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Have management and equity holders taken their haircut yet? They're the first to grab the money and run when things are going well - they should be the first to take haircuts when the going gets tough. Otherwise, you're privatising profit and socialising risk.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Mar 5th, 2009 at 11:58:32 AM EST
[ Parent ]
I'm certainly not.

Supply must be reduced, and you either do that by reducing the workforce by 20 % or you reduce the working hours of the workforce by 20 %. Those are the alternatives here.

And I hardly think you want your management to work 20 % less during the crisis of the century. That they are often grossly overpaid is another issue.

And the quity holders not taking a haircut? Have you by any chance noticed how share prices have developed since the crisis began?

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu Mar 5th, 2009 at 03:31:32 PM EST
[ Parent ]
No, that management are grossly overpaid is precisely the issue. The management is effectively a class of "super duper equity holders" in that they get all the upside when things are good, and - so far - none of the downside when things go sour.

The justification, in the capitalist system, for downturns is precisely that it forces overpaid and underproductive parts of the political economy - and these days, the most obviously underproductive and overpaid part of the political economy is the management class - to take a haircut. If this haircut fails to materialise, then capitalism isn't working as advertised.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Mar 5th, 2009 at 04:17:55 PM EST
[ Parent ]
I am not aware of any law of physics that says that a 20 % reduction in output must be accompanied by a 20 % reduction in payroll. Since there is unemployment, that's purely a distributional question: Who gets to take the haircut. So far, it's workers and - to some extent - equity holders. Management has been exempt, as have bondholders.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Mar 5th, 2009 at 04:21:24 PM EST
[ Parent ]

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