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> It's not "shitting on" anyone; it's how (efficient) economics works. You don't earn more money unless you're producing more value. If a steel mill increases i

by eiaoa 8y ago

> It's not "shitting on" anyone; it's how (efficient) economics works. You don't earn more money unless you're producing more value. If a steel mill increases its output by way of some new automation, the accounting department and janitorial staff are unlikely to see a wage increase. The folks on the assembly line are also unlikely to see a wage increase because they're not more productive. The people who will be principally rewarded are the people who developed (including investing) the automation. In your example, all the steel mill owners have to do to make more money is to passively own the steel mill while their employees work to improve it. If "efficient economics" works by compensating the people who create value, why are the passive owners getting most of the compensation? They're not creating any value. By your logic they probably should get less than the janitors and assembly line workers, who at least create some value.

weberc2 8y ago
Good question! That’s the “investment” part. They risked the funds to create the value in the first place in exchange for returns on their investment.
- eiaoa 8y ago
  > Good question! That’s the “investment” part. They risked the funds to create the value in the first place in exchange for returns on their investment. That's not really an answer. You're just saying their entitled to the passive returns from ownership because they owned something else. It's circular. Anyone could take a risk with the funds if given access to them, even the janitors and line workers.
  - weberc2 8y ago
    Then I'm not sure what answer you're hoping for. > You're just saying their entitled to the passive returns from ownership because they owned something else. Not sure what you mean here, but I agree that investors are entitled to the returns stipulated in the investment agreement. Hopefully this isn't a controversial position. > Anyone could take a risk with the funds if given access to them, even the janitors and line workers. Yes, janitors and line workers can (and regularly do) invest their finances as well, frequently for the very company for which they work (although they are very likely not investing enough to be principal owners, because even very small companies tend to be very expensive relative to the average salary of a janitor or line worker).
    - eiaoa 8y ago
      > Not sure what you mean here, but I'm saying investors are entitled to the returns stipulated in the investment agreement. You said "...(efficient) economics [means y]ou don't earn more money unless you're producing more value." However, an owner can be nearly completely idle yet still profit handsomely, by simply paying others a modest fee to increase her fortune, so your statement isn't really true.
      - weberc2 8y ago
        I think you misunderstand investment. Enterprises are risky; someone has to lose money when they fail or otherwise lose value. Those people are investors. Employees can also be investors (e.g., employee owned companies or other arrangements in which employees buy stock in their companies). By definition, the people who get returns on investment are the investors. Buying risk (aka investment) is inherently valuable. If you think employees should get returns on investment, then you're necessarily advocating for forcing them to take home less money and risking the difference on the performance of their company. The good news is that many employees do invest in their own company or in other companies, and they're free to choose their investments such that they can tune the knobs of 'amount' and 'risk' to suit their personal goals.
        eiaoa 8y ago
        > I think you misunderstand investment. I understand investment, I'm just telling you that your original statement is wrong. If you're an owner, you don't have to create any value to get paid. Mere ownership gets owners paid. Sure, they can actively invest if they want to, and they may be better off for it, but that kind of activity is strictly optional.
        weberc2 8y ago
        > I understand investment I'm ... not sure you do... > If you're an owner, you don't have to create any value to get paid. Mere ownership gets owners paid. Sure, they can actively invest if they want to, and they may be better off for it, but that kind of activity is strictly optional. This isn't true. Owners are investors by definition; owners are the sole investors in their companies. Like all investors, owners don't "get paid" unless they sell their shares at a higher price than they bought them. I'm not sure if you take issue with those definitions or if you're trying to nit-pick what it means to 'create value', but I'm pretty sure I've simplified this as much as I can. Good luck.
conanbatt 8y ago
You are battling with the century old fight about interests. What are interests at all. You can read much argumentation from different economists across the ages about this topic. Hating interest is a very natural endeavor: it has been banned for long periods of time after all. But economics has clarified that interests is just what you pay for opportunity cost. If you build a hammer, you can use it or loan it. And you can loan it for another new hammer in the future, plus, some value extra for not having it. You could then, in the next period, loan the new hammer again. And so on, forever, without causing anyone harm, you can "passively" gain an income from your original investment. This is Bastiat's explanation of interest from the 1850's

by eiaoa 8y ago

weberc2 8y ago

Good question! That’s the “investment” part. They risked the funds to create the value in the first place in exchange for returns on their investment.

eiaoa 8y ago
> Good question! That’s the “investment” part. They risked the funds to create the value in the first place in exchange for returns on their investment. That's not really an answer. You're just saying their entitled to the passive returns from ownership because they owned something else. It's circular. Anyone could take a risk with the funds if given access to them, even the janitors and line workers.
- weberc2 8y ago
  Then I'm not sure what answer you're hoping for. > You're just saying their entitled to the passive returns from ownership because they owned something else. Not sure what you mean here, but I agree that investors are entitled to the returns stipulated in the investment agreement. Hopefully this isn't a controversial position. > Anyone could take a risk with the funds if given access to them, even the janitors and line workers. Yes, janitors and line workers can (and regularly do) invest their finances as well, frequently for the very company for which they work (although they are very likely not investing enough to be principal owners, because even very small companies tend to be very expensive relative to the average salary of a janitor or line worker).
  - eiaoa 8y ago
    > Not sure what you mean here, but I'm saying investors are entitled to the returns stipulated in the investment agreement. You said "...(efficient) economics [means y]ou don't earn more money unless you're producing more value." However, an owner can be nearly completely idle yet still profit handsomely, by simply paying others a modest fee to increase her fortune, so your statement isn't really true.
    - weberc2 8y ago
      I think you misunderstand investment. Enterprises are risky; someone has to lose money when they fail or otherwise lose value. Those people are investors. Employees can also be investors (e.g., employee owned companies or other arrangements in which employees buy stock in their companies). By definition, the people who get returns on investment are the investors. Buying risk (aka investment) is inherently valuable. If you think employees should get returns on investment, then you're necessarily advocating for forcing them to take home less money and risking the difference on the performance of their company. The good news is that many employees do invest in their own company or in other companies, and they're free to choose their investments such that they can tune the knobs of 'amount' and 'risk' to suit their personal goals.
      - eiaoa 8y ago
        > I think you misunderstand investment. I understand investment, I'm just telling you that your original statement is wrong. If you're an owner, you don't have to create any value to get paid. Mere ownership gets owners paid. Sure, they can actively invest if they want to, and they may be better off for it, but that kind of activity is strictly optional.
        weberc2 8y ago
        > I understand investment I'm ... not sure you do... > If you're an owner, you don't have to create any value to get paid. Mere ownership gets owners paid. Sure, they can actively invest if they want to, and they may be better off for it, but that kind of activity is strictly optional. This isn't true. Owners are investors by definition; owners are the sole investors in their companies. Like all investors, owners don't "get paid" unless they sell their shares at a higher price than they bought them. I'm not sure if you take issue with those definitions or if you're trying to nit-pick what it means to 'create value', but I'm pretty sure I've simplified this as much as I can. Good luck.

conanbatt 8y ago

You are battling with the century old fight about interests. What are interests at all. You can read much argumentation from different economists across the ages about this topic. Hating interest is a very natural endeavor: it has been banned for long periods of time after all. But economics has clarified that interests is just what you pay for opportunity cost. If you build a hammer, you can use it or loan it. And you can loan it for another new hammer in the future, plus, some value extra for not having it. You could then, in the next period, loan the new hammer again. And so on, forever, without causing anyone harm, you can "passively" gain an income from your original investment. This is Bastiat's explanation of interest from the 1850's