Wednesday, February 17, 2010

Getting it WRONG #4

Predator economics is hobbled by some truly idiotic assumptions.  Such as:
While accounting will credit something called "goodwill" it has never properly accounted for institutional memory--which may be the most important asset of all.

And since they make this incredibly major error, Predator Class economists tell us things like: There are many companies that would be worth more shut down and broken up for parts; You only gain a cheaper workforce if you move a production facility off-shore--there are no costs; or my favorite, courtesy of George HW Bush's chief economist Michael Boskin, who claimed it made no difference if a country made computer chips or potato chips.  I often like to cite that remark as the single stupidest sentence ever uttered by an economist, but really, there are so MANY to choose from.
Employers Take a Beating by Laying Off Employees
by Sherwood Ross | February 17, 2010 - 10:06am
It's not only employees who suffer when they get laid off but the firms responsible for handing them the pink slips can take a beating, too.
As millions of Americans have been fired by employers struggling to remain profitable, we have all borne witness to Corporate America's calloused disregard of its workers. Now, canny business economists claim the layoffs have hurt employers, too.
That's part of the story of now-defunct Circuit City, an article in the current Newsweek reports, after it lopped off 3,400 of its highest-paid sales associates to cut costs. "A company cuts people. Customer service, innovation, and productivity fall in the face of a smaller and demoralized workforce," Newsweek points out. more
It may be tempting to blame the Republicans who are the most wedded to economic theories that have been utterly discredited--after all, they brought them in in a major way with the Reagan administration.  But there are PLENTY of Democratic politicians and economists with the same problem.  It is the inevitable result of an intellectual hegemony.

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