>You may be right, but a good sign for whom, exactly?
The economy, so everybody. You're asking the wrong question, it isn't "Why is it a good sign that IBM has begun layoffs?" The question is "Why is it a good sign that IBM, a poor performer that is popularly believed to have misallocated resources, has begun layoffs?" It isn't a choice between IBM doing great, or doing layoffs; it is a choice between IBM continuing to do poorly and eventually imploding spectacularly, or doing layoffs. Of course layoffs don't mean a certain turn around for them, but the consequences for inaction are pretty certain.
As far as the fate of the individual employees: in the long run the vast majority will be better off. Either IBM didn't efficiently translate those employee's skills to profit, or there is inadequate demand for the skills and the employees have been shielded from that harsh reality. In the case of inefficiency (the most common case): if another company can derive more profit from the same skill - then they can also pay more. In the case of obsolete skills: unless IBM can, with a certainty, provide employment until the employee dies - they are assisting the employee in a game of retirement savings Russian roulette.
So that is the economics 101 explanation, but I've found it to be true. I've been through this twice, and in both cases I've come out the other side much better off.
The economy, so everybody. You're asking the wrong question, it isn't "Why is it a good sign that IBM has begun layoffs?" The question is "Why is it a good sign that IBM, a poor performer that is popularly believed to have misallocated resources, has begun layoffs?" It isn't a choice between IBM doing great, or doing layoffs; it is a choice between IBM continuing to do poorly and eventually imploding spectacularly, or doing layoffs. Of course layoffs don't mean a certain turn around for them, but the consequences for inaction are pretty certain.
As far as the fate of the individual employees: in the long run the vast majority will be better off. Either IBM didn't efficiently translate those employee's skills to profit, or there is inadequate demand for the skills and the employees have been shielded from that harsh reality. In the case of inefficiency (the most common case): if another company can derive more profit from the same skill - then they can also pay more. In the case of obsolete skills: unless IBM can, with a certainty, provide employment until the employee dies - they are assisting the employee in a game of retirement savings Russian roulette.
So that is the economics 101 explanation, but I've found it to be true. I've been through this twice, and in both cases I've come out the other side much better off.
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