Summary
The Economy depends upon a circular flow.
If all companies become highly efficient or out to protect their bottom line, then it is possible that this highly competitive economy will find itself in economic distress.
Companies that see workers as stakeholders tend to do better financially those those who don't.
Analysis
This article, part of a monthly series in The Manufacturer, an excellent magazine showing how many companies are moving towards best practices in production here in the United States, deals with the working of the economy. It follows the general theme that I like to expound that we're all in this economy together. The idea that pushing towards the highest level of profitability by starving workers (keeping wage bills down or moving too much of what we make to Asia) will eventually break down.
I used to lecture that economies move up and down because of faith, but they also need a steadily rising circular flow. That flow will be interrupted if unemployment gets too high, or if wages are pushed down too far thus cutting off oxygen.
It's like the old parable about the farmer. Looking at the sky, he notes that there's a hail storm coming and he prays that it will strike his neighbors field, not his own, knowing that if it does then the price he will get will be higher. The same is true for companies. If they lay off their workers to gain efficiency moving much of what they make to Asia, they have to hope that those laid off workers will find new, higher paid jobs, with another company or they won't be able to sell the products that they can now make for less.
Companies that treat their employees well, I've noted, usually do better than those who see employees only as cogs, expendable and replaceable.
