Layoffs....Bad for Business

From Newsweek article on why layoffs are bad for business:
Following 9/11 all airlines but Southwest laid off workers. Southwest, which has never instituted layoffs in 40 years is now the largest US airline.  Former HR director at Southwest:  "If people are your most important assets, why would you get rid of them?"

Newsweek describes a death spiral at Circuit City.  It laid off 3400 high paid workers to cut costs.   Customer service and other skills were lost.  Other competitors gained ground, and  it had to lay off more workers.   Ultimately it filed for bankruptcy and closed.

Also, places where it's harder to lay people off, like France, have held up compariatively bettern during the gloabal economic meltdown.  Workers have not lost their income and their competence, and so keep spending. Did Marx talk about that?   Did Keynes?