If that were true, there would be no hyper low margin businesses, much less ones that thrived during the even worse 1970s / early 1980s. Nobody would start such

If that were true, there would be no hyper low margin businesses, much less ones that thrived during the even worse 1970s / early 1980s. Nobody would start such businesses. Witness: Walmart, Costco, Target and most of the retail sector. People have never stopped creating these low margin businesses. You're not actually earning a return via US treasuries, you might get lucky and keep pace with inflation. More broadly you've dropped the context, which is that the business in question can be growth positive even with high risk and tiny margins. US Treasuries are not growth positive, they don't grow and spit off new capital to reinvest into further expansion. Operating with a 2.3% operating income margin is a risky business, retail is extraordinarily difficult and is extraordinarily risky to start a business in due to the very low margins, and yet people will keep on doing it perpetually regardless of interest rates. Earning a lower rate of return for eg five years on a business (vs treasuries), while re-investing into said business, can be the rational thing to do for a larger longer term payoff (which you'll never get out of treasuries). Your premise ignores pretty much all the very complex nuance to business. To say nothing of that the rational thing to do sometimes, is to do what you enjoy, which perhaps is operating a very low margin convenience store instead of sitting on a stack of treasuries. Businesses (more common in small to mid-size businesses) are frequently not run for maximum return, and that action can in fact be quite rational.