For the last year or so I have been contemplating all of the corporate downsizing that has been occurring. Thousands of people are dismissed so that a company can grow and become more profitable. However, I keep wondering if all of this will damage the purchasing power of many Americans and end up creating more profit problems for a company. When this trend is combined with the huge bonuses that executives get, often for doing nothing, it is hard for me to see American capitalism as healthy.
Recently I was sent a copy of an email newsletter Whisky and Gunpowder. The newsletter was reacting to a headline: "HP [Hewlett Packard] to Slash Work Force by About 10%" and a comment by Caris & Co. analyst Mark Stahlman: "They've gotten themselves in fighting shape here. It dispels uncertainty, which had been frustrating for some in HP's engineering culture. I think this is going to give a big boost to morale internally."
The newsletter goes on to state:
Enquiring minds might be asking some of the following questions:
1. When was the last time firing 14,500 people boosted morale?
2. Would firing 20,000 have boosted morale even more?
3. Is there a "Laffer Curve" on firing people to boost morale?
Reports like these are bound to be good news for Wal-Mart. . .
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