Did Corporate Downsizing Kill the Economy? | The American Spectator | USA News and Politics
Did Corporate Downsizing Kill the Economy?
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“Lay Off the Layoffs,” the magazine advised corporate America in its Feb. 15, 2010 cover story. “Our overreliance on downsizing is killing workers, the economy — and even the bottom line.”

Let’s revisit the moment — for what it says about the soon-to-be-defunct magazine… and the ill-informed thinking that passes for wisdom in Hollywood, academia, and, not least of all, the Obama administration.

Thirteen months into the Obama presidency, it was painfully clear that the American Recovery and Reinvestment Act, signed on Feb. 17, 2009, wasn’t doing what it was supposed to do — which was to keep unemployment below 8 percent. Instead, the nation’s unemployment rate had soared to 10 percent — or 15.8 percent, if you added “discouraged workers” who had given up looking for jobs and others doing part-time work because they couldn’t find full-time employment.

What do you do when the facts don’t fit your narrative?

You change the facts to fit the narrative. You lie if you have to. You stall and obfuscate and wait for people to lose interest as the story grows old and muddled.

That is the Obama way of covering up mistakes and responding to criticism. We have seen it repeatedly.

It is what the Obama administration did following the murder of the U.S. ambassador to Libya and three co-workers on the eleventh anniversary of the date known as 9/11.

With the Nov. 6 election just eight weeks away, the administration decided to stick with the already-established (and self-flattering) narrative for the Middle East and world affairs. This was: “Osama is no more,” Al Qaeda is crippled, and “the tide of war is receding.”

Despite immediate and compelling evidence to the contrary, President Barack Obama, Secretary of State Hillary Clinton, and UN Ambassador Susan Rice refused to admit that the deaths in Benghazi had been the result of a premeditated terrorist attack involving an Al Qaeda affiliate. For two full weeks, they insisted that it was a “spontaneous” demonstration that got out of hand. In short, they threw sand in the face of the American people — in the apparent hope that this would help Obama win a second term.

With that bogus line of thought came the oft repeated and shameful apology, which I will paraphrase as follows: 

We hope that our friends in the Islamic world will forgive us for the fact that there was someone amongst us — some wretched and hateful creature out of the 300 million-plus people living in sometimes unseemly freedom inside the United States of America — who put together a 14-minute video that found its way to YouTube… where it offended the tender sensibilities of many devout Muslims — including (and this-is-okay) those who rioted on Sept. 11, 2012, and (this-is-not-so-okay) some others of an extremist bent who murdered our ambassador and three co-workers in Libya.

With the emerging jobs fiasco following the failed stimulus package, the administration acted in a similar way — painting happy faces over damning evidence as long as it possibly could. First of all, it stuck with the narrative that the “Stimulus” was working — and working miracles. This time, it invented a new and entirely meaningless metric — jobs created or saved. This number grew and grew — even as total employment recorded by the Bureau of Labor Statistics was stuck or falling. Eventually, even the administration’s own economists grew tired of this obviously phony metric which took credit for “saving” jobs from disappearing at a theoretically assumed faster rate. So Obama’s advisers dropped the metric — to keep from being laughed at for their stupidity.

But back to Newsweek, which, as Jeffrey Lord noted in a recent column (“Twinkicide: Death by Liberalism“), was sold for a single a dollar.

Not knowing that I would be paying five times the final sale price for the entire magazine, I spotted the issue with “Lay Off the Layoffs” cover as I was checking out a grocery store check-out line in early 2010, and I plunked down $5 to buy a copy.

For me it was money well spent. I just wanted to see how — with its lefty bias — Newsweek would play around the idea that rich and powerful executives had strangled economy — just for the hell of it.

That was the story line in the then popular movie Up in the Air, starring George Clooney — one of the president’s biggest supporters in Hollywood — as the “downsizing expert” who racks up more than 10 million frequent flier miles going from city to city to terminate an endless parade of desperate employees. As it happened, I had just seen the movie.

I felt sure that Newsweek‘s treatment of “Lay Off the Layoffs” idea would offer more of the same screwy logic in seeing a bottomless gold mine of opportunity for unscrupulous businessmen to make money by shuttering plants and laying people off.

Of course, there are firms (and Bain Capital was one of them) that specialize in restructuring distressed companies and returning them to profitability. What they do used to go by the respectable name of “re-engineering.” But that was in another age, before large government bailouts of distressed companies gained general acceptance.

The Newsweek article did not disappoint. That is to say, it was even worse than I thought. And it was the perfect companion piece to Clooney’s Up in the Air. So I wrote a story for the Weekly Standard aimed at correcting some of the nonsense spread by Clooney and Newsweek.

The Newsweek article opened by singling out Southwest Airlines for special praise in hiring new workers and expanding its operations in the midst of the first big slowdown in commercial aviation history — the great slump that occurred after al Qaeda succeeded in simultaneously hijacking and crashing four U.S. jetliners on 9/11/2001 — two into the Twin Towers, a third into Pentagon, and fourth that crashed into an open field after passengers revolted and tried to regain control of the airplane and from the armed and already prepared-to-die hijackers.

As someone who has written about the airline industry for several decades (both as a reporter for leading publications and, at other times, as a speechwriter for CEOs in the airline and aircraft industries), it wasn’t hard for me to highlight the absurdity of Newsweek‘s premise — which would have the reader believe that if all of the nation’s airlines had followed Southwest’s example, the industry would have rebounded quickly from the disaster that happened on 9/11.

But nothing could be further from the truth. Among the large airlines, Southwest, by reason of being the one big low-cost carrier, was the only the one that was strategically positioned to expand and pick up market share from the others during a period of falling demand for the industry as whole. As a group, U.S. airlines were losing more than ten cents on every dollar of sales during the post 9/11 slump. With the exception of Southwest and a couple of low-cost, low-fare upstarts — JetBlue and AirTran — they had no choice but to retrench. If anything, the big carriers were slow to downsize in the aftermath of this great national tragedy (employment at U.S. airlines declined only half as fast as revenues in two years after 9/11).

Now here is one last irony which I omitted from my piece in the Weekly Standard as a result of being limited to 1,000 words: Newsweek out-sourced its own story on outsourcing (or downsizing and then farming out the work, which comes to the same thing). Even as it was laying off staff members, it relied upon on an outside source (Jeffrey Pfeffer, professor of organizational behavior at Stanford University’s Graduate School of Business) to write its cover story.

I ended my story with the words: “The big threat to today’s economy is not corporate downsizing, but government upsizing.”

With Obama’s reelection, we are sure to get more of both in the year ahead — more government upsizing and, with that, a demoralized and diminished private sector, leading to more corporate downsizing.

No doubt about it: Team Obama licked its chops at the thought of applying the whole sad fantasy of unfairness and victimization (from Up in the Air / Lay Off the Layoffs / and Occupy Wall Street) to the 2012 election. In Mitt Romney — from Bain Capital — they even had someone they could portray as an honest-to-God “downsizing expert.” Mitt might have been George Clooney’s boss-of-bosses in Up in the Air. What luck!

Unfairness was the winning hand in this election. It trumped the free market and the argument that failed economic policies were a more than sufficient cause for dismissal.

That makes Nov. 6 a dark day for America — and the world.

As for Newsweek, there is no need to mourn its passing. It is going to its just reward in the boneyard of print journalism.

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