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Doesn't that mean that all the employees taken on a much greater personal risk? Personal risk seems to have higher stakes than financial risk - so it's unclear

Doesn't that mean that all the employees taken on a much greater personal risk? Personal risk seems to have higher stakes than financial risk - so it's unclear why financial risk is so prized. When you lose $2 billion because your company fails, workers are thrown out onto the streets. What makes the $2 billion risk more valuable than peoples' livelihoods? I'd rather be a multi-billionaire who loses $2 billion than a mid-level worker who loses their job (and for a proper comparison you'd have to aggregate all the trouble caused by all the job losses the closing of the company has caused), especially in a country with a smaller social safety net. That alone tells me enough about the value of this "risk" supposedly so greatly undertaken by the owners to entitle them to perpetual gains on it.

SpicyLemonZest 7y ago
Financial risk isn't prized in some moral sense. It's just an instrumentally valuable service. If a factory costs $100m to build, someone has to put $100m at risk to build it; no matter how much the workers self-organize they won't be able to build the factory if they don't have the $100m.
- claudiawerner 7y ago
  It is prized in the sense of providing justification for huge salaries, which is the point of discussion here. Just as you couldn't build a factory without $100M, you couldn't operate it without workers - and sometimes, because they self-organize. In a capitalist economy, one needs capital and labour. Capital without labour is unproductive, and labour without capital is (usually) the same. Each and every employee takes a risk by being employed at a company. At the moment, it seems they are only compensated for their labour. Why is the owner of the company compensated for risk, possibly in addition to being compensated for labour, but the employees aren't?
  - pathseeker 7y ago
    >It is prized in the sense of providing justification for huge salaries No it's not. Investors don't take salaries. Many stocks don't even pay a dividend (e.g. most tech stocks).
    - claudiawerner 7y ago
      Switch "salaries" for "compensation", then. If the idea is that risk-taking is inherently useful and therefore deserving of constant income, it must be shown why that risk is compensated in some cases (investors, CEOs) but not in others (employees). The argument was as follows: * People who do nothing useful gain high compensation (Debs). * Acutally, the high compensation is due to taking on "all the risk" * But employees also take on a large amount of personal risk which is not compensated. * Ah, but the kind of risk being discussed isn't personal risk, it's financial risk. * But this means that when constructing an argument for high compensation, financial risk is prized and personal risk is not. Why? The fact that investors don't take salaries is irrelevant to the discussion. The justification for their profit is still "financial risk" without regard for "personal risk".
      - SpicyLemonZest 7y ago
        Stock appreciation isn't really "compensation". When Bezos for example gets billions of dollars richer, that's an artificial number from multiplying a NASDAQ price by his holdings - there's no actual flow of billions of dollars which could be redirected to employee salaries. The only way for employees to get a piece of the pie would be to give them stock. And most large companies do try to give their employees stock; even Walmart part-timers have an ESPP.

SpicyLemonZest 7y ago

Financial risk isn't prized in some moral sense. It's just an instrumentally valuable service. If a factory costs $100m to build, someone has to put $100m at risk to build it; no matter how much the workers self-organize they won't be able to build the factory if they don't have the $100m.

claudiawerner 7y ago
It is prized in the sense of providing justification for huge salaries, which is the point of discussion here. Just as you couldn't build a factory without $100M, you couldn't operate it without workers - and sometimes, because they self-organize. In a capitalist economy, one needs capital and labour. Capital without labour is unproductive, and labour without capital is (usually) the same. Each and every employee takes a risk by being employed at a company. At the moment, it seems they are only compensated for their labour. Why is the owner of the company compensated for risk, possibly in addition to being compensated for labour, but the employees aren't?
- pathseeker 7y ago
  >It is prized in the sense of providing justification for huge salaries No it's not. Investors don't take salaries. Many stocks don't even pay a dividend (e.g. most tech stocks).
  - claudiawerner 7y ago
    Switch "salaries" for "compensation", then. If the idea is that risk-taking is inherently useful and therefore deserving of constant income, it must be shown why that risk is compensated in some cases (investors, CEOs) but not in others (employees). The argument was as follows: * People who do nothing useful gain high compensation (Debs). * Acutally, the high compensation is due to taking on "all the risk" * But employees also take on a large amount of personal risk which is not compensated. * Ah, but the kind of risk being discussed isn't personal risk, it's financial risk. * But this means that when constructing an argument for high compensation, financial risk is prized and personal risk is not. Why? The fact that investors don't take salaries is irrelevant to the discussion. The justification for their profit is still "financial risk" without regard for "personal risk".
    - SpicyLemonZest 7y ago
      Stock appreciation isn't really "compensation". When Bezos for example gets billions of dollars richer, that's an artificial number from multiplying a NASDAQ price by his holdings - there's no actual flow of billions of dollars which could be redirected to employee salaries. The only way for employees to get a piece of the pie would be to give them stock. And most large companies do try to give their employees stock; even Walmart part-timers have an ESPP.