THE law of diminishing marginal returns is one of the most basic concept that one needs to understand under the production theory. It sounds very theoretical, high falutin and intellectual, but it is actually a very logical and practical idea.
This concept explains that in the short-run when the firm has no ability to increase the quantity of physical capital like machineries and equipments as well as acquiring more land andor building, a firm that is engaged in the production of goods can only add up to a certain quantity of a variable factor like labor for it to have a significant impact to the firm’s productivity.
I often use a bakery to illustrate this economic concept. An entrepreneur purchases 3 ovens for his bakery business. At first, he had no bakers that is why he was not able to bake anything. When the first baker was hired, his bakery was able to produce bread, but not a lot.
He again hired one more baker, then another, then one more, until he had 5 bakers. The volume of output of bread continued to increase as he hired more bakers.
Following this line of thought, he again hired one more baker, and saw that he still has a good volume of bread produced although the baker hired last was not able to contribute as much as the fifth baker. So the owner thought that it may just be slow month.
In order for the bakery to recover the slight drop in its output, he hired another baker. But he observed that the output of the bakery still increased but again by a smaller difference than when prior hires.
“What could be the problem,” the entrepreneur asked himself. As he has hired more and more bakers, output seems to be increasing, but the increase is at a lesser rate everytime the owner hires new bakers.
Thereby, the return or contribution of each baker becomes lesser and lesser. This precisely is what the law of diminishing marginal returns would like to describe.
When the owner inspected the bakery with all the 9 bakers working all at the same time, the area is already crowded with all the bakers trying to work hastily, competing against each other on who will use the ovens first. This resulted to wastage. So instead of maximizing resources to their most efficient levels, many resources go to waste and not converted to final goods or products.
In today’s politics, this concept may be applied to explain why a certain political party are fielding a senatorial slate that is more than the available posts. They fielded 14 senatoriables for the 12 vacancies in the upper chamber of congress. So, from the very start, there are two who are sure to lose, that is, assuming that no one from other parties make it the Magic 12.
They may think that it is assuring their party can be able to fill up more posts if they have more candidates is called being “seguristas” but this is not only wasteful and inefficient, but also very irresponsible and incredibly stupid. How do we expect them to be good in governance if even for a simple fill in the blanks, they overthink and insist in the illogical or even the improbable?
If I were invited to join this slate and be one of the 14 senatorial candidates, I would be very insulted because they do not value me that much because somehow they can afford to drop me and let me lose, while there is an expectation that I would exerting effort, devoting time and spending a lot of money in the campaigns, same as all the other people running for an elective office, especially if they belong to the same party.
Sticking to a slate that is slim should be a good idea because this means that the party is only maintaining the best who can provide the best returns, the best benefits, the best vision, and the best future for all of us Filipinos when they are already there, elected into their respective offices.
Congruent to the law of diminishing marginal returns, the more politicians running for the same position will prove that there will be more who were not elected, essentially wasting his resources for a virtually impossible cause.
What is important to note is that the more is not always the merrier.
There are times that more lead to adverse effects, higher costs and more disadvantages than getting benefits and produce more advantages.
That’s very true for the market, also very much true in politics.