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> 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

by 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.
  - AnimalMuppet 8y ago
    Nearly completely idle, except for the part about building a whole new steel mill. That's... not very idle. And it is exactly that creation of a new steel mill that is where the value is going to be created - by the steel mill producing it.
    - eiaoa 8y ago
      > Nearly completely idle, except for the part about building a whole new steel mill. That's... not very idle. No one said they built it, just that they owned it. It's totally possible (and common!) to own something that you didn't build and have never had a hand in operating. But lets say a new steel plant was built. Who actually built it? Was it the the owner, or the project managers, engineers, architects, construction crews, etc.? Which of these groups contributed more value to the enterprise?
      - AnimalMuppet 8y ago
        All right, let me put it this way. Without the money, it doesn't get built. The project managers, engineers, architects, and construction crews (plus the steel workers' local) aren't going to have a bake sale and come up with the money. If there's going to be a steel mill, the owner has to do something - at least write the checks plus hire someone to be the general contractor, and someone else to be the plant manager once it's built. And the owner has to have at least a reasonable chance of getting paid back for their investment. They're not building a steel mill as a charity. So if you don't let the owners make money off of their steel mills, then you don't get any steel mills. Whose life does that make better? [Edit: And letting the owner make as much as the janitor isn't going to cut it. The owner is putting in hundreds of millions of dollars; letting them get back $15/hour is a completely inadequate return for the level of risk they are taking.]
        weberc2 8y ago
        > The project managers, engineers, architects, and construction crews (plus the steel workers' local) aren't going to have a bake sale and come up with the money. But if they did, they'd still be investors (i.e., employee-owners) and everything I said would still apply :). More seriously, employee-owned businesses aren't uncommon, but still, the investors/employees are profiting from the company's increased producitivity _as investors_--their wages don't increase, the value of their shares increases. Just like owners in sole-proprieter businesses like our hypothetical steel mill.

by eiaoa 8y ago

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.
- AnimalMuppet 8y ago
  Nearly completely idle, except for the part about building a whole new steel mill. That's... not very idle. And it is exactly that creation of a new steel mill that is where the value is going to be created - by the steel mill producing it.
  - eiaoa 8y ago
    > Nearly completely idle, except for the part about building a whole new steel mill. That's... not very idle. No one said they built it, just that they owned it. It's totally possible (and common!) to own something that you didn't build and have never had a hand in operating. But lets say a new steel plant was built. Who actually built it? Was it the the owner, or the project managers, engineers, architects, construction crews, etc.? Which of these groups contributed more value to the enterprise?
    - AnimalMuppet 8y ago
      All right, let me put it this way. Without the money, it doesn't get built. The project managers, engineers, architects, and construction crews (plus the steel workers' local) aren't going to have a bake sale and come up with the money. If there's going to be a steel mill, the owner has to do something - at least write the checks plus hire someone to be the general contractor, and someone else to be the plant manager once it's built. And the owner has to have at least a reasonable chance of getting paid back for their investment. They're not building a steel mill as a charity. So if you don't let the owners make money off of their steel mills, then you don't get any steel mills. Whose life does that make better? [Edit: And letting the owner make as much as the janitor isn't going to cut it. The owner is putting in hundreds of millions of dollars; letting them get back $15/hour is a completely inadequate return for the level of risk they are taking.]
      - weberc2 8y ago
        > The project managers, engineers, architects, and construction crews (plus the steel workers' local) aren't going to have a bake sale and come up with the money. But if they did, they'd still be investors (i.e., employee-owners) and everything I said would still apply :). More seriously, employee-owned businesses aren't uncommon, but still, the investors/employees are profiting from the company's increased producitivity _as investors_--their wages don't increase, the value of their shares increases. Just like owners in sole-proprieter businesses like our hypothetical steel mill.