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Path: utzoo!watmath!clyde!cbosgd!ihnp4!houxm!vax135!cornell!uw-beaver!ssc-vax!eder
From: eder@ssc-vax.UUCP (Dani Eder)
Newsgroups: net.politics.theory
Subject: Risk vs. Reward
Message-ID: <458@ssc-vax.UUCP>
Date: Tue, 26-Feb-85 21:20:02 EST
Article-I.D.: ssc-vax.458
Posted: Tue Feb 26 21:20:02 1985
Date-Received: Fri, 1-Mar-85 05:35:05 EST
References: <792@utcsri.UUCP> <1184@amdahl.UUCP>
Organization: Boeing Aerospace Co., Seattle, WA
Lines: 44

> > > The Rich also create jobs, because they are willing to pay people to
> > > do things they themselves are not willing to do.  This is, in effect,
> > > redistributing wealth.
> > 
> > Huh? How is this "redistributing wealth"? The auto manufacturer pays
> > wages and gets cars. The cars he gets are worth more than the wages
> > he pays (otherwise he would have long ceased to be an auto manufacturer).
> > Therfore, not only does he not "redistribute wealth" but in fact
> > appropriates the wealth created by the labour power he hires.
> 
> The workers get a share of the value of their labor.  If there were
> no auto manufacturing company to pay them, their labor would be
> worthless.  It is because some person with a lot of money (theirs
> or someone else's) is willing to pay them for their labor that
> these people have jobs.  Isn't that nice?
> 
     Employees more or less get full value for their labor.  They
also have very little risk.  Working, as I do, for the Boeing Company,
I can be fairly confidant that I will get a check every two weeks
for the full amount of time I put in.  On the other hand, the shareholders,
who in aggregate own the company, have a bunch of plants full of 
equipment, a number of airplanes in various stages of assembly,
zillions of parts, and a lot of risk.

     These are the risks they take: will all the planes we build
get sold? will the selling price be more than what we pay suppliers
for parts and our employees for their labor? will the FAA certify
our new models as safe enough to carry passengers?  Will we be able
to compete with France, Britain, W. Germany, and the other owners of
Airbus, our main competitor?

     In return for taking these risks, the shareholders have the
opportunity, not the certainty, of making a return on their
investment.  If the employees wages were increased so that there
was no profit for the shareholders, why should they take those risks
I mentioned?  They would have no chance for gain and many chances
for loss.  

     One of the most fundamental rules of investment is that the
risk you take should be proportional to the potential gain.  This
applies to the laborer, who invests his time, as much as to the
venture capitalist, who invests money.

Dani Eder / ssc-vax!eder / Boeing