Overhead costs of society

November 27, 2009

Business has an interesting word: Overhead
As wikipedia says: The term overhead is usually used to group expenses that are necessary to the continued functioning of the business, but do not directly generate profits.

Society has overhead costs too. All the paperwork and financial issues – can we really not reduce that? Without going into any specific examples, I see lots of people moving digital money, or paperwork to each other.

On a very large scale, we’ve started to have companies that advise agencies that check on other offices and organizations that pump money around. None of them add any physical wealth to society. They don’t seem to provide a service either, because lots of people hate them and would rather see them gone. They are non-essential. Their only reason for existence is that the financial side of society – that part where money goes round and round – has become so complicated that nobody really understands it anymore. That, and profit. It seems that nowadays you can trade food and other physical stuff for “doing something that never produces anything”.

A clear example of how complicated things have become was the financial crisis. Not even the top economists really understood what the hell was going on. The world lost billions upon billions. The end was near. But most industries (not all) continued business as usual, or at least did not crash completely. It was (is?) mostly a non-physical crisis. And the people who lost their jobs were mostly working in the non-physical world…

Now, I realize quite well that companies that pump around money make money as well. Often, these are the best places to make a career, and these places make proper profits. But while they add value to the economy on paper, I have never fed myself with digital money. As a person, all I care about is the physical stuff. Food, house, means of transportation, clothes, gadgets – stuff I can touch. I want as much as possible of that.

Can’t we do without these organizations, companies and institutions? Or, more importantly, should we not get rid of them? I know this sounds like blasphemy. I don’t care. I put the whole lot into the category of “overhead costs“.

As any businessman can tell you – it’s bad to have too much overhead costs. It will kill your business.

Ok, so why does the “market” not auto-correct itself, as you would expect? I believe that this is because society as a whole is sort of a monopoly. You have no choice but to live in your own society. Monopolists are often the least efficient companies, with huge overheads. Consumers have no choice but to buy from them, and therefore there is no incentive to reduce the overhead costs. And the same goes for society as a whole.

… says the engineer.

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