alt Hacker NewsIt may be good but also can be very problematic.
Organizations don't really shrink well. When times are good, they hire a lot of people that are marginally necessary. Over the good times, these roles become well-integrated into how the organization does business; whether or not they were necessary at first, people start depending on that person for a task, their approvals become part of a critical workflow, they develop special institutional knowledge without which the institution won't function, etc. When the organization needs to shrink, the marginally-necessary roles all get laid off. Except now you have all these unfilled dependencies. Other remaining employees depend upon the now-gone employees to do their jobs. Communication processes break. People get demoralized as they realize the organization is broken anyway, and quiet-quit or start looking out for their own self-interest.
You run into Gall's Law in action: "A complex system that doesn't work cannot be patched up to make it work: you have to start over with a working simple system."
Lots and lots of things are going to break as fertility declines and the population shrinks. Education is going to be one of the first ones hit because it explicitly deals with young people, but likely this will go right up to capitalism and the state.
I'll give a real example.
In my department we have research staff to look at research proposals and make sure they're good before they're submitted to the grant agency.
Someone might look at the budget and say "This is administrative bloat because it is not teaching focused so we are cutting them."
What's the downstream effect? Well now those professors who relied on the research staff have to take time out of their schedules to do deeper reviews of their work, so they reduce teaching time and increase research time.
They are not as skilled as the dedicated staff, so now there are fewer proposals being accepted. This means less money to the university, and particularly the department.
So what does the department do? They stop hiring undergraduate graders and they institute a hiring freeze. Now that means they cannot admit as many students, teaching costs go up, class sizes go up. And for the admitted students, now they've lost their work study, so it means fewer students are going to enroll because their aid has decreased, effectively increasing tuition. This can be a vicious downward spiral if not checked.
So the original intent of "tighten belts and reduce waste" is really "we made everything worse for everyone"