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What if Apple had failed ? This is what she is trying to say. The risk is taken by the public. And the rewards mainly goes to the private entities.

by nmridul 12y ago

zo1 12y ago
The risk is taken by the public and all the other investors. The loss/reward is proportional, which is something that's being glossed over. From the look of it, the author is trying to make it seem like the public funds it, and the private people reap all the benefits. Weird scenarios aside (such as the NSF research grant stuff), we should see the "public" in the same light as all the other investors.
bsbechtel 12y ago
>>What if Apple had failed? What if the Federal Government subsidizes mortgages causing a housing bubble and subsequently making our entire financial system to collapse costing hundreds of thousands of jobs? What if California spends $6B+ on a high speed rail system and no one uses it? I understand what you (and by extension, she) are trying to say, but remember that every government action has risk and reward, just like every action taken by the private sector. It would be nice if we could keep the risks/rewards of the two sectors completely separate, but that would entail moving to either a completely communist or completely anarcho-capitalist model of society, which might be nice to think about in theory, but will never happen. It's important to note that even if Apple and Google send all their profits and jobs overseas, their investors still have had to pay out $100B+ in capital gains taxes over the years. This has more than paid back any investments the gov has made in them.
- tessierashpool 12y ago
  This is the common theme in the comments on this story: The argument we have socialized risk but privatized the successes is invalid, because when those successes pay off, the taxes paid by those success stories repay the individual investments in those individual success stories. That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off.
  - bsbechtel 12y ago
    >>That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off. That's certainly true, but I'm not sure what you're getting at. I'd appreciate it if you could clarify. Diversifying your investments to hedge against those that don't pay off is the foundation of modern portfolio theory. You can see it in action at virtually every level of society: individual firms have employees that don't generate returns, but they hope that the collective productivity of the entire company can generate a positive return, angel investors and VCs invest across a broad spectrum of companies hoping that a few big wins will offset those investments that don't pay off, and governments invest in a variety of projects, research, and (sometimes) companies that they hope will generate positive returns for the economy as a whole.

What if Apple had failed ? This is what she is trying to say. The risk is taken by the public. And the rewards mainly goes to the private entities.

by nmridul 12y ago

What if Apple had failed ? This is what she is trying to say. The risk is taken by the public. And the rewards mainly goes to the private entities.

zo1 12y ago

The risk is taken by the public and all the other investors. The loss/reward is proportional, which is something that's being glossed over. From the look of it, the author is trying to make it seem like the public funds it, and the private people reap all the benefits. Weird scenarios aside (such as the NSF research grant stuff), we should see the "public" in the same light as all the other investors.

bsbechtel 12y ago

>>What if Apple had failed? What if the Federal Government subsidizes mortgages causing a housing bubble and subsequently making our entire financial system to collapse costing hundreds of thousands of jobs? What if California spends $6B+ on a high speed rail system and no one uses it? I understand what you (and by extension, she) are trying to say, but remember that every government action has risk and reward, just like every action taken by the private sector. It would be nice if we could keep the risks/rewards of the two sectors completely separate, but that would entail moving to either a completely communist or completely anarcho-capitalist model of society, which might be nice to think about in theory, but will never happen. It's important to note that even if Apple and Google send all their profits and jobs overseas, their investors still have had to pay out $100B+ in capital gains taxes over the years. This has more than paid back any investments the gov has made in them.

tessierashpool 12y ago
This is the common theme in the comments on this story: The argument we have socialized risk but privatized the successes is invalid, because when those successes pay off, the taxes paid by those success stories repay the individual investments in those individual success stories. That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off.
- bsbechtel 12y ago
  >>That is not what the term "risk" means. "Risk" also includes all the investments which did not pay off. That's certainly true, but I'm not sure what you're getting at. I'd appreciate it if you could clarify. Diversifying your investments to hedge against those that don't pay off is the foundation of modern portfolio theory. You can see it in action at virtually every level of society: individual firms have employees that don't generate returns, but they hope that the collective productivity of the entire company can generate a positive return, angel investors and VCs invest across a broad spectrum of companies hoping that a few big wins will offset those investments that don't pay off, and governments invest in a variety of projects, research, and (sometimes) companies that they hope will generate positive returns for the economy as a whole.