I talked at length to the head of AK Steel, who told me that he regretted in the 1970s not firing the number of people he needed to fire because of his company's "family" type policy. In the long run, he said, it caused far more heartache, and they had to be fired anyway, and in the meantime, other wages were held down trying to keep them on. I think the same would happen here.
Although innovation is historical, a particular innovation is something new. The economy is no longer a hunter gatherer economy and its new characteristics require new non-historical alternatives that not only result in efficiency but also embrace the notion that people who don't own cash generating property have to work to sustain their families as well as invest in their futures. The government does not have to control the actions of the steel industry or any other industry and the CEO of Steel may have to downsize to manage cost in competition with external forces. So what are the potential solutions for the need to downsize and the need to make a living when they appear to be in conflict?
My suggestion is to get government and business and labor and education to collaborate. Establish a National New Business Incubator in a National Free Economic Enterprise Zone. The Zone would be free from unnecessary regulations and taxes. The only requirement to operate in the Zone would be to downsize excess labor into the Zone so that it could work on new business initiatives. In the alternative, businesses operating in the Zone, could move labor into it (instead of downsizing) and receive economic benefits established by government regulation for operating within the Zone. A host of other incentives could be developed to create the economic environment needed for full employment. For example, all public transfer payments such as unemploymnet compensation could be transferred to the Zone for investment in new business. No doubt you can think of many more incentives, such as tax free investing as long as the investment is made in new businesses operating in the Free Economic Enterprise Zone.
Now since you friend at AK Steel did not think of this, it is not likely that he/she will. So Business, Government, Education, and Labor have to put their heads together to develop this notion and help make it part of our economic infrastructure. The alternative, "long term layoff" is not an acceptable use of scarce (human) resources nor is it a appropriate means to encourage individuals to be responsible for their incomes and the future incomes of their children.
Yes, human resources are scarce. Take a look around, there is more work that needs to be done than we know how to do or that we have the skilled labor to do. What is needed is the political will to adapt the infrastructure to the realities of a globalized economy.
"In the context of a free and civil society at work: To All According to Their Needs And To Each According to His Will." . . . pipus willabi