Not saying downsizing does not make sense, but its a stretch to say that its a service to our society to downsize one's company.

> As a society we allow layoffs because it reallocates skilled workers to new areas that actually need them

This more sounds like a trap mindset to me to be honest. Its associating some sort of morality to what is just regular part of running a business. Companies do what's best for the company and its investors first and foremost.