|
|
|
|
|
|
by lmm
4197 days ago
|
|
|
> Do some economists really believe that the "right" thing to do is fire thousands of people? Yes. The idea is that they'd be more productive in other companies (or start their own). In a country with decent employee protections, unemployment provisions, and public healthcare, it can even be more-or-less true. > Are a company's shareholders really more important than its employees? Yes. With employees, there is a contract, which in some fictional-economics sense was a negotiated agreement between equals, so the company only has those obligations laid out in that contract (just as with bondholders). With shareholders there is no contract, instead the company has a fiduciary duty to act in their best interests. |
|
|
However, as the concept of work to rule (http://en.wikipedia.org/wiki/Work-to-rule) shows, employees don't treat themselves as being only obligated to do what their contracts specify, and it would be disastrous if they did. Similarly, managers view themselves as owing something to their employees that's not specified in the contract.
Hostile takeovers often work by going into a company and breaking all the relationships of trust that previously existed. By doing that, you can often cut costs in ways that the previous management couldn't do. (Here's the paper, though I confess I've only read the summaries of it: http://www.nber.org/chapters/c2052.pdf)