What This Economy Needs

Are we going about this the right way?

About the largest issue we seem to face as a nation (we, meaning the United States) is lack of confidence in our businesses. After all, it’s lack of confidence in our financial institutions that brought about this recession in the first place. But we need to go further.

The Federal plan seems to be geared toward stimulating the economy by giving tax breaks and injecting financial resources into various parts of the economy. But that’s just not going to cut it. When faced with slow economic times, many companies will elect to reduce their workforce, known in most circles as a layoff. Whereas that certainly stems the tide of the company’s bleeding, is it a good idea? I mean, does it actually work?

I can tell you it most certainly does not, in the long run. It obviously doesn’t make happy people out of the people that were laid off. But even those that weren’t still have demons to face. Speaking as someone who’s been laid off before, and who was lucky enough not to get laid off a year ago when my company decided to cut 10% of the workforce, I can say that I am not singing any praises for my employer. Let’s look at why.

First of all, layoffs typically come in waves. Where there’s one, there’s usually a second, and even a third wave of more layoffs. So anyone who was lucky enough to survive the first wave is going to be on pins and needles. Some might think that this will motivate employees to do a better job, but it is my contention that it doesn’t. Why? Well, simple. To begin with, the employee gets a big snootfull of just how much their employer is looking out for the employees’ interests… which is to say, not at all. Push comes to shove, the company will toss you o...

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...ow we have people that lost their jobs not spending, and we also have people that didn’t lose their jobs also not spending. Economic downward spiral.

So what should the Federal Government do? Well, I’m not an economist and I don’t have any great answers. But there sure should be some sort of dis-incentive to laying off valuable workers. Tax breaks for retraining and education. Or tax penalties for eliminating workers if there are any openings elsewhere in the organization. Even poor-performers could probably be valuable somewhere else in the organization… figure it out.

In the end, if this were the case, and we could all feel a little more confident that our jobs will still be here tomorrow, then we might all feel a little more generous, a little more eager to spend and stimulate the economy, and then maybe, just maybe we can get ourselves back on track.