You can’t cap returns from investment, it would lock out a lot of productive investments that only become viable because of the home run potential.
I haven’t seen anyone yet in this thread propose there should be such a law. But that does no damage to my point–what these people do is claim that society would be better if people structured things more to their liking (instead of to the liking of the actual participants). That’s the same thing but sort of worse–an expression of a desire to use coercion without the balls to make an actual policy argument and face the real world consequences of such a law.
And how does collective bargaining fit into your view of “freedom”
The state outlaws collective bargaining or striking in some places and prohibits owners from agreeing to closed shops in other places, is that coercion too or is that just defense of freedom?
People can agree to form a group that only sells their labor at a certain price. That’s fine and dandy with me in general.
Of course, other considerations can come into play and coercion could be justified (i.e,. in general, when the thing stopped by the coercion is worse than the coercion).
Not sure what any of the above has to do with anything, but I answered your questions, so there you go.
You seem to have a deep belief in a robust efficient market. One that only exists in economics textbooks. Over time the allocation of wealth has shifted from capital to labor and back again. Is it really healthy for an economy to starve labor for the benfit of capital?
How am I not a participant?
I am not interested in grand theories of social justice.
Dishwashers do not have the same freedom of choice that capital has. You do not have to feed your capital, dishwashers need to eat so they are coerced into providing their labor in a way that capital owners are not coerced into providing their capital.
I’m not saying that we shoud be able to tell people what to do for a living or even tell owners that they have to pay more (assuming theya re paying minimum wage), I am just pointing out that over the last few decades, more and more fo the rewards of productions have done to the owners of capital and their representatives (and yes, I’ve been a beneficiary of that effect) and less and less of it has gone to labor.
And to jsutify this shift by saying “but the owners are the only ones “risking” anything” is a bit simplistic.
What do you think I would do with the dishwasher? The most I could do is raise the minimum wage and as some point that would simply price him out of the market altogether.
If the last few years should ahve shown you anything, it should have shown you that laissez faire does not always work so well.
You haven’t seen anyone proposing what you assume we would propose because we responding to the notion that the owners of capital deserve all the profits from a successful enterprise because they are the only ones that risk losing capital. Aside from the disturbing notion that capital is the only thing that can be risked in enterprise, the OP neglects to consider that lenders risk loss as well but are not entitled to profitsharing, it is not the risk of loss alone that warrants profits. The shareholder takes more risk than the lender but as you know debt and equity are just points on a sliding scale.
Labor is just as necesary to the successful enterprise as capital and in many cases (such as the practice of tax law), capital is significantly less important than labor and labor is significantly less improtant than reputation.
Well, because I think that the decline of labor relative to capital has been the result of a sustained attack on organized labor. Much of it is deserved but we are punishing labor generally for the overreaching of labor in a few industries.
I’m going to try and stay on topic here. You say you don’t want laws requiring the owner of the restaurant to share profits. So what do you want, exactly?
There are two aspects to this question. First and foremost the employee is compensated for the work she does. That seems to be the most unclear part of this discussion. More specifically for the dishwasher, her compensation is in no way tied to the health of the restaurant, but instead she he paid hourly for the time she shows up. What ever risk people want to associate to the dishwasher, that is covered by the fact that she gets paid.
Secondly, monetary investment risk is NOT the only thing taken into account. Like I said, the chef puts his reputation and career on the line, but investing his time. And the waitress risks the earning potential she could have at a busier restaurant. Under this agreement, the chef stands to gain fame command a higher salary if the restaurant is a success, but might get left in the gutter if he fucks it up.
Going back again to gambling, the person that puts down money is the only one entitled to the winnings, and the only person that stands to lose. Under what scenario would you envision spreading around his winnings?
The investor risked his/her capital, and in doing so created jobs. What ever risk the dishwasher perceives working there is rewarded through guaranteed salary. No one is forcing the dishwasher to work at a new restaurant.
At the end of the year, the dishwasher will have earned an income, regardless of how the restaurant did. But the investor took a risk trying to capitalize on the vampire craze. If he was right, he stands to make a profit, if he was wrong he stands to lose the capital he put in. No one is going to ask him to pay for the soup he used. He didn’t have to supply his own mop. He won’t be part of the bankruptcy process.
No, because there is no such thing as “reasonable profit.” We don’t tell a Bono he’s earned enough so his music is free now.
What you are proposing would put a halt to new restaurants.
Backing up a bit, I think I can actually explain why you don’t want to do what you’re suggesting:
When I first started trading stocks, the first thing I was taught was to evaluate how much I was willing to lose on a trade, the key point being that you need to lose on several trades before you get a win. You don’t want to blow through all your capital before you make a successful trade. The flip side to that is that you don’t make an investment unless you think the upside potential offsets those potential losses. If 2 of your 3 trades are losers, you need that winner to be large enough to cover those losses otherwise you go broke. If I’m losing $20 on each failed trade, I need to make $80 on my win to move ahead. If you cap my winnings at $40 for a trade I go broke.
I remember playing roulette once as a kid and the dealer saying, “you’re losing more money each turn that you’re winning.”
Restaurants are notorious for failing. If you want someone to take the risk opening one, you need to allow for the upside potential. If it succeeds, the investor will have enough capital to try again. Now you’ve got two restaurants.
Meanwhile my philosophical premise is that widespread prosperity is better than a single king surrounded by a starving populace. This is why we have differences of opinion.
I agree with your premise. Forcing investors to share profits with employees will not lead to widespread prosperity.
Several months ago, there was an SDMB thread about the “house edge in roulette” where debate went on and on and on, because two sides were using different definitions. The silly thing about that thread was that it was purely semantic: computer software was offered so that the result of any betting system could be displayed; yet still the debate went on.
This thread reminds me of that one. We seem to have a debate about the definition of “risk”, and a Marxist vs Capitalist debate going on in the same thread! :smack: I’d ask OP to determine which, if either, of these he really wants to debate and restart with a different thread title. “Understanding risk” just doesn’t hack it, especially since OP has made it clear that he thinks a millionaire risking $500 risks more than a dishwasher with $400 to his name who risks all he has.
What’s really amusing in this thread is to watch the right-wingers debate strawmen. We’ve had a total of one (1) post in the thread that might be regarded as tending toward Marxist, and it was equivocal:
Uh, Frylock ? For reasons I mentioned in another recent emacknight thread (which he agreed with :D, though drawing the opposite and incorrect conclusions :smack: ), I tend to agree we need to move away from pure capitalism in the modern world. But don’t argue that here! You will find our right-wingers to be more wedded to the “Free Market” dogma than Fundamentalist Christians are to their own dogma. I posted a link to a fun “The Market as God” article that makes that point. (Of course none of the right-wingers has admitted to clicking that link. 
)
And please don’t show any compassion to a mere dishwasher! In fact, they should be happy to work for less than minimum wage, if that’s the way to increase the multi-million dollar bonuses paid to the Wall Street speculators who produced the wonderful financial hyper-efficiencies of recent years.
As if this weren’t enough, we now learn that it is the right-wingers who have true compassion for the dishwasher:
:dubious: :smack:
When did I suggest a cap?
I am merely asking that if the definition of “risk” in the OP is the investors risking their money on a venture then once that investment has been repaid and some profit earned (such that their money wouldn’t have been better off in T-Bills or something) then the “risk” has expired.
Anything on top of that is gravy. That’s fine. Just saying the supposed risk the OP is on about has disappeared.
It is fine that they continue to make money.
Bit of a hijack, but still. .
In professional poker, a lot of pros stake other pros (usually either young, upcoming players or players that have been around the block and are low on bankroll at the moment). They provide the capital, the other guy provides the labour.
It is NEVER the case that the guy doing the staking just pays the staked player a wage. The profit is always shared, while the losses are solely borne by the staker.
And yet, people still do it.
Here’s one of the biggest stakers in the game, talking about it. (amusing)
Can we agree there are “unreasonable profits”?
Depends - on the product, or the company?
http://finance.yahoo.com/q/ks?s=KV-A+Key+Statistics
KV Pharmaceuticals is not exactly a highly profitable firm at this time. If they are marking up that product, they might have lost their shirt on several others. If not, KV is going under.
If the gambler was acting on a hot tip he got about the horses, without which he would be unable to make an intellegent bet, he might give a percentage to the tipster. Even in real casino’s winners generally tip the dealers in approximate proportion to their winnings even though dealers are pretty much interchangeable. As a second example, mutual fund fees are taken out of the fund in proportion to the amount invested. Since it takes as much thought to manage 100 shares as it does to manage 10 shares, why don’t they just charge a flat fee?
In any case, I ask again, why should I only be concerned about risk as you define it when determining compensation?
They “won” approval to exclusively sell the drug. They did not invent the drug and bear those costs. The drug has been around a long time and was made to order by certain pharmacies for a cost of $10-20/dose.
So, they are taking something you could have gotten a month ago for $15 and now charging $1500/dose because they made it so only they sell it.
You miss my point. You questioned their profits, I pointed out that as of their last public filing, they were losing money - NOT making profits.
This is another factor of Business/Investment Risk (since the word Risk alone has perhaps too many permutations, including whether or not to try to take Australia and hold it if you can). A single product could be very profitable, while other are not. I have sold products at below cost, in exchange for long-term servicing contracts (the old razer / blades model). If you looked at the profits of my service plan, you would scream that I am gouging. If you look at the profits of my hardware, however, I am losing money. If you look at the profits of my business unit, we doing OK once all costs are accounted for.
I’ve never claimed to have compassion (whatever that means really).
What I claimed was that you and your ilk dehumanize people like our dishwasher. You treat them like pets–you don’t let them make their own decisions and think they should be fed and watered and taken to the doctor when they get sick.
I think that’s abhorrent. Part of treating someone like a fellow human being is allowing them to experience the negative consequences of their choices.