Business: America the Inefficient

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production. The best overall measure of the efficiency of management and workers is output per man-hour in the nation's factories and offices. Late last year, productivity in the private nonfarm area declined slightly and that aggravated inflation. Reason: when productivity falls while wages rise, businessmen have to increase prices to cover costs. Inefficiency is not only impinging on production but also on the actual span of life in the U.S. Inefficiencies in the medical system have contributed to a decline in the life expectancy of the average American at birth, from 70.8 years in 1967 to 70.4 years in 1968.

The Traumas of Growth

At the root of much inefficiency is the nation's startling growth and the lack of planning to cope with it. More people every year crowd into the cities. Of the nation's approximately 80,000 cities, towns, villages, school boards, sanitary districts and other governments, most are too small, too fragmented, and too jealous of each other. There are few joint programs that would provide efficient transit for these people, educate their children effectively, or even haul away their garbage. The sheer growth in the numbers of people has led to many of today's inefficiencies —traffic-jammed streets, uncollected trash, interminable waits for taxis, lunch tables or a sales clerk's attention.

For all their Chamber of Commerce talk about long-range planning, many U.S. businessmen have shown a deep-seated distrust of planning, particularly by the Government. They have often been surprised and overwhelmed by the extent of growth and demand. In some cases they did not spend enough for expansion because the slow growth of the late 1950s and early 1960s misled them into believing that American consumers were becoming sated. But in many instances, managers simply skimped on spending to dress up their balance sheets. Says Mason Haire, professor of management at M.I.T.: "Too many companies still reward executives for short-term profits. Very often a manager will not spend money on the future, and with luck he will get promoted out of his job before the future arrives. Some other guy has to live with the consequences."

The consequences can be nightmarish. The New York Stock Exchange, whose members thrive or fail according to their ability to forecast, predicted a few years ago that daily trading volume might hit 10 million shares by 1975. Trading surged past that level in 1968. A mountain of paper work fell on exchange members, and they did not have enough men or machines to dig out. The Big Board went on short trading hours early in 1968, and has still not bounced back to a full trading week. In a similar way, demand for electricity has shocked power-company executives. Managers of New York's Con Edison decided some time ago that a 21% reserve capacity would be enough to give the customers what they need. The managers were wrong. They had to ask customers to turn off air conditioning in some of New York City's biggest buildings on the hottest days of last summer.

In a sense, affluence is the enemy of efficiency. Affluence weakens, sometimes to the point of nonexistence, the worker's fear of being fired. In her study of the Depression, The Invisible Scar, Caroline Bird describes almost lyrically the service enjoyed by people who were well off in the 1930s: "Shopping was a pleasure