.

    More about

    Inte­res­ted in more? Find recom­men­da­ti­ons on relevant festivals, film collec­tions and lite­ra­tu­re here.