Monday, January 26, 2015

Free Market Competition, Creative Destruction and Populist Grounded Unionized Government

Free markets are sometimes harsh. Winners become losers, and new competitors unseat the former leaders. IBM, Sears, A&P, Montgomery Wards and American Motors come to mind, as do Apple, Google, Wal-Mart, Amazon and Ford.

But that's just the 'creative destruction' of the marketplace at work bringing better things to a growing and prosperous middle class grounded society.

Alas, such is not the case with government. Populist measures and socialism stand in the place of freedom and taxpayers substitute for the demands of customers and shareholders. The public sector's employees are 'protected' from the rigors of the marketplace and its 'creative destruction' as long as taxpayers are willing to foot the bills.

Rumors abound this morning about the biggest layoffs in history coming from former stalwart and industrial kingpin IBM. They cause me to wonder what would happen if city, state or national government took the same approach. Of course, no government will do so, and it's just a mental exercise of mine.

IBM's stock gains amid reports that a massive layoff is coming has the story:

"Shares of IBM are rising 1.2% in premarket trade Monday, on the heels of reports that the technology giant is prepping for a reorganization that will lead to the largest corporate layoff in history.

Reports from multiple sources suggest Big Blue will slash its global workforce by 26%, which would represent about 112,000 of the approximately 431,000 people IBM employs globally.

IBM's stock, a component of the Dow Jones Industrial Average, has slipped 0.7% since it reported last week earnings that beat expectations but revenue that missed. IBM has missed revenue expectations in 12 of the past 14 quarters. The stock has lost 3.8% over the past three months and 13% over the past year, while the Dow has gained 5.2% and 11%, respectively."

Summing Up

Capitalism is harsh. It also creates prosperity for a nation's citizens.

I wonder what the Greeks think about all this.

I wonder too about what Senator Elizabeth Warren thinks.

And I wonder what President Obama thinks about saving the middle class through government action.

But mostly I wonder about what my fellow Americans think --- and will do.

Will we prefer socialism, public sector dominance, more government control, educational shortfalls and a stagnant to declining standard of living for the middle class?

Or will we embrace prosperity, individual freedoms, income inequalities and the harsh and uneven results that will inevitably occur?

The choice is ours.

That's my take.

Thanks. Bob.

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