Merger Mania

[Henry C.k. Liu]

Recent posts on this list have focused on the current merger mania, with
massive worker layoffs.
Another disturbing aspect is that these mergers are not motivated by any
desire to expand market share.  They are mostly motivated by cost
cutting needs in a deflationary business environment.  And the cost
cutting is mostly concentrated on labor cost.  Prices after the merger
will stay high or even increase, while cost drops.

Another development worthy of note is the new tricks in corporate
governance and accounting.
To ward off the effect of anticipated periods of declining corporate
earnings due to unsustainable share value speculative appreciation,
corporations have been resorting to tricks of exaggerating extraordinary
charges and write-offs.
These tricks create two bubble benefits for the company:
1) unearned tax savings from fake write-offs and
2) a smaller post-write-off capital base with which to calculate future
earnings, so even delcining earnings would look like an increase in
return on capital.

The unearned tax savings is theft from  the public and the faked
earnings are fraud on the investing public.
The problem is serious enough that Arthur Levitt, head of SEC, has
appointed a panel headed by John Whitehead, former Goldman partner, and
Ira Milstein, NY corporate governance lawyer, to look into this trend.

What do Marxist economists have to say about this?

Henry C.K. Liu