Saturday, March 26, 2011

How to Create Jobs and Have Austerity Too

It seems that we always live in a world of either/or.  Paul Krugman recently (here) chided the Inside-the-Beltway folks for focusing too much on austerity measures and not on creating jobs.  He tells them that “slashing spending in the face of high unemployment is a mistake.“  Well, maybe he is correct.  I think not because I don't care for his linear view; I prefer the fractal approach.  He then goes on to discuss setting priorities correctly, as he determines them, by jobs first and austerity later.  But, why do we have to have austerity only for governments?

Why not austerity for corporations too?

We live in a world of excessiveness, as this website has described several times.  We all know that corporations exist to make money.  But, really, should corporations always try to make obscene profits?  Does every corporation have to strive for 20 percent margins? What is wrong with 3 percent?

What happens if we expect corporations to make modest profits?  Maybe they will be a little slower at cutting everything to the quick.  Being lean and mean is functional at times but is it always a good business model?

If everyone expected less then austerity would be the norm.

In our so-called free market culture, what really has happened is that growth has become more important than competition.  Through M & A activity, we have terminated thousands of corporations and millions of jobs. 

To reverse this trend we need to:
1. Place a ban on all M & A activities for fifteen years for private and public companies
2. Place a ceiling on corporate size; do not allow companies to get big.
3. All companies currently above the ceiling have two years to break up voluntarily; after that, the government comes in, takes over, and busts them up, like AT&T and Standard Oil.
4. Example:  B of A could be broken up into 50 companies, one for each state.  This would mean 49 new CEOs and new headquarters.  Think of all the new VPs it would create and all the new support jobs needed to run a business.

All of this would mean that profits would be shared across more businesses; few would be able to concentrate power; healthy competition would be restored.

Jobs are created by creating corporations.

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