Friday, January 9, 2009

Capitalism/financial crisis: a question for you

Which is the better situation?

You have two separate companies in the same line of business, let's say two small community banks. Each one is financially solid and solvent, but not dramatic. One bank employs about one hundred people and the other employs about two hundred people. Everyone gets a good salary and benefits. Thus three hundred people, including the top managers, earn "a good living" but are not exactly plutocrats or captains of industry.


The bank with one hundred people figures they could "do better" and takes over the bank of two hundred people. They "merge" and eliminate "duplicate services." They now employ a total of two hundred and twenty people, eliminating eighty of the previous employees. The deal makers made a big commission out of the merger and the managers make more money. The "shareholders" get a few cents more per share in earnings than they did before.

That is the problem. All of western society has been brainwashed to think that scenario number two is "better."