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March 20, 2020


Ralph Musgrave

There’s actually an upside to the cash piles, which Chris omitted. It’s that in the event of bankruptcies caused by the virus downturn, liquidators would tend to sell the assets of bankrupt firms and corporations for scrap: instead, given cash piles, the cash rich would pile in and a make better offer, although they’d be buying the bankrupt firm at a bargain basement price. That way, valuable assets, like relatively new aircraft are not scrapped. Instead, Warren Buffet or whoever the cash rich person / firm is that buys at bargain basement price stands to make a killing once the economy recovers.


«the workers who lose their jobs won’t easily find new ones, and won’t even be a decent reserve army of labour.»

But employers usually care more about power than money, and the unemployed are less a reserve army of cheap labour than an object lesson to the employed of what could happen to them.
That was part of the force of the object lesson of the structural unemployment from the closing down of many manufacturing businesses in the 1980s and later: that for many the loss of their jobs meant a lifelong descent into the underclass.


The other part of the story is that in the last years the introduction of new technologies in production pushed workers in the tertiary sector, as stressed by Chris with bartenders or waiters. Also, not only the recession creates reserve army of labor but also technologies make redundant certain types of labor, f.e. bank teller. The mismatch can also explained with the displacement of labor with certain skills - f.e. waiters - and the request for another type of labor skill - f.e. bricklayers. In fact, when labor became expensive more than technologies, firms try to implement technologies.

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