Any capitalist nation must be willing to embrace some level of economic Darwinism: the notion that the fittest survive while the less robust fall away.
But what America is living through now is a drastic and high-speed wave of Darwinism that reaches every corner of the economy and financial system.
We're on failure overload -- which is why this all feels so frightening and why markets remain in disarray.
Case in point: It's a good thing, ultimately, for sickly banks to be closed and for stronger banks to take their place.
When too many major banks are at risk of failure at the same time, however, the entire financial system is threatened. The fittest might survive systemic failure, but to what end?
Likewise, an economy this size can handle some significant number of companies paring, say, 5% or 10% of their workers in the name of efficiency. But it can't easily contend with plummeting employment across the private and public sectors.
Of course, for companies teetering on the verge of bankruptcy because sales have collapsed, there may be no alternative but to slash expenses by cutting staff.
Microsoft Corp., however, appears in no danger of failure. The company earned $4.17 billion in its latest quarter, a 25% net profit margin on sales of $16.6 billion. Yet even Microsoft is taking the knife to its payroll, with plans to eliminate up to 5,000 jobs, or 5% of its workforce, over 18 months -- the firm's first-ever layoffs.
Had they been let go a couple of years ago, those people might have easily found work elsewhere. Now, amid a deepening recession, they'll join millions of others who face the brutal reality that jobs are extraordinarily scarce.
In California the jobless rate reached 9.3% in December, a 15-year high. And given the dire condition of the Golden State's economy, it's a pipe dream to think that the unemployment rate has peaked.
Technology workers, perhaps more than others, understand the concept of "creative destruction." The term was popularized by the Austrian economist Joseph Schumpeter to describe the forces perpetually at work in a healthy capitalist economy.
The idea is that an economy should be forever renewing itself thanks to innovation, albeit with considerable pain along the way. In other words, new technologies are wondrous -- unless you're stuck selling technologies made obsolete by a smarter competitor.
