Yahoo Downsizing Reax

Ben Cohen
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by Ben Cohen

A Huff Post reader posted this response to my article on Yahoo's downsizing binge:

the company fired 2,400, yet increased profits, doesn't that call into
the question the value that those employees were creating? BTW, what
system are we criticizing here? If we all wanted to invest our 401(k)'s
into companies that were overstaffed and unworried about profits, then
we would. But, we don't. Funny how we all complain about Wal Mart
business practices, yet buy all of our food there. We complain about
companies that abuse the environment, yet "green" funds are largely
ignored by investors. Why? Because when you invest your savings so that
you can retire, you care about rate of return (primarily).

Nothing forces companies to go public and have shareholders that are
focused on profits. There are plenty of small and mid-size companies
that are privately owned and are willing to forego profit maximization
because they feel an obligation to their employees. But, it is a dying
breed. Why? Probably because, as drymartini1 suggests, the employees
don't reciprocate that sense of obligation to their employers.

My response:

Steve, I think you are way off the mark here. You are arguing that
downsizing is somehow the fault of the worker. It's a pretty inhumane
way to look at it. The fact is, corporations often shed people when
they don't need to in order to make profits. These are people with
families who rely on their paycheck to survive. I know plenty of people
dedicated to their companies who were laid off because of cut backs.
Interestingly, their bosses never took a pay cut.

This type of 'efficiency' has effectively destroyed the middle class in
America and has driven wages down to a level where people simply cannot
survive on them. You bring up WalMart - a classic case were their
business model has driven local stores out with their rock bottom
prices, and forced people to work there for lower wages. They import
most of their good from China (which is much cheaper), so also drive
factories out of business. Why you think this is a good thing is beyond

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