The truth about efficiency

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The writer is a biomedical systems engineer and author of ‘Wicked Problems: How to Engineer a Better World’

The difference between medicine and poison lies in the dose. This truth speaks directly to government reform. As Washington prepares to launch an efficiency crusade, we must remember that efficiency, wrongly dosed, can sicken the very system it means to improve.

This principle extends beyond metaphor. Just as our bodies maintain seemingly inefficient back-up systems (like two kidneys), and financial systems keep seemingly inefficient capital reserves, governments need built-in redundancies and safety margins to function effectively during crises.

But widespread worship of efficiency has now created the unfortunate tendency to prioritise it over efficacy at all costs.

The forgotten French engineer Jules Dupuit understood this problem. In the early 1800s, before the term “scientist” existed, engineers were the high priests of social arithmetic. As Paris’s chief engineer in 1850, he faced a practical issue: how could public projects be efficient while maximising social benefits?

His answer came not through cost-cutting but by understanding how people valued and used the services. Whether maintaining roads or setting water prices, Dupuit recognised that efficiency in public systems had to balance market incentives with fairness and technical requirements with social needs. Like the dramatic pauses in Beethoven’s Fifth Symphony, what appears inefficient on paper — variable tolling, excess capacity, multiple transit modes — might be precisely what gives public systems their natural rhythm.

Dupuit’s engineering mindset helped him see that these apparent inefficiencies weren’t flaws but features. They helped people make trade-offs between time and money when choosing which bridge to cross, for example.

Society seeks efficiency, often without a deep knowledge of what it is. Efficiency performs endless mutations — now time, now money, now speed, now productivity, now lay-offs, now accountability, now market share, now GDP.

Systems engineers apply a practical framework: a concept of operations. Because even small failures can doom a rocket launch, they ask key questions such as: How would the system work? What functions could it responsibly fulfil? This critical operational perspective can help us think beyond efficiency, and consider other integral attributes — vulnerability, safety, maintenance and resilience — that give a complex system, including government, its true capability and vitality.

The paradox of efficiency is that it cannot exist without inefficiency. Those apparent redundancies and slack in the system aren’t waste; they make efficient operation possible in the first place.

Consider three recent catastrophes born of ignoring this principle. The “efficient” distribution of risk across financial markets helped to trigger the 2008 global meltdown by sacrificing basic system safety for short-term gains. Before the 2014 Ebola outbreak, “efficient” cost-benefit analyses suggested no rush for vaccine development, leaving us vulnerable to catastrophic risk. And during Covid-19, supply chains optimised for cost-efficiency cracked and crumbled, failing to flex with surging demands.

Systems engineers have long recognised what nature demonstrates through our immune systems: efficiency alone cannot sustain complex operations. Every robust system involves careful trade-offs — sometimes running below peak efficiency to maintain safety margins, sometimes maintaining redundant capacity to handle uncertain threats and sometimes prioritising maintenance over short-term performance.

Applying this engineering insight to government reform reveals a crucial truth: what look like inefficiencies are often essential features of a resilient democratic system. Fast efficiency is false efficiency. We need enough to eliminate genuine waste, but not so much that we compromise the other key parameters that make government work, in good times and bad. 

Like any double agent, we must handle efficiency with vigilance, embracing its benefits while guarding against its betrayal.

Success requires prudence — knowing not just how to be efficient but when to let efficiency yield to other parameters of good governance. When we privilege efficiency above all else, we create brittle systems prone to catastrophic failure. Let’s ensure our government reforms reflect — and remember — this prime principle: efficiency is a tool, not a totem.