Thursday, February 20, 2014

How increased labour efficiency drives resource consumption

If we compare efficiency on various systems, e.g. in farming or food processing, it will in most cases show that the bigger and more technological advanced system is more efficient. Larger crop farms perform better financially, on average, than smaller farms. The larger farms don’t have higher revenue or yields per acre, but they simply have lower costs. As expressed by the report (Farm Size and the Organization of U.S. Crop Farming) from USDA: “larger farms appear to be able to realize more production per unit of labor and capital. These financial advantages have persisted over time, which suggests that shifts of production to larger crop farms will likely continue in the future.” Their yield per acres is mostly the same as on smaller farms but the research shows that farms with more than 2,000 acres spend 2.7 hours of work per acre of corn and have cost for equipment of $432, while a farmer with 100-249 acres will spend more than four times as much labor and double the amount for equipment per acre. In that sense the larger farms are more “efficient” or “productive”

The same goes for a farmer who drives his pickup to the farmer market compared to the lorries supplying the supermarkets; she will use more fuel and more machine capital per kg of goods. And embedded in the machine capital are many other resources, metals, more energy and other peoples’ work. But despite all this efficiency our society neither reduce the number of hours worked nor the resources used, not in total and not per capita. This is not even the case for societies that have moved towards more services, as agriculture and manufacturing declines. How come? 

Try this discussion: If we compare the resource use of big, highly mechanized farmer with a small scale farmer, we have ascertained that per kg harvested yield, the labor efficiency of the bigger farm is higher. This is also the case for use of most other resources for area unit. But what happens if we look at resource use per labor-hour? Then it is clear that the big farmer in his 400 hp tractor use an awful lot more resources than the farmer with a small tractor, or oxen, not to speak about the half a billion farmers still working with their own labor as the main resource. The same goes for the driver of the delivery truck to Walmart, he uses a lot more resources per hour than the farmer loading her pickup to drive to the market. 

Now, you could say that nature doesn’t care about this discussion, if we are efficient per hour, per kg or per acre; nature only cares about the absolute use of resources or the total emissions. That is correct. But almost all people have a job of some kind, and in each job the same logic applies, i.e. that the more efficient each person is, he or she uses less resources per produced unit but more resources per hour of labor[1]. The total resource use in society is thus bound to increase despite of, or perhaps because of, increased labor efficiency. After all, as long as we all continue to work so much, our total resource use is determined by how much resources we use at work and how much we use as consumers together. 

This is a summary of a longer article I published a while ago, and which I now revised. Read the full article here: Jevons paradox - why efficiency is a liar word 

[1] It is likely that there are some exceptions to this, but I believe that they are just that, exceptions.

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