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How did you arrive at your assessment of what is reasonable? Mine happens to be different from yours. Does that make me unreasonable? I mean, are there more sh

How did you arrive at your assessment of what is reasonable? Mine happens to be different from yours. Does that make me unreasonable? I mean, are there more shades to the world than reasonable/unreasonable, black and white? I think so and I hope we can discuss the various shades of grey. I think being responsible and saving for a rainy day applies across all spheres of life - be it government, business or a household. What do you think is fundamentally wrong with such a view, other than that it isn't the way things currently are?

EGreg 6y ago
It assumes savings are possible in a business that has tons of expenses and can’t just stop paying rent.
asdfasgasdgasdg 6y ago
You made a bunch of normative statements about what people "need" to do, so I don't think it's out of bounds to make a normative comment about the reasonableness of your demands. >What do you think is fundamentally wrong with such a view, other than that it isn't the way things currently are? For one, it dramatically increases the capital requirements for starting a new business. Such capital is likely not going to be available to new restaurants or other service oriented small businesses with no real collateral. Or it would come at such a high cost that it would be unprofitable to run the restaurant. All to optimize for a once in a century event. I think the world where the government backstops these businesses is just a better world than the one that would arise from what you envision. It has more of what I want and less of what I don't.
- alexashka 6y ago
  > You made a bunch of normative statements about what people "need" to do, so I don't think it's out of bounds to make a normative comment about the reasonableness of your demands. Did I? There is a single sentence with the word 'need' in it in my entire post. My last sentence expresses my hope for others' behaviour. That's two 'normative' statements that really express the same point - we are living in a consumerist culture. I don't think that's at all a controversial position, it is almost a cliche at this point. I also haven't made a single demand upon anyone. I'm not sure what motivates you to misrepresent my position in such crude fashion and I wish you'd refrain from replying to me in this manner in the future. > it dramatically increases the capital requirements for starting a new business. Help me understand - you think the approach of being responsible and saving for a rainy day, dramatically increases the capital requirements for starting a new business? How? How does saving profits relate to upstart requirements? As far as I can tell - the two are unrelated.
  - tempestn 6y ago
    OK, so you're saying you don't need to have rainy day funds at the start of a new business, but should build them up over time, right? So, that leads to two potential situations. Let's use the restaurant example. First possibility is the one most restaurants face. If they're lucky and the business is actually viable, they will have a profit margin of 3-5%. For a single location restaurant, that profit will be enough for the proprietor to make a decent living hopefully, but not a whole lot more. Should be enough for them to save up a few months of personal expenses sure. But saving up enough cash to pay rent, suppliers, and staff, for months, with no income... would take forever with those margins. It's just not possible for most businesses of that sort. But let's also look at the other possibility. Say you've got a real hit restaurant (or another type of business with larger margins) and your margins aren't 3-5, but 15-20%. Now you're saving real money. So yes, you could sock it away under the proverbial mattress. But if you're that successful, it means people really value the product you're providing. Instead of hoarding your profits in case of a pandemic, you could instead invest those profits into opening a second location, allowing twice as many people to benefit from the service you're providing. In the 99% of years when there isn't a black swan event, that option is better not only for the business owner, but for society as a whole. So even for very successful businesses that could afford to keep a large amount of cash around, we're usually better off if they spend that money to do more of what's making them successful in the first place. Of course occasionally there will indeed be a pandemic, at which point government can help out to prevent both types of businesses from failing, so that when the event passes they can go back to generating value.
tempestn 6y ago
From a societal perspective, it is more efficient for capital to be employed in creating value than stashed away as cash for a rainy day. Rather than every entity—individual, family, business, local government—keeping enough rainy day funds to withstand a black swan event like the most serious pandemic in a century, it is far more efficient to put that money into creating things of value, and to rely on the central government as a backstop in those circumstances.
- alexashka 6y ago
  I think I understand your position. > it is far more efficient to put that money into creating things of value From my perspective, having enough food, medicine and stability to withstand a pandemic without putting the entire society on the brink of collapse is the most valuable investment we can make, while balancing that with providing human dignity and freedom to pursue simple pleasures for all people worldwide. Once we've provided human dignity and simple pleasures to every human being and ensured that it stays that way even in the case of a pandemic or other calamity, then we can start building luxury yachts for billionaires and trading in the stock market strictly for the purposes of profit. That's my understanding of value and maybe I'm naive, but I think most people would see this as a worthy goal for us to share planet-wide. I think having a society that shares this belief, would itself produce an incredible amount of good will, motivation and purpose for many that currently feel alienated and disenfranchised. Do you have a different view of value and what you'd like to see humanity achieve? I'd genuinely like to know.
  - tempestn 6y ago
    FWIW I don't think you should be attracting so many downvotes, because while your point of view is apparently unpopular, you do seem to be arguing it in good faith. (Although for what it's worth, bringing yachts and day trading into it seems a bit of a strawman given the conversation was originally about main street businesses.) I think my answer to another comment of yours above basically outlines what I mean by creating value. The example of the successful restaurant choosing between building up cash and opening a second location. Basically if a business has sufficient profits that they're able to store up a significant cash buffer, it's because they're making something that people are willing to pay for. (Or they're particularly good at regulatory capture or rent seeking or something, sure, but for the most part there is a correlation between earning money and providing something of worth.) Businesses that make popular products and provide popular services—things that people like and are willing to pay for—make more money than those that don't. And these things that people want and are willing to pay for, by definition, have value. So rather than sitting on cash, when possible we would like these businesses to do more of what they're doing. As another example, say you start a tractor company. You really understand what makes a good tractor, and your tractors are widely considered to be the best available. The only problem is, you only have one small factory, and can only produce a small number of them. You turn a profit on each one, and you want to be responsible, so you're saving most of that profit in case of a natural disaster or other calamitous event. It takes around 10 years to save up enough that you could keep all your staff on, your equipment in good shape, and your rent paid for a year, but you manage it. Unfortunately in the meantime, most of the farmers in the worth need to make do with shittier tractors, because instead of growing your business you're trying to build up a bunch of cash. Wouldn't it be better if you reinvested as much as possible into the business—borrowing even—to scale up your production as quickly as possible? That way more people get to benefit from your awesome tractors and everyone is better off. If a pandemic happens, the government helps you get through, so once it's over you can go back to making and selling these machines that are making farms more productive. And all the added production from that reinvestment is of course also creating jobs, paying more in taxes, and earning you more income as well. Now sure, your direct competitors won't love your selling a better tractor, but if we scale the example out to the whole economy, the more successful companies are making and doing successful things, the more actual wealth is created for society. And of course, not all companies make useful things, and the things people spend money on aren't always objectively valuable either. But in aggregate it's pretty clear that value is created. Just look at the quality of life people enjoy now compared to say a century ago. There are serious problems (like climate change) that we need to tackle—I'm not at all arguing for unregulated capitalism as a panacea. But I think it's objectively true that if all companies strove to each build large nest-eggs to weather events like this one, far less wealth (meaning tangible stuff of value) would be created than is otherwise the case.
kmonsen 6y ago
It makes no sense for governments to save money. With negative interests and good ways to spend the money it will pay itself pack in the future. Of course depending on how it is used. For example improving schools almost always has a positive return.
lm28469 6y ago
Some businesses barely make enough to pay the bills and bring food on the table. You can decide what's reasonable or not with your budget but you can't project that on every single person or business. > What do you think is fundamentally wrong with such a view It simply doesn't work in the real world. It's a nice ideal but it's not a thing for most people. People on HN tend to forget that we're earning more than the average here. I made more money during one of my uni's internship, it was before getting my bachelor so I didn't even have any kind of degrees at the time, than my mom was making at the peak of her career. So yes I can save 50% of my salary and have 2 years of emergency fund without even trying to save. On the other hand my mom never had that and couldn't have that even if she wanted to, it's the exact same thing for businesses. After all that's why we live in societies, pay taxes, have insurances, &c.
FpUser 6y ago
Let's skip small business for now. The economy is structured to leave most of the people with just enough money to buy couple of beers after covering basic expenses. It simply leaves no room for few month worth of savings. And every accident (like a visit to dentist) adds to financial instability. Not everyone works cushy 6 figures IT job and hangs on HN.
- tonyedgecombe 6y ago
  Savings rates tend to be much higher in poorer countries. It's clearly not just about how much people earn.
  - SketchySeaBeast 6y ago
    I'd like to see some stats for that - I just did a quick google search and returned a top 10 list from investopedia[1] which has it evenly split between high and low earning countries. [1] https://www.investopedia.com/articles/personal-finance/022415/top-10-countries-save-most.asp https://www.investopedia.com/articles/personal-finance/02241...

EGreg 6y ago

It assumes savings are possible in a business that has tons of expenses and can’t just stop paying rent.

asdfasgasdgasdg 6y ago

You made a bunch of normative statements about what people "need" to do, so I don't think it's out of bounds to make a normative comment about the reasonableness of your demands. >What do you think is fundamentally wrong with such a view, other than that it isn't the way things currently are? For one, it dramatically increases the capital requirements for starting a new business. Such capital is likely not going to be available to new restaurants or other service oriented small businesses with no real collateral. Or it would come at such a high cost that it would be unprofitable to run the restaurant. All to optimize for a once in a century event. I think the world where the government backstops these businesses is just a better world than the one that would arise from what you envision. It has more of what I want and less of what I don't.

alexashka 6y ago
> You made a bunch of normative statements about what people "need" to do, so I don't think it's out of bounds to make a normative comment about the reasonableness of your demands. Did I? There is a single sentence with the word 'need' in it in my entire post. My last sentence expresses my hope for others' behaviour. That's two 'normative' statements that really express the same point - we are living in a consumerist culture. I don't think that's at all a controversial position, it is almost a cliche at this point. I also haven't made a single demand upon anyone. I'm not sure what motivates you to misrepresent my position in such crude fashion and I wish you'd refrain from replying to me in this manner in the future. > it dramatically increases the capital requirements for starting a new business. Help me understand - you think the approach of being responsible and saving for a rainy day, dramatically increases the capital requirements for starting a new business? How? How does saving profits relate to upstart requirements? As far as I can tell - the two are unrelated.
- tempestn 6y ago
  OK, so you're saying you don't need to have rainy day funds at the start of a new business, but should build them up over time, right? So, that leads to two potential situations. Let's use the restaurant example. First possibility is the one most restaurants face. If they're lucky and the business is actually viable, they will have a profit margin of 3-5%. For a single location restaurant, that profit will be enough for the proprietor to make a decent living hopefully, but not a whole lot more. Should be enough for them to save up a few months of personal expenses sure. But saving up enough cash to pay rent, suppliers, and staff, for months, with no income... would take forever with those margins. It's just not possible for most businesses of that sort. But let's also look at the other possibility. Say you've got a real hit restaurant (or another type of business with larger margins) and your margins aren't 3-5, but 15-20%. Now you're saving real money. So yes, you could sock it away under the proverbial mattress. But if you're that successful, it means people really value the product you're providing. Instead of hoarding your profits in case of a pandemic, you could instead invest those profits into opening a second location, allowing twice as many people to benefit from the service you're providing. In the 99% of years when there isn't a black swan event, that option is better not only for the business owner, but for society as a whole. So even for very successful businesses that could afford to keep a large amount of cash around, we're usually better off if they spend that money to do more of what's making them successful in the first place. Of course occasionally there will indeed be a pandemic, at which point government can help out to prevent both types of businesses from failing, so that when the event passes they can go back to generating value.

tempestn 6y ago

From a societal perspective, it is more efficient for capital to be employed in creating value than stashed away as cash for a rainy day. Rather than every entity—individual, family, business, local government—keeping enough rainy day funds to withstand a black swan event like the most serious pandemic in a century, it is far more efficient to put that money into creating things of value, and to rely on the central government as a backstop in those circumstances.

alexashka 6y ago
I think I understand your position. > it is far more efficient to put that money into creating things of value From my perspective, having enough food, medicine and stability to withstand a pandemic without putting the entire society on the brink of collapse is the most valuable investment we can make, while balancing that with providing human dignity and freedom to pursue simple pleasures for all people worldwide. Once we've provided human dignity and simple pleasures to every human being and ensured that it stays that way even in the case of a pandemic or other calamity, then we can start building luxury yachts for billionaires and trading in the stock market strictly for the purposes of profit. That's my understanding of value and maybe I'm naive, but I think most people would see this as a worthy goal for us to share planet-wide. I think having a society that shares this belief, would itself produce an incredible amount of good will, motivation and purpose for many that currently feel alienated and disenfranchised. Do you have a different view of value and what you'd like to see humanity achieve? I'd genuinely like to know.
- tempestn 6y ago
  FWIW I don't think you should be attracting so many downvotes, because while your point of view is apparently unpopular, you do seem to be arguing it in good faith. (Although for what it's worth, bringing yachts and day trading into it seems a bit of a strawman given the conversation was originally about main street businesses.) I think my answer to another comment of yours above basically outlines what I mean by creating value. The example of the successful restaurant choosing between building up cash and opening a second location. Basically if a business has sufficient profits that they're able to store up a significant cash buffer, it's because they're making something that people are willing to pay for. (Or they're particularly good at regulatory capture or rent seeking or something, sure, but for the most part there is a correlation between earning money and providing something of worth.) Businesses that make popular products and provide popular services—things that people like and are willing to pay for—make more money than those that don't. And these things that people want and are willing to pay for, by definition, have value. So rather than sitting on cash, when possible we would like these businesses to do more of what they're doing. As another example, say you start a tractor company. You really understand what makes a good tractor, and your tractors are widely considered to be the best available. The only problem is, you only have one small factory, and can only produce a small number of them. You turn a profit on each one, and you want to be responsible, so you're saving most of that profit in case of a natural disaster or other calamitous event. It takes around 10 years to save up enough that you could keep all your staff on, your equipment in good shape, and your rent paid for a year, but you manage it. Unfortunately in the meantime, most of the farmers in the worth need to make do with shittier tractors, because instead of growing your business you're trying to build up a bunch of cash. Wouldn't it be better if you reinvested as much as possible into the business—borrowing even—to scale up your production as quickly as possible? That way more people get to benefit from your awesome tractors and everyone is better off. If a pandemic happens, the government helps you get through, so once it's over you can go back to making and selling these machines that are making farms more productive. And all the added production from that reinvestment is of course also creating jobs, paying more in taxes, and earning you more income as well. Now sure, your direct competitors won't love your selling a better tractor, but if we scale the example out to the whole economy, the more successful companies are making and doing successful things, the more actual wealth is created for society. And of course, not all companies make useful things, and the things people spend money on aren't always objectively valuable either. But in aggregate it's pretty clear that value is created. Just look at the quality of life people enjoy now compared to say a century ago. There are serious problems (like climate change) that we need to tackle—I'm not at all arguing for unregulated capitalism as a panacea. But I think it's objectively true that if all companies strove to each build large nest-eggs to weather events like this one, far less wealth (meaning tangible stuff of value) would be created than is otherwise the case.

kmonsen 6y ago

It makes no sense for governments to save money. With negative interests and good ways to spend the money it will pay itself pack in the future. Of course depending on how it is used. For example improving schools almost always has a positive return.

lm28469 6y ago

Some businesses barely make enough to pay the bills and bring food on the table. You can decide what's reasonable or not with your budget but you can't project that on every single person or business. > What do you think is fundamentally wrong with such a view It simply doesn't work in the real world. It's a nice ideal but it's not a thing for most people. People on HN tend to forget that we're earning more than the average here. I made more money during one of my uni's internship, it was before getting my bachelor so I didn't even have any kind of degrees at the time, than my mom was making at the peak of her career. So yes I can save 50% of my salary and have 2 years of emergency fund without even trying to save. On the other hand my mom never had that and couldn't have that even if she wanted to, it's the exact same thing for businesses. After all that's why we live in societies, pay taxes, have insurances, &c.

FpUser 6y ago

Let's skip small business for now. The economy is structured to leave most of the people with just enough money to buy couple of beers after covering basic expenses. It simply leaves no room for few month worth of savings. And every accident (like a visit to dentist) adds to financial instability. Not everyone works cushy 6 figures IT job and hangs on HN.

tonyedgecombe 6y ago
Savings rates tend to be much higher in poorer countries. It's clearly not just about how much people earn.
- SketchySeaBeast 6y ago
  I'd like to see some stats for that - I just did a quick google search and returned a top 10 list from investopedia[1] which has it evenly split between high and low earning countries. [1] https://www.investopedia.com/articles/personal-finance/022415/top-10-countries-save-most.asp https://www.investopedia.com/articles/personal-finance/02241...