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October 04, 2004
Layoffs Create Wealth
The fastest way to generate wealth is large productivity driven layoffs. Producing the same value for less effort. Telling skilled and ambitious people that they are no longer needed because what they were doing no longer has value.
There are two immediate consequences of the layoff:
1. Bitter complaints at how unfair the world is. A needed expression of "poor me."
2. The availabilty of a talented and ambitions person to generate new value where no value existed before.
Productivity driven layoffs are the single biggest contributor to the generation of wealth. This process began tens of thousands of years ago when someone figured out that using a stick to plant seeds freed up the time of someone else to make arrows. The arrow maker freed up the time of someone else to make pots. The person no longer pushing seeds into the ground with her thumb was laid off. Unemployed. Seeking a new position. Until either she figured out that she could now make arrows or someone said, "Here, make arrows and I will give you every fifth animal." The journey to wealth began.
This journey proceeded slowly until about four hundred years ago. Then the value of innovation emerged as a primary driver of growth. The cycle is straight-forward. Have a job. Lose a job. Find something else to do or starve. Old skills are no longer valued. Identify a new skill. Figure out a way to deliver value using that skill. This is the core of innovation.
If this were not true, then today we would have millions of unemployed lining the dirt roads of rural America and no one working at Blockbuster.
So, the next time someone bemoans productivity driven layoffs, remember, new wealth was just created. All that is required is a bit of innovation to identify the new value that can be created by all the newly available talent.
Long ago someone realized that a seed could be planted faster and easier with a stick than with a thumb. Today, that same process delivers TiVo and GPS watches.
Posted by creagb at October 4, 2004 05:38 AM