Q:

Refute my assumption: Bearings Don't Improve Efficiency

If two surfaces rub together with a normal force between them, friction is generated.  You could add lubrication between those two surfaces and reduce that friction.  
Bearings essentially consist of two surfaces rubbing together and, as before, under load, friction will occur.  As before, you could lubricate the bearings and reduce that friction.
So absent a better understanding, I can't see how bearings add much of anything to efficiency.  This must be wrong or all of industry would be spending money frivolously on unnecessary parts.
So my question is, in what way is my argument wrong?

A:

Your initial assumption is a bit  flawed. You can not just  draw the conclusion that all friction is the same. It is like saying all birds i know of can fly thus all birds can fly. Which is obviously untrue. Moreover, continuing this similie, you also imply that there is only one kind of flight.
In reality friction is a highly complicated phenomena that includes a lot of the things we don't deem worth thinking about in our day to day life. In fact if you have ever seen the formula:
$$
F_f=  \mu F_n
$$
You have seen a physicist saying i have no idea of how it  works but  seen a simple property. Everything in your question is hidden in the symbol $\mu$ and the formula is approximate. Also by  the  way the formula is  actually $F_f <= \mu F_n$ which  is even less useful to answer the question asked.
See, the friction coefficient  is highly dependent on not just the material pair, but also the quality of surface finish, surfaces capability  to carry  the load, how the materials react on the interface, temperature, lubrication and geometry. But it gets better, rolling is way different it has much lower friction so a roller bearing  has  just the fraction of the friction a conventional sliding contact pair. Even better you can have no solid contact  at  all. Typically  this is achieved by lubrication, but there are even bearings that do this naturally like airbearings or magnetic bearings that don't even have touch anything.
It is not always even about the efficiency increase. Rather about controlling the wear, or some other  characteristic. See by having  specialized pieces you can change them if damaged, you can spread the load so they last longer, and you can get these cheaper than manufacturing them yourself. The bearing can even have  a function in aligning the shaft properly and thereby reduce vibration.

