Patrick Collison has pointed out that past production often was very speedy, for instance the Empire State Building went up in 410 days, start to finish. These days, it took the government almost fifty years to open the 2nd Ave. subway line in NYC, with a lot of the speedy production being relegated to China.
But how important is speedy production? More generally, how should we think of the speed of production as a variable of import?
I can think of a few reasons why the speed of production might matter:
1. Because if you don’t act now the status quo is terrible. (Often a factor in China, especially in earlier decades, or in earlier American history. They really did have to put up those bridges at Remagen very quickly.)
2. Nominal interest rates are high. You can think of the nominal rate as a rough measure of the opportunity cost of locked-up funds/resources.
3. Speed is a signal of urgency, and other positive qualities, but speed per se is not actually so valuable. Speedy institutions and societies, nonetheless, might be better at setting priorities and accepting trade-offs, big gains above and beyond the value of speed. Who wants a dawdler!? And perhaps the speedy are especially good at signaling, a valuable skill.
4. Patrick himself suggests: “speed matters because frontier people like it and will go to the places where speed is possible. It maximizes their comparative advantage. If your field ceases to support speed, you’ll lose frontier people and stagnate.” [In turn you might wonder if speed today simply has shifted into other areas, say payment companies and the like, and out of construction, rather than speed having declined per se? Amazon will try to shift to one day delivery, car production is speedier, Netflix gets you a movie more quickly, and so on.]
5. In a speedier world, recontracting happens more frequently. Quantity-based resource logjams are cleared up more quickly, and the more rapid contracting sends off price signals, to the general benefit of the market, on a more regular basis, leading to generally superior resource allocation for Hayekian reasons. For these reasons, perhaps the social value of speed is higher than the private value, thus implying we are underinvesting in production speed? There are positive external benefits to pushing more liquidity into those spot markets!
So how much should we be worried about the (possible) decline of speedy production? Should currently low nominal interest rates be taken to mean this simply isn’t much of a problem?
Your thoughts would be most welcome.