Efficiency Is Biting Back

Decades of streamlining everything made the U.S. more vulnerable.

An illustration of a hospital bed with drawings on top.
Getty / The Atlantic

The global quarantine, an optimist might argue, is pushing us toward a more web-mediated world. Millions of people who had seldom, if ever, used videoconferencing before March are now doing their jobs without a long commute, taking classes without getting on a school bus, or consulting a doctor without first sitting in a waiting room full of sick people. These changes are, by some standards, a form of efficiency. Yet the pandemic has forced them on us even as their benefits have yet to be firmly established. Who can predict not just test scores but long-term outcomes of remote learning? And who can say whether a physician’s physical presence and touch are truly irrelevant to protecting a patient’s health?

If the coronavirus pandemic does ultimately make our lives more efficient, it will be ironic. For decades, even before Silicon Valley championed the “disruptive technologies” of the web, leaders in business and government alike have declared war on allegedly wasteful spending. Overlooked is the fact that too much zeal for lean operation has pitfalls of its own. In practice, the pursuit of efficiency has often resulted in the consolidation of smaller companies and facilities into larger ones; in greater congestion as more people are packed into smaller spaces, whether in office towers or aboard commercial airliners; and in the tight coupling of deliveries and other business processes in ways that, at least when all goes well, speed up production and reduce warehouse inventories. But consolidation, congestion, and tight coupling may also make our economy less efficient in the long run—and our society more vulnerable to outside shocks such as the coronavirus. Efficiency, in fact, can be hazardous to our well-being, and a strategic amount of inefficiency is crucial in keeping society healthy.

Consolidation has long been a feature of American economic life, and corporate mergers and acquisitions are routinely justified as saving money and creating other efficiencies. Unsurprisingly, mergers have reshaped even nonprofit health care, as formerly independent hospitals have joined into larger systems. Writing in The New York Times in February 2019, the health-care economist Austin Frakt disputed hospital chains’ claims that consolidation had lowered costs and improved health outcomes.

As costs of health care have escalated, doing more with less has become a universal goal. Over the past two decades, the state of New York pressed for the elimination of 20,000 hospital beds. The pursuit of efficiency in the state’s health system was a bipartisan effort, originating in a 2006 report from a commission convened by Republican Governor George Pataki and continued by his Democratic successors, including Andrew Cuomo. The commission urged an occupancy rate of 85 percent, up from an allegedly wasteful 65 percent in 2004. Many of the hospitals closed during this wave of consolidation served the most economically troubled neighborhoods of New York City—neighborhoods that, in March and April, were disproportionately struck by the pandemic. Once COVID-19 threatened to overwhelm the New York hospital system, Cuomo was pleading with Washington, D.C., for additional beds.

Fortunately, because of public compliance with social-distancing measures, the need for hospital beds has proved less dire than authorities feared. But New York’s experience illustrates the difficulty of adding useful hospital space from scratch at moments of crisis; the Navy hospital ship USNS Comfort, which came to New York’s assistance, was ill-equipped for treating coronavirus cases and was of little help in absorbing patients with other ailments. The ship is now slated to depart.

In theory, efforts to make American health systems more efficient could have made them nimbler. In New York, the expansion of preventive and primary care was supposed to accompany the closure of hospitals. But that did not occur in many poor areas. Meanwhile, cutbacks in hospitalization nationwide have simply pushed unwell people into other forms of care. “Nursing home facilities,” The New York Times reported earlier this month, “have borne the brunt of a structural shift: Hospitals, seeking to keep costs down, send more vulnerable patients into a growing industry of nursing homes.” About a fifth of COVID-19 fatalities in the United States, the Times noted, have been linked to nursing-home and long-term care facilities.

The pandemic also exposed weaknesses not just in the extension of human life but in the provision of food that sustains it—specifically in the giant slaughterhouses and meat-packing plants of rural America. According to a 2000 report from the U.S. Department of Agriculture, new technology in the previous 20 years had revolutionized meat processing, increasing production in fewer plants through economies of scale. This evolution, which benefited shareholders far more than workers, produced today’s highly consolidated industry. While the early-20th-century horrors depicted in Upton Sinclair’s novel The Jungle are gone, meat cutting remains one of the most hazardous jobs, with workers often crowded together. Viral infections can spread at small plants, but at larger ones they can strike far more people more quickly. While the risk to consumers may be relatively small, a single asymptomatic infected worker could transmit the virus from the community to hundreds of fellow workers, or vice versa. At a Smithfield Foods plant in Sioux Falls, South Dakota, more than 700 workers have tested positive for the coronavirus. That plant alone handles up to 5 percent of the entire nation’s pork production, and its shutdown forced the closure of other Smithfield plants that use raw materials from Sioux Falls. The closure of a single plant can devastate the meat supply and agriculture of an entire region. The Tyson Foods plant in Pasco, Washington, that closed on Thursday for COVID-19 testing processes 2,300 head of cattle a day, reportedly supplying enough beef to feed 4 million people. The Trump administration announced yesterday it would designate meat plants as essential infrastructure and require them to remain open. This short-term move will not reverse the trends that brought about the current problem.

Concentration of industries does not necessarily imply that the physical facilities they operate will be jam-packed with people. Yet organizations small and large—in manufacturing, in white-collar industries, and in the transportation world—have been methodically congesting more people in fewer square feet as a way of cutting costs. Until governments decreed social distancing, executives and investment analysts spent years praising tighter occupancy as rational and efficient. Grumbling away, passengers on commercial airlines chose cheaper fares over legroom. Seat pitches—the distances between rows on jets—have contracted. Empty middle seats have grown rare. From 2002 to 2018, occupancy on U.S. domestic flights grew from about 68 percent to 86 percent. While modern planes filter microbes and pollutants effectively from circulating cabin air, crowded flights increase opportunities for infection from the breath of nearby passengers. As far into the pandemic as April 23, the New York Post reported, an American Airlines flight from Miami to New York was almost full, with only half of the passengers wearing face coverings. (The airline has since announced measures to reduce density.)

Travelers can sometimes pay extra to mitigate overcrowding. Office workers, like meatpackers, generally cannot. The open-plan office is a paradise for microbes, not people. Mark Zuckerberg described Facebook’s planned new headquarters in 2012 as “the perfect engineering space: one giant room that fits thousands of people, all close enough to collaborate together.” Yet studies of Swedish open-plan offices from several years earlier had found that density correlated with more frequent sick leave. Repeated moves of seats and laptops allow viruses to linger for hours on surfaces; much-vaunted snack bars in common spaces may encourage more hand-to-mouth contact. Nonetheless, in a single year, 2018 to 2019, per capita office space declined by more than 14 percent, to 195.6 square feet, according to a report by the real-estate brokerage JLL cited by The Wall Street Journal. Reporting on Amazon’s office leases in Bellevue, Washington, near Seattle, the Puget Sound Business Journal noted last year that 150 square feet of office space per worker was the standard in the area, and that some technology companies provided as little as 100. The troubled co-working giant WeWork tried to present itself as a tech company, but perhaps a more significant innovation was this: “It jams more people into its spaces,” Bloomberg News reported last year, “than just about any other commercial landlord.” The company offers about 55 square feet per workstation on average, and one London branch offers only 44, Bloomberg calculated. (Other analysts have cited similar estimates.) So far, no cases of COVID-19 have been conclusively tied to office environments like these, but the danger of community spread is obvious.

A further consequence of the relentless drive for efficiency is what Charles Perrow, a sociologist of technological risk, has described as “tight coupling.” It happens when a system is so dependent on a series of linkages that the collapse of one of them can lead to a cascade of failure. This occurs most notoriously in conventional nuclear-power plants, but Perrow’s warning applies to other situations. Global networks of vendors, coordinated by the web and tapping overnight air-freight services, have long replaced the early-20th-century ideal of Henry Ford’s River Rouge, Michigan, plant, which united as much production as possible from raw materials on-site. From the now-forgotten Japanese productivity scare of the 1980s—during which many in the United States feared that the island nation’s hyperefficient manufacturing industries would crush our economy—American business learned just-in-time production, reducing inventories and storage costs. But in the absence of excess capacity, even around-the-clock operation has not produced enough masks and disinfecting wipes for health-care workers, let alone average citizens. Efficient in normal conditions, just-in-time techniques have been disastrous in the global fight against COVID-19, pitting nations—and even U.S. states—against one another.

The pain, grief, and economic ruin brought by the pandemic should teach us that efficiency—though still a worthy goal—must be tempered by what can only be called “strategic inefficiency.” We must make room for an optimum amount of waste. Strategic inefficiency does not mean simply going back to old ways. It does mean recognizing and paying for redundancy and flexibility—larger stocks of essential materials, spaces designed to be reconfigured as hospital rooms, just as the SS United States was designed to be readily converted to a troop ship in wartime. Likewise, calculations about the minimum square footage that office workers need will have to take into account the threat of contagion. We have all seen signs warning about occupancy levels that are “dangerous and unlawful.” We need to rethink office plans and co-working spaces; higher rents can be less expensive than insurance bills and sick days. We also need to look more skeptically at industry trends that may make society more vulnerable by concentrating production in a small number of giant plants.

But I fear that the many economic and social upheavals caused by the pandemic will lead not to greater caution, but to a redoubled search for efficiency through the same old methods of consolidation, congestion (at least once the urgency of social distancing fades), and tight coupling—along with more recent trends such as distance learning, telecommuting, and telemedicine. These internet-driven ideas, at least, may prove to have considerable merits.

But one caveat is worth keeping in mind: Arrangements that initially appear beneficial may turn out to have hidden flaws that reveal themselves only slowly. Even when experts conscientiously vet a proposed intervention for unwanted side effects, they cannot always find them. The medical field offers a cautionary example: The screening of new medicines by the FDA is time-consuming and costly, and that process sets a world standard of rigor. Yet according to the Harvard Health Blog, a study of all drugs the agency approved from 2001 to 2010 revealed that the FDA had issued alerts, warnings, or even recalls for a third of them.

A technological wonder such as free teleconferencing can gain widespread adoption without undergoing any such scrutiny. During the pandemic, the drawbacks of life on Zoom have become obvious in real time. One might think that showing the facial expressions of all participants in a meeting at once would promote better communication. In fact, these videoconferences force everyone to work harder in processing nonverbal cues. “Our minds are together when our bodies feel we’re not,” Gianpiero Petriglieri, a professor at the business school INSEAD, told the BBC. “That dissonance, which causes people to have conflicting feelings, is exhausting. You cannot relax into the conversation naturally.” In other words, videoconferencing is less efficient than a regular meeting.

Even failed experiments can be good for efficiency in the long run—if society can learn from them. The basic lesson is that innovations should be correctable and even reversible with experience. But whichever paths we choose, we need to remember that the greater fragility of society is too high a price to pay to save a little money and time.