Unemployment is a major topic for today's economist and this article should help spark some conversations. Millions of jobs were lost with current recession. Although some company's were coming close to the end of thier lifetime anyways the recession definantly helped speed up the process. It does not make economic sense for a store like Circuit City, #4 in cuts, to remain in business with Walmart and Best Buy being able to offer lower prices. However it does make sense, when a increased number of unemployed workers, who are now saving their money, slow sales for consumer products and the materials used to make those products . Ultimately the effects are felt in the companies that turn commodities into a finished product, and companies like Alcoa (#14), DuPont (#16), and Dow Chemical (##15) had real problems. This article helps put a number to some of the companies we have heard having huge layoffs.
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As we talked about in class, a capitalist market is the 'undertaker' and the 'midwife.' If a firm is efficient enough, it will succeed until it is overtaken by a better competitor. Unemployment is a negative eternality of this recession yet, we have always had some percentage of unemployment. Since we are only now, slowly, coming out of the recession, it will still take some time for the companies to feel the full impact and aftermath of what happened as they look back and see, now, how they are working ineffectively. Companies who have the comparative advantage are those who have previously experienced economies of scale, giving them the upper hand, even during the recession. An example would be Walmart. During a recession, more people went to Walmart because it made sure that they would have the lowest price. So people who once bought superior products from higher end stores moved their purchases to inferior products which can be provided at Walmart at a lower cost.
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