this post was submitted on 27 Dec 2023
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Economics

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[–] [email protected] 5 points 1 year ago* (last edited 1 year ago) (1 children)

Ideally, taking business risks should be rewarded as much as possible. That keeps an economy dynamic, flexible, and responsive to new opportunities. Otherwise you get an economy dominated by big brittle players that are content to sit back and milk cash cows. Oracle comes to mind, with its army of lawyers eager to shake down institutions that may not have quite the correct license for a server.

This is where bankruptcy for businesses is incredibly important. People should be able to start a business based on an idea, try to grow it, and not suffer personal ruin if the business fails. A good social safety net is beneficial as well to make sure that after a business folds, its former owners still have the bear necessities of life. Likewise, there needs to be a strong inheritance tax so the wealthy have their wealth significantly diluted.

None of this will make things equal between the children of the upper class and lower class, obviously. It just makes social mobility a little easier and benefits the economy as a whole.

[–] [email protected] 5 points 1 year ago (2 children)

That is the opposite of risk. A risk is something you do with a poor chance of success, possibly with a good reward if successful. What you're describing is a guarantee. Now look at the returns on guaranteed interest certificates and the high-risk stocks. Sure, some of the high-risk stocks outperform the guaranteed certificates, but many also end up being worth nothing.

[–] [email protected] 2 points 1 year ago

Risk exists on a spectrum. US Treasury Bonds would be about the lowest risk asset you can invest in, but there's always risk at some level that the dipshit Republicans in Congress finally manage to blow up the bond market.

A healthy economy has a good mix of creation of new businesses, destruction of inefficient businesses, and retention of businesses that are well run. The family run corner grocery store may just not need to grow and change much.

[–] [email protected] 1 points 1 year ago

Yes, exactly. Businesses should be less risky to open and that should be paid for by larger corporate taxes. Coca Cola is selling sugar water that costs 50¢ for a dollar. They can afford higher taxes because of their huge brand name. And I own shares of Coca Cola.