Kass: Stop Firing People!

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This blog post originally appeared on RealMoney Silver on March 5 at 8:17 a.m. EST.

An important role in public policy is to manage a downturn. But what about the private sector? Does it have, or should it have, a more important role or obligation?

In his magnum opus, The General Theory of Employment, Interest and Money, John Maynard Keynes wrote about the "Paradox of Thrift," also called the "Paradox of Savings."

Keynes' "Paradox of Thrift" suggests that while saving may be a private virtue, it is a public vice. According to Keynes, when an individual saves, it is a healthy phenomenon, but a community that seeks to increase its rate of saving would end up impoverishing itself and actually saving less, resulting in a catastrophic negative feedback loop and a downward spiral in economic activity.

Corporations respond in kind, and generally reduce their expense bases, cutting capital programs and reducing workforces. In turn, retail sales and housing activity plummets. (By contrast, when the community increases its consumption at the expense of saving, it ends up being richer and saving more.)

As I suggested last night on "The Kudlow Report," my proposal to the private sector is a bold one, but it is simple in content.

• Isn't it time for the private sector to adopt a shared responsibility and to think more creatively about the present and future?
• Isn't it time for some large publicly held corporations, with strong balance sheets and good reputations as corporate citizens, to draw a line in the sand?
• Isn't it time for one of these corporations to start a precedent by telling its employees that, despite the weak economic backdrop and continuing economic uncertainty, there will be no more firings and that these corporations are prepared to take a hit for the benefit of the broader society?

My proposal would start by asking the Oracle of Omaha, Warren Buffett, one of the most revered industrialists extant, to make the commitment that Berkshire Hathaway (BRK.A Quote) would immediately freeze firings at his subsidiary companies.

Then, on the next day, I would ask Disney's (DIS Quote) Robert Iger to do the same.