“Firms Are Businesses”

Great post on the Adam Smith, Esq. blog (which is included in our blog roll) on Latham’s recent news.  You should read the whole thing, but here is a key quote [after noting that Latham is “well managed” and that it’s severance policy is double the going rate]:

“Finally, this morning’s news out of Latham tells us something with all the emphatic insistence of a fire-truck air horn:  Firms are businesses.  I hope that by now that comes as news to no one.
Before firms can live to thrive again another day—which, trust me, they will—they first have to live. 
Call it what you will (carrying excess human capacity, being underutilized, supporting fallow and unproductive assets), it’s simply not viable in a competitive marketplace to have a substantial proportion of the people on your payroll sitting around with too little to do.
That is also bad for morale, bad for professional development, unattractive to talented candidates you might want to recruit, and, finally, less than useless to clients.
At the moment, understandably and inevitably, we are all focused on the “destruction” inherent in Joseph Schumpeter’s powerful insight about how capitalism repairs and reinvigorates itself.  It would be much more fun if we could focus on the “creative” dimension.  But not yet.  Not just yet.”