Laying people off is always a large burden. Laying off multiple flights of people with latency and inducing stress (e.g. "will I be next?") is probably worse.
Alternatively:
If the business goes under, all employees will suffer. If some are laid off and the business continues to survive, those that make it will be spared.
So from a harm reduction point of view, laying nobody off is probably worse than laying some people off.
Even if you reduce pay, people may not be able to afford housing even though they're still working for you (e.g. in the bay area). And health benefits still cost the same even if you reduce other employee associated costs.
Things are not as simple as (I'm interpreting) you're implying they are. It's not black and white, and the decision needs to be made on a case by case basis.
Certainly not thinking things are simple, or that any of your points are innacurate. I’m sure it is very tough, and maybe even the right call for the goals at that moment in 2008. My criticism was that through this lens and with the audience the OP has, the lessons of an economic downturn being basically “lay off more people” is incredibly sad from a humanistic point of view.
