4 replies to this topic

[Snow_Fox]

Something I had never thought about before, but saw argued recently was that in situations where people become rich to a degree that is incredibly disproportionate to the general population. They then gain the ability to invest in any given thing they want and create bubbles, which will then pop and cause everyone who was in the bubble and got a job, salary and living wages from that bubble to then lose everything they invested into the bubble. Meanwhile, they never risk their own comfortable lifestyle. An example here is if you have a billion dollars, throw 500 million into a failed business endeavor.. You can temporarily employ people, pay for the business venture.. And still have it totally flop. You still have 500 million, but you've displaced a lot of jobs, possible even people who move to take part in your business venture and you may even move them away from jobs they had already, that may not be waiting there when they get back.

[CptnChan]

What does this have to do with objectivism?

[Hairnet]

In this scenario I only see a business man getting punished for his mistake. Losing half of one's wealth is terrible, where as the employees seem to have gotten paid for their time (even if it is inconvenient that their time with the company wasn't as long as they expected).

When your employees can't employ you anymore because of mismanagement it sucks, but it isn't wrong.

This really doesn't have anything to do with macroeconomics though.

[knast]

So some rich people can "afford" to make really expensive mistakes - and that's a flaw with Objectivism? I don't see how it follows.

[softwareNerd]

An example here is if you have a billion dollars, throw 500 million into a failed business endeavor

Are you talking about the $500 billion that government spent on Solydra, the failed solar-energy company ? The point is: if you think rich businessmen can make mistakes, then you should see what governments can do. For instance, governments can subsidize an entire housing market across a country, pushing prices up and causing a spiral of asset-price rises that ends badly for the whole country, and reverberates around the world.

Or, if we're talking about a hypothetical, what of a rich altruistic businessman who decides to give away his billions and people start to rely on him for their sustenance and then his money dries up, leaving them destitute. You see the flaw here? Those guys who were sucking at his teat are responsible for their own fate.

There's an important lesson for individual employees: you must be aware of what your company does and what its prospects are. No, you do not need to be an expert, but you must have a basic sense of awareness. This is not far-fetched: rather, it is routine. Twice in my career I have worked for a company that was running into trouble. In both cases, employees saw the writing on the wall well before the end. If anything, employees seemed to be more nervous and pessimistic about the company's prospects than was warranted. Also, in both cases, most employees did not drop everything and leave. They looked for other jobs pretty deliberately and without much desperation and fled the sinking ship in a trickle.