What do you call it when you take over an organization and
fire a majority of the staff? A Musk? A Milei? Perhaps a Trump 47?
Everyone is so freaked out by this concept. They see it as
raider behavior, unfair to the workers, and possibly devastating to the economy.
It’s the sort of thing that venture capitalists do after an unfriendly merger,
after all.
Too many people don’t understand economics.
I’m not saying that massive layoffs are without costs, especially
in an area that has put all of its eggs in one economic basket. My town is
currently reeling from John Deere’s decision to move production to Mexico.
But in a healthy economy, layoffs are as much opportunities
as they are obstacles. When one group stops using a resource, another group has
the chance to obtain it at a lower cost. Local industries which have been
struggling to find qualified staff will grow because former Deere’s workers are
looking for jobs. It has been decades since the farm equipment giant was hiring
unskilled labor, too, so they are people with valuable education and
experience. A lot of those workers will lose some income, which is hard, but it
also happens to various people all the time.
The government is different in some ways. Too much of the
fat in our bureaucracy only exists because bureaucracy might as well be a
synonym for cancer. It starts as healthy cells trying to accomplish something
valuable and becomes a tumor with the potential to destroy the organism. Economic
forces generally stop it from being lethal to private enterprises, but the
government is sadly, mostly immune to the cure. The percent of revenues that actually
make it to productive activities has been shrinking rapidly for decades in public
institutions. Your local school is probably a prime example. Teachers who decades
ago shared a handful of administrative staff are now seriously outnumbered by them,
while educational outcomes have tanked by every single metric available. If you
wanted to cut that budget, you wouldn’t fire the teacher. You would fire the backroom,
but every time the budget is threatened, the plan endangers the jobs of
classroom staff.
If you can find an honest teacher and get her to speak off
the record, the odds are she knows those people eat reports for breakfast and everything
they do actually makes the frontline job harder and less effective. Frankly,
the whole economy needs far fewer people who create nothing but obstacles to output.
The only downside to firing them is the risk that they will continue to hamper
productivity anywhere they land. The upside is that the whole organization
would probably be healthier paying their unemployment than letting them keep
their jobs.
This is why the corporate raiders start this way. And corporate
raiders exist because they can increase productivity and cut costs. We shouldn’t
be afraid of this, even when it hits us personally. We should be afraid of the people
who take almost half of every dime we make to produce goods and services we would never buy
at going rate.
