Solving the Hostess Problem

English: A Hostess CupCake, shown whole.

Don’t forget the cupcakes!

Let’s open a discussion.  How can we save Hostess?

Last March Hostess named turn around expert Gregory Rayburn as CEO.  Eight months later they’re closing the doors, allegedly overwhelmed by obligations to current and past employees.  Pensions, wages, benefits and stuff.

Of course the unions are going to take a beating here, especially from the conservative right, but that isn’t entirely fair.  Really.

Keep in mind that a struggling market is not the only reason a business will fail.  Businesses can be poorly managed, for example.  (It appears Hostess had some structural issues that it failed to address.)  Or demand shifts.  In this case perhaps consumer tastes have gone from baked cakes to baked chips.  Who knows?  But business failure isn’t an inherently labor problem.

Labor is one input of production.  If the market cannot support a business like Hostess, the business likely will fail just as buggy whips have gone from mass production to the artisan trade.  Labor suffers, but it is a reckless jump to lay the blame on workers.

Perhaps it is sad, but true…consumer demand no longer supports the mass market snack cake business.  That’s the game of capitalism, right?  Neither good nor bad, it simply is what it is.  But rest assured that unions will be vilified.  Perhaps the labor market needs to go over a “cliff” of its own reset the marginal inputs of labor in this market.  Why not?  Cliff jumping — or at least playing chicken — is quite the thing with the kids in Washington these days.

Of course we could easily solve this problem.  Applying the logic of GOP capitalism, if we were to give the job creators at Hostess a tax break, consumers would magically demand more snack cakes and the problem would be solved!  Right?  (As absurd as it sounds, that is precisely the way the tax-cut-for-job-creators argument would have to work if it were to work in our demand-starved recession, but never mind…)

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