What is waste?

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We are hearing a lot about cutting waste in the public sector and reducing the welfare bill by getting people back to work. These are on the face of it laudable goals. But we need to look a bit more deeply at what is waste in the public or private sector and how do you identify it. Economists don't always help here as in market economics, an activity that does not make money is automatically wasteful. This does not help you determine what should be cut in the public sector as almost none of it is profit making. So there is a market value - and then there is social value, the value that society assigns to an activity. Education, health, policing, defence, welfare, pensions, all these are expensive. They are paid for by taxpayers. But are they wasteful? I have never worked in the public sector but I have heard many horror stories about non-jobs and mad procurements that must to some extent be true. What I find strange is that little is made of waste in the private sector. I work in it and I know there is plenty of waste, both in economic activity - what people do or don't do - and in production of unused materials. Marketing is arguably the most wasteful of activities, since its focus is on convincing people to buy something regardless of merit or usefulness, rather than providing useful information on what is available at what cost (although market participants also do this).

We have just been through the worst ever banking crisis that, thanks to dodgy deals and blind speculation, cost taxpayers some trillions and nearly wrecked the economy. This is a big market failure. The market wastes resources all the time - in fact the market requires waste. If you did not throw out clothes and gadgets, you would not buy new ones. Food rots and is thrown out. No kind of socialism can ever have achieved the level of systemic waste of capitalism. Socialism as practised often left people in poverty and lacking access to basic goods. Sometimes they starved. This was a problem of production and distribution.
Capitalism produces vast quantities of goods for the market but it does not automatically go to those who need it most. As long as buyers can be found, no matter how silly or quickly obsolete the product, it will be produced for profit. If not, it will be just so much more landfill, even if there are people crying out for the thing being binned.
But we need to look beyond the consumer end of the market to what people do. Capitalism's greatest gift to mankind even more than wealth and access to lots of consumer goods, is labour-saving technology. A few centuries ago, the majority of people were engaged in agriculture in order to feed themselves and others. Today a mere fraction of the workforce can feed the other 99%. This is something of a miracle. The same thing has happened in industry. Most of our basic needs can be met by a fraction of the workforce.
This leads to the next question - how many people does it take to keep a country housed, clothed, fed, educated and kept warm? If the answer to this is just 20% of the working age population, the question is what do we do with everyone else.
We already know that eight million working age adults don't work, compared to 29 million who do. Another few million are in education, which we mostly think of as a good thing. But how many of 29 million working are doing something that we could not do without? This may be impossible to answer. Or we could just ask them.
I seriously wonder what the reply would be. What would happen if you asked people 'Is your job useful to (1) you (2) your employer (3) society? By answering these questions, or some version of them, we might begin to get a sense of how useful all this work is, and how much of this activity is in fact a waste of time and effort. Of course this question only partly relates to the monetary value of any individual's work, which is the point. The immediate money value of a job is not very illuminating. It depends what the outcome of the activity is and who pays for it, as much as what it is 'worth' financially to the employee or the employer.
Of course people work for money, but mostly not only. They also work for status, for the value of their work to them and others, for something to do, and for the people they work with. There may be other reasons. If we only measure the money value, we don't really know the true value. This goes back to the point that people are not merely economic beings, as economics and most of our politics assume. People are not merely consumers or workers. I am what I do, but it depends what I do and how I value it.
These questions should be asked. Then we might know which jobs to cut. Which is worse - working in a pointless job, or being paid to do something else with your time? What would you do if you could be paid a basic wage to do anything you wanted? I know I could make myself busy. I might of course just waste my time....