And what’s up with the rhetorical questions for titles of my posts lately?
In any case, today we learned that there were 533,000 jobs lost last month, and in response to this news, the stock markets flailed around and ended sharply higher. The Dow was up 3.1% and the Nasdaq rose 4.4%.
I guess it’s a better time to be a investor than a worker.
Some may be confused by this. At first glance, the need to lay off huge numbers of workers is a sign that something is wrong with business, and that wrongness could at some point be expected to have a negative impact on profitability (and therefore dividends on investment).
However, this overlooks the reality that workers and investors are natural enemies in a capitalist economy. This becomes obvious when we consider that income minus costs of production (which includes labor) equals profit. Workers are a negative, a drag on profitability. The more of us that are fired, the more profitable things will be. I’m sure that if someone can figure out how to run a company without labor, that will be the next big investment craze. Maybe that’s why Wall Street is getting excited now.
The current uptick is merely speculators hoping that the worst is past, that the layoffs have cut the fat and now we can get back to making some profit.
I would call it crazy, but that’s an insult to people with mental illness.
It doesn’t have to be that way, as is proven by ESOPs (employee stock ownership plans), cooperatives, and other kinds of employee-owned companies around the world. But nevertheless, we mostly put up with a really awful situation in which investors think they are better off without the workers who produce whatever it is that forms the basis for their investment. We do this even when the motive of pleasing the investor at all costs has driven our financial sector into the ground and is about to do the same to our manufacturing base.
I think it might be too late for the auto industry, and we should be seriously looking at contingency plans: how to redirect all the millions of jobs that currently make auto parts. The people who are now making car radios, for example, could be shifted to production of solar-powered radios.
Whatever we do, we should be directing any assistance to where it needs to be: in the hands of employee-owners. They are the only ones who can be trusted not to ship their jobs to China in a few years when the crisis slips out of the headlines. Investor driven companies will simply return to business as usual, looking for ways to cut labor costs.