Monday, August 08, 2011


One of the failures of economists

I'm sure everybody knows what happens when you clear cut a forest and fail to replant right? It doesn't take much more than a decade or so to see that the results are obvious.

From observation, it seems that economists have had a major failing since somewhere in the 1980's. This is the failure to connect the labor pool to the consumer pool. This is because they are one and the same. What has happened is that everybody has been so focused on cutting labor, they have a complete failure to realize that they are also cutting away at the very consumers that would buy their products. In other words, they're breaking one of the links in the cycle of capital flow. Thus without healthy flow of capital, the economy itself flounders.

You want the economy to do well as well as the businesses within it, right? Well, in order for things to not stagnate and get sick - you've got to spread the wealth around. With a focus on stockholders and a very narrow definition of profit, that's not going to happen. If you would treat the employees you get from the labor pool as an investment instead of as a disposable resource, you'd come to the realization that by considering their income as part of the profit definition that your business and your impact on the economy at large would be much better off.

But what the hell do I know about economics, this is just my observation. But if you happen to read this and agree, feel free to pass it along to an MBAs that may be out there.

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