Efficiency and Creative Destruction

See ‘The Origins of Efficiency’ Review: Rise of the Machines by Mark P. Mills, who is the executive director of the National Center on Energy Analytic. He reviewed the Brian Potter’s book The Origins of Efficiency. This reminded me of the my recent posts on creative destruction and this year's Nobel Prize. More on that after these excerpts:

"all things have a production process involving materials, actions, procedures, people and, of course, technology—whether to clean a house, run a restaurant or build a Cadillac. Efficiency comes from a choreography of tweaks among all those factors, not from any single invention or technique."

[The book] "dissects a variety of examples, including the early production of nails, books, lightbulbs and cars. We learn, for example, that there’s far more to the penicillin story than the casual history of Alexander Fleming’s eureka moment. The eventual explosion in production capacity—fabricating millions of doses rather than trivial quantities for only a handful of people—emerged from years of hard-won efficiency improvements made by people other than Fleming. Mr. Potter chronicles the array of ideas, techniques and experiments, originated by the unsung heroes of production efficiency, that saved so many lives through antibiotic abundance."

"all efficiency gains emerge from changes in five basic features: the inputs, the design of the process or product, the pursuit of reliably repeatable processes, the nature of how people or machines do things, and the role of volume (scale). How these features combine to improve efficiency depends on human ingenuity, imagination, tenacity and that elusive thing called “tacit knowledge” that comes from experience."

"As Andy Grove, the visionary leader of Intel, wrote some 15 years ago, society benefits from an invention only because of those who “work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.”"

This sounds like where Schumpeter says creative destruction "incessantly revolutionizes the economic structure".  Constant change.

Creative Destruction

See Creative Destruction by Richard Alm and W. Michael Cox. Excerpt:

"Joseph Schumpeter
(1883–1950) coined the seemingly paradoxical term “creative destruction,” and generations of economists have adopted it as a shorthand description of the free market’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (p. 83)

Although Schumpeter devoted a mere six-page chapter to “The Process of Creative Destruction,” in which he described capitalism as “the perennial gale of creative destruction,” it has become the centerpiece for modern thinking on how economies evolve."

But also see this link which suggests that the idea goes back even before Schumpeter to other scholars: Creative Destruction in Economics: Nietzsche, Sombart, Schumpeter by Hugo Reinert and Erik S. Reinert.

"Abstract

This paper argues that the idea of ‘creative destruction’ enters the social sciences by way of Friedrich Nietzsche. The term itself is first used by German economist Werner Sombart, who openly acknowledges the influence of Nietzsche on his own economic theory. The roots of creative destruction are traced back to Indian philosophy, from where the idea entered the German literary and philosophical tradition. Understanding the origins and evolution of this key concept in evolutionary economics helps clarifying the contrasts between today’s standard mainstream economics and the Schumpeterian and evolutionary alternative."

Related posts:

Creative Destruction in a Nutshell (2025) (firm exit rates and job destruction rates are positively correlated with growth in labor productivity)

The Power of Creative Destruction (That is the title of a book co-authored by Philippe Aghion, one of this this year's winners of the Nobel Prize in economics) (2025)

Marginal Revolution has great posts on this year's winners of the Nobel Prize in economics (Philippe Aghion, Peter Howitt and Joel Mokyr): This is a prize for economic growth & creative destruction (2025)  

Renters Are Conning Their Way Into Luxury Apartments: Atlanta, where up to half of rental applications contain fraudulent information, is epicenter of national surge in these scams

By Deborah Acosta and Rebecca Picciotto of The WSJ. Excerpts:

"Social media is spreading the word that Atlanta is flush with empty high-end units. Influencers on TikTok say renters can boost their chances of getting approved by fudging financial information on their applications. 

Some promoters charge hundreds of dollars for fake rental-application packages, which they say include doctored financial documents, fake social-security numbers and false employment letters.

Greystar, the country’s largest apartment landlord, said that up to half of its rental applications are fraudulent in some Atlanta buildings. Other landlords are also noticing a sharp rise in Atlanta applicants falsifying income or other personal information."

"Nationally, nearly three-quarters of apartment owners reported an average 40% increase in rental-application and -payment fraud last year compared with 2023"

"A combination of factors led to this surge, starting with technology. Advanced photoshopping and the advent of generative artificial intelligence have enabled most anyone with a laptop to fake a pay stub or forge an employment letter."

"One TikTok influencer markets a $1,250 housing and apartment package that includes a nine-digit number called a Credit Profile Number attached to a near-perfect credit score."

"Forging documents for an apartment application is also considered fraud, but landlords rarely pursue legal action. It is difficult to collect legal damages from someone who is unable to pay their rent in the first place. They are more focused on evicting the tenant and finding a replacement."

"While some scammers evade detection by staying current on their rent, many stop paying as soon as they secure their units."

"Applications from fraudsters artificially boost prices by convincing landlords that demand for the more-expensive units is greater than it actually is. Tenants who get in using misinformation often engage in other criminal behavior, neighboring residents say. Those who are caught and evicted are more likely to trash their apartment units on the way out."

"As new rental housing came online, the federal government’s economic-relief checks during the pandemic brought sudden windfalls to families. That allowed some to rent these new luxury units even if the price was above their means. Severe court backlogs made it difficult for landlords to evict."

"Landlords, eager to fill their empty units, are offering an initial period of free rent to attract tenants. But that means it may take months before a landlord becomes aware that a fraudulent renter has no plans to pay."

"most landlords rely on fraud-detection software, which has helped mitigate the issue in Atlanta. But these services have to constantly adapt as fraudsters find ways to circumvent them"

Related posts: 

Online Returns Fraud Finds a Home on Telegram, Costing Retailers Billions: Efforts to exploit retailers’ return programs are growing more organized, fueled by websites and messaging accounts that target merchants (2024) 

In Poorer Countries, Obesity Can Signal Financial Security (2023)

Fake Books Are a Real Trend (and people pay money for them) (2023)

Job Listings Abound, but Many Are Fake (2023)

You can hire someone to do the job interview for you (2022)

How to Spot Fake Reviews and Shady Ratings on Amazon (2022)

Making Money Off of Fake ATM Receipts (2021)

People are hiring out their faces to become deepfake-style marketing clones (2021)

Why would men bring fake cell phones to bars? (2021)

Are sellers paying Amazon customers to delete negative reviews? (2021)

Fake Reviews and Inflated Ratings Are Still a Problem for Amazon  (2021)

Photos show China's most surreal tourist spot— a fake Instagram-worthy town full of pretend farmers and phony fishermen (2021)

The Myth of Authenticity Or The Story Behind Products (2010)

Fake Authenticity (2011)

Students: Make a mistake on purpose, its good for you! (2007)

A fake job reference can be just a few clicks away (2015)

Fake Economist Fools Portugal (2013)

Slave Redemption in Sudan (2007) (Fake slaves are sold to those who buy slaves and then give them their freedom)

Can A Product Work Just Because It's Expensive? (2008) (fake medicine)

If It Pays To Have Friends, Can You Pay To Have Friends? (2013) (you can hire fake boyfriends)

Study: Half of American Doctors Give Patients Placebos Without Telling Them (2008)

Saudis grapple with fake street sweepers (2017)

Rent a White Guy: Confessions of a fake businessman from Beijing (2010) (by Mitch Moxley in The Atlantic Monthly, excerpts below)

Can adding a phantom third story to their homes help families find a wife for their son? (2018)

Why do employers pay extra money to people who study a bunch of subjects in college that they don’t actually need you to know? Signaling (2018)

Mexicans buy fake cellphones to hand over in muggings (2019)
 
Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) (2007)

How does a company selling used luxury goods spot fakes? (signalling and conspicuous consumption) (2019).

Why do stores sometimes pay people to be fake shoppers?  (2019)

What if companies can't afford real models for their ads? Use AI generated fake pictures  (2020)

Excerpts from "Rent a White Guy"

"Not long ago I was offered work as a quality-control expert with an American company in China I’d never heard of. No experience necessary—which was good, because I had none. I’d be paid $1,000 for a week, put up in a fancy hotel, and wined and dined in Dongying, an industrial city in Shandong province I’d also never heard of. The only requirements were a fair complexion and a suit.

“I call these things ‘White Guy in a Tie’ events,” a Canadian friend of a friend named Jake told me during the recruitment pitch he gave me in Beijing, where I live. “Basically, you put on a suit, shake some hands, and make some money. We’ll be in ‘quality control,’ but nobody’s gonna be doing any quality control. You in?”

I was.

And so I became a fake businessman in China, an often lucrative gig for underworked expatriates here. One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image—particularly, the image of connection—that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: “Having foreigners in nice suits gives the company face.”

Six of us met at the Beijing airport, where Jake briefed us on the details. We were supposedly representing a California-based company that was building a facility in Dongying. Our responsibilities would include making daily trips to the construction site, attending a ribbon-cutting ceremony, and hobnobbing. During the ceremony, one of us would have to give a speech as the company’s director. That duty fell to my friend Ernie, who, in his late 30s, was the oldest of our group. His business cards had already been made."

"For the next few days, we sat in the office swatting flies and reading magazines, purportedly high-level employees of a U.S. company that, I later discovered, didn’t really exist."

The Seasonally Adjusted CPI Was Up 0.31% In September

Here are the changes in the seasonally adjusted CPI each of the last six months: 

April 0.2209%

May  0.0810%

June 0.2870%

July 0.1966%

Aug 0.3825%

Sept. 0.3105 

 

The last decline was March 2025 when it was -0.0500%. Before that it was June 2024 when it was -0.0029%.

 

See Consumer Price Index for All Urban Consumers: All Items in U.S. City Average from FRED (Federal Reserve Economic Data) compiled by the Research Division at the Federal Reserve Bank of St. Louis for data on the seasonally adjusted CPI.

 

That site shows a graph but if you click on the Download button you will get the actual numbers in Microsoft Excel.

 

The Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL) was 323.364 in Aug. and 324.368 in Sept. Since 324.368/323.364 = 1.003105, that means it was up 0.3105%. If we had that every month for 12 months it would be up 3.79%. 

 

It was 314.851 in Sept. 2024. Since 324.368/314.851 = 1.0302, that means it was up 3.02% over the last 12 months. 

 

The non-seasonally adjusted CPI was 324.800 in Aug. and 315.301 in Aug. 2024. That was up 3.01%. So pretty close to the seasonally adjusted CPI. This is still above the Fed's target of 2.0% (although they prefer to use the Personal Consumption Expenditures Price Index which was 2.7% higher in Aug. 2025 than Aug. 2024).

 

For more information, see Inflation rate hit 3.0% in September, lower than expected, long-awaited CPI report shows by Jeff Cox of CNBC. Excerpts:  

"Prices that people pay for a variety of goods and services rose less than expected in September, according to a Bureau of Labor Statistics report Friday that keeps the door wide open for another interest rate cut next week.

The consumer price index showed a 0.3% increase on the month, putting the annual inflation rate at 3%. Economists surveyed by Dow Jones had been looking for readings of 0.4% and 3.1%, respectively. The annual rate reflected a 0.1 percentage point uptick from August.

Excluding food and energy, core CPI showed a 0.2% monthly gain and an annual rate also at 3%, compared with estimates of 0.3% and 3.1%, respectively. Core CPI on a monthly basis had posted 0.3% gains in both July and August." 

The article also discusses what types of products are going up in price and what is going down. There is a graph of the monthly year-over-year percent change in prices and core prices going back almost 4 years. 

Other related links:

 

Consumer Price Index for All Urban Consumers: All Items Less Food and Energy in U.S. City Average (CPILFESL) This is also from from FRED (Federal Reserve Economic Data), compiled by the Research Division at the Federal Reserve Bank of St. Louis. It has the seasonally adjusted core CPI.

 

Consumer Price Index Data from 1913 to 2025

 

Personal Consumption Expenditures Price Index 

 

The Bureau of Labor Statistics makes seasonal adjustments. See Consumer Price Index Summary.

 

The table below has the annual inflation rate since 1914 in the columns labeled CPI %Ch. or CPI percentage change. It is from Consumer Price Index Data from 1913 to 2025 and is not seasonally adjusted. It is also the December to December change in the CPI. That site also looks at how the 12 month average for the CPI changed from one year to the next.

 

Year	CPI %Ch.		Year	CPI %Ch.		Year	CPI %Ch.		Year	CPI %Ch.
1914	1		1944	2.3		1974	12.3		2004	3.3
1915	2		1945	2.2		1975	6.9		2005	3.4
1916	12.6		1946	18.1		1976	4.9		2006	2.5
1917	18.1		1947	8.8		1977	6.7		2007	4.1
1918	20.4		1948	3		1978	9		2008	0.1
1919	14.5		1949	-2.1		1979	13.3		2009	2.7
1920	2.6		1950	5.9		1980	12.5		2010	1.5
1921	-10.8		1951	6		1981	8.9		2011	3
1922	-2.3		1952	0.8		1982	3.8		2012	1.7
1923	2.4		1953	0.7		1983	3.8		2013	1.5
1924	0		1954	-0.7		1984	3.9		2014	0.8
1925	3.5		1955	0.4		1985	3.8		2015	0.7
1926	-1.1		1956	3		1986	1.1		2016	2.1
1927	-2.3		1957	2.9		1987	4.4		2017	2.1
1928	-1.2		1958	1.8		1988	4.4		2018	1.9
1929	0.6		1959	1.7		1989	4.6		2019	2.3
1930	-6.4		1960	1.4		1990	6.1		2020	1.4
1931	-9.3		1961	0.7		1991	3.1		2021	7
1932	-10.3		1962	1.3		1992	2.9		2022	6.5
1933	0.8		1963	1.6		1993	2.7		2023	3.4
1934	1.5		1964	1		1994	2.7		2024	2.9
1935	3		1965	1.9		1995	2.5
1936	1.4		1966	3.5		1996	3.3
1937	2.9		1967	3		1997	1.7
1938	-2.8		1968	4.7		1998	1.6
1939	0		1969	6.2		1999	2.7
1940	0.7		1970	5.6		2000	3.4
1941	9.9		1971	3.3		2001	1.6
1942	9		1972	3.4		2002	2.4
1943	3		1973	8.7		2003	1.9

Here is a timeline graph of this data: