4 ms·
Maximally efficient is minimally robust.
by bsder 4y ago
Maximally efficient is minimally robust.
- Tagbert 4y agoThis also applies to supply chains and economies in the whole.
- bsder 4y agoAnd biology and ...
- 1bent 4y agoIndeed, when I saw the headline, I thought this was going to be commenting on the various supply chain crashes triggered by the pandemic's sudden changes, after decades of cleverly squeezing slack out of shipping, ports, warehouses, and logistics coordination.
- closeparen 4y agoCatastrophic failure is pretty bad for efficiency. Over any serious time horizon, being maximally efficient means finding the optimal level of robustness, given the likelihoods and consequences of possible failures and the costs involved in preventing or mitigating them.
- bumby 4y agoThe problem is the incentives of the decision makers often don’t align with that time horizon. Consider a CEO who is rewarded by quarterly outcomes rather than how healthy the company will be in two or three decades. Or a politician who proposes a short-term policy that looks like a short term win but will undermine constituents after they are long out of office.
- bsder 4y ago> Catastrophic failure is pretty bad for efficiency. For the system, but not necessarily for any individual actors in that system. There is no inherent force that automatically keeps those incentive aligned. Everybody knows that the supply chains are brittle. Covid, earthquakes, war, etc. all can disrupt them. Yet, do you see anybody holding inventory? Do you see any diversification occurring (very minimally--and mostly to shift from cheap Chinese labor to cheaper Vietnamese/Indonesian labor)? Do you see anybody buying personal protective equipment domestically in the US (nope, everybody went back to buying cheap Chinese crap)?