Quote:
Originally posted by chavos
Basic econ 101 here. When you go to do layoffs, you fire your most inefficient, least productive laborers. Average productivity rises, overall output is usually lower. Morale is certainly an issue, especially in white collar positions.
Spending on technology is NOT an operating expense. It is an investment, a purchase of a durble good. Those purchases are not recovering like we might hope...
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First off, Basic econ 101 doesn't exactly cover the real world. There are many constraints on who you can get rid of. Firing the least efficient in theory is what should happen. But that's not usually the case. Tenure, contracts, likelihood of lawsuits, etc are all things used to determine who will be fired.
Second, firings hurt blue collar morale as much as white collar.
Third, I never said spending on technology was an operating expense the point was that without consumers buying products (or the strong belief that they will) companies will not invest in it.
The fact is that the consumer drives the economy. Anything that upsets the consumer screws the economy. High interest rates, rising inflation, massive layoffs (much higher than the ones we've seen which push unemployment well above the levels we have now), etc will cool the economy a hell of a lot quicker than anything to do with government spending, business investment, etc. That's basic economics both in the real world and in theory.