Nearly 25,000 tech workers were laid off in the first weeks of 2024.Why is that?
npr.org
npr.org
I was taught that generally the fed raises rates and markets go up, the Fed flattens and markets go up, then feds drop interest rates and markets drop and unemployment goes through the roof.
Is that not we expect?
Is this the way capitalism was meant to be? Isn't there some healthier alternative? I've lived through what feels like half a dozen at this point.
From that, the rest of capitalism as a system derives from whatever rules are in play at the moment: the numbers of the financial system, acting as scorekeeping, drive speculative manias and panics, and the laws in the court are weapons to use on whoever opposes you. The system stays stable where it supports the overlapping interests of the elite - so all the formalities of government are just a continuous process of normalization; if a so-and-so wants the country to go in big in a certain direction - to train a kind of workforce or build an industry or invest in developing a technology - they can groom the political system to go their way, provided everyone else at the top agrees. A lot of things go undeveloped because "there is no money in them," and this is just a reflection of lack of political will to make that the thing that someone could have as a job. The technological competition of industrialization did a great deal to wake up the sleepy parts of the world into thinking "we need to change policies if I want to stay in power", and we definitely have more of that ahead.
This is more evidenced when you visit a different country and you look around and ask "why is this part so much better and that part so much worse" and a local will tell you that the law does this and the economy does that, so you get a better thing here and a worse thing there.
And that's all a bit disappointing because it means we really don't have a lot of things figured out and are just reacting like the apes we are as all these new things sweep through society, but it does mean that we could potentially do a lot better by getting the right kinds of conversations started.
https://www.amazon.com/Capital-Order-Economists-Invented-Aus...
Here is the summary from the publisher:
https://press.uchicago.edu/ucp/books/book/chicago/C/bo181707...
Obviously not mainstream theory (that primary theory is that capitalism has intrinsic boom and bust cycles) but I found it compelling. It’s important to understand that in Jane Austin’s books price and wealth was so stable that she used their annual allowances and salaries to identify the social classes of who she was talking about — that didn’t change in her era nearly as rapidly as the modern world, so much so that salaries and allowances were stable enough to be used in this way. Imagine how crazy the book would sound if it was someone in 2024 trying to make references with 1970s salaries! So the modern monetary system has a rather large amount of drift due to fiat currency’s inherent loss of value.
It’s important to separate the boom and bust cycle from fiat currency cycles, as a lot of stability we feel in the modern world is actually the constantly collapsing value of our medium of exchange… it creates a lot of price / asset distortions and “investment” opportunities where simply holding onto a capital asset unproductively provides a return as the value of the currency used to purchase the asset rather than an improvement in the assets actual underlying value. This pushes speculation and the accumulation of assets to the top of the wealth strategy pile, which leads to speculative asset bubbles. And in order to make this deeply profitable derivatives — pure financial instruments that represent “bets” on assets — become widespread, even further distorting real markets. These derivative markets are beyond conception large at this point. It’s not necessarily causative but I would suggest enhances their severity and scale.
There’s so many distortions it’s hard to pull apart one from the other, but that’s what I’ve been thinking about. Capitalism bad is trendy thinking and nonsensical. This system, despite its very deep problems, is responsible for pulling 2/3 of the world out of poverty and is the most consistent force for positive civilization we have ever discovered. We simply need to adjust the systems incentives and harness the very same system that’s causing so much destruction to help reverse its own negative effects. This is common sense, but the current trend is towards self-hated and it’s very trendy to call for the downfall of the entire current system.
Capitalism can have socialism incorporated: plenty of countries do it. There isn’t a pure approach that’s going to work in the broader world, but it’s incredibly important to understand assets, fiat, bubbles and the system that allows them as a spectrum of various systems and not reduce it down to the convenient but nonsensical talking points people use on social media.
I could go on and on about this subject. The biggest issue we have with our current system is that it’s been taken up as a cause de jour by respective sides of passionate but supposedly opposite political parties and people are invested in their viewpoints as self-ideology and find different views therefore ideologically and personally threatening, and also try to assign any conversation to a familiar political stripe. It can make conversation difficult.
> "stock investors are appreciating it"
> "All of the major tech companies conducting another wave of layoffs this year are sitting atop mountains of cash and are wildly profitable"
stock goes up. shareholders happy. execs get fat bonuses.
not because of interest rates, loans or over-hiring.
That and IRS rule changes that removed tax writeoffs for "research".
25 years ago, I started my own business. I haven't been laid off since --- and I haven't laid off anyone either.
There have been ups and downs --- but definitely more ups.
I have full control over how to address "macroeconomic conditions" and the ability to mitigate risk by diversifying beyond a single market segment.
As an employee, you are at the whim and mercy of others with little or no control. There is less responsibility but way more risk and uncertainty.
The idea is that being a business owner hedges your bets.
Whether that shakes out is entirely dependent on how important your product or service is to your customers in a downturn. Some services are completely worthless in a downturn (recruitment services), others can be essential or even come with higher demand (marketing).
You are also probably way less insulated from macroeconomic shocks.
With a url fix, more discussion here:
Keep laying off people to pump up the stock price, and economic disaster might become a self-fulfilling prophesy.
source? There's various definitions of unemployment (U-1 through U-6), but to my knowledge they haven't changed those definitions, nor have they changed what the "headline" unemployment rate corresponds to (U-3). Finally the BLS openly publishes figures for all the different unemployment rates, so it doesn't seem like they're trying to hide anything either.