[PassedOut]

mycroft, on 2013-April-11, 18:49, said:

I believe that a certain amount of security increases the risk taking in a culture.

Absolutely! No one in business that I know romanticizes risk the way Mike seems to do.

When contemplating the start of a new business, you look for opportunity. If you see one, you then assess the risks. Your focus is on developing a plan that takes advantage of the opportunity while minimizing the risks. If you can't devise a way to manage those risks, you don't start the business.

Of course there is always the chance that one can be wrong, so you take that into account when deciding how much of one's savings to invest. I'm not a billionaire (by a long shot) and any 6-figure loss disturbs me considerably. So far I've never taken such a hit in a business that I've controlled (although I can't say the same for a certain real estate venture in which I was not a managing partner nor for a certain mutual fund that I bought into).

The point of minimizing risk is that the consequences of not doing so hurts the lives of your family, of your employees, and of the customers who've come to rely upon you.

My considered opinion is that we would be a lot better off in the US if folks knew that they'd have adequate food, housing, and medical care for themselves and their family if they took time off for more education or to start a new venture. Businesses would be more efficient if managers knew that letting someone go would not lead to the ruin of the person's family. And I personally resent all of the time I've had to spend on health care insurance instead of business matters when health insurance should properly be handled by the government -- as it is in more advanced countries.

I've been lucky, and it could have been much different for me. Suppose my girl friend in high school had become pregnant, as happened to some of my friends? I might have had to support a family instead of going to college and later starting businesses. If my friends who found themselves in that predicament had been able to complete their educations, they'd surely have been able to accomplish a lot more with their lives.

[Cyberyeti]

Another example of security helping risk taking.

IIRC in the US if you go bankrupt in many ways, you keep your house. In the UK you don't so bankruptcy is much more devastating and this inhibits risk taking.

As an aside, this difference is one of the reasons the extradition laws UK->US are so despised here, people would rather plead guilty with a plea bargain when they're not than be bankrupted and found innocent.

[barmar]

mike777, on 2013-April-11, 16:07, said:

As far as the whole topic of large businesses vs small ones. I do think size, in this case larger businesses carry much greater risk just based on size alone compared to a s small one. I find it very misguided and funny that so many think a very large business cannot fail or does not have a great risk of failure or simply disappear.
But that may be another thread about size and risk.

It takes a bigger problem or mistake for a large business to fail than a small one. Its size usually gives it a bigger safety net.

You're right that a large business has greater inherent risk. For instance, the likelihood that there's an employee out sick on any particular day is probably close to 100%. But conversely, that employee is less likely to be critical to the success of the business -- the adage "no one is irreplaceable" is mostly true. A large company is more likely to make a mistake that costs the company millions of dollars, but that might be only 1% of annual profits for them, while a mistake of $100,000 could wipe out most of the profit of a small business.

[kenberg]

I would think big/small is mostly a matter of different risk. Large businesses, most of them, have been around for a while. This would mean that they are, or at least at one time were, doing something right. On the other hand, they can get stuck in a routine and miss innovative ideas. I'm no expert, but I would expect the causes for large business failures to not be much like the causes of small business failures. Is it more dangerous to eat oysters from an unknown source or to jump from a plane with an unchecked parachute? I don't know. Probably depends on a lot of things that have not been stipulated.

[blackshoe]

Most of what Hollywood produces is idiotic, when you get right down to it. What else is new?

[kenberg]

There are different ways to look at the problem and ew come from different experiences. But it might be worthwhile to divide the issue into two fundamentally different blocks.

1. Opportunity to choose, based on interest and ability: This is my natural starting point. I feel I was most fortunate to live when and where I could choose my path, and I worry that this is more difficult now than it was when I was young.

2. The changing nature of useful employment: Gerben and Akwoo, and others, develop this idea. I think they might respond to my version 1 by saying that it's fine for someone with mathematical talent (I ahve some such talent, no one ever mistook me for Einstein) to be able to develop it, but the fact is there are many who have no talent that can be developed into a marketable skill in today's world. I apologize if I am mis-stating their views.

In both 1 and 2, we can argue about whether the problem is real. My point here is merely that these are two very different aspects of the inequality problem.



Perhaps Mike's arguments should go into category 3: To what extent is it true that government or society or whatever is discouraging people from making the most of their talents? It's a fair question even if, as I think is correct, most of us do not agree with Mike's conclusions.

I am not rich. Anyone who knows me does not have to be told that. But we are secure enough so that we can sometimes lend a hand to others, and right now we are engaged in something like that. The fundamental question is not what the expense will be, although certainly that has to be kept within bounds we can handle. Rather the fundamental question is whether it will do any good. If it works, we are happy. If not, then not. A very Christian, and conservative, friend, now deceased, worked through his church directly helping some people at a personal level. He would sometimes get very very frustrated. It's good to help, but people are supposed to do their part by not acting like total idiots.

All of this is easier to see in one on one settings, but it applies in the large also.

[mike777]

"To move the discussion regarding inequality away from risk; perhaps to a discussion that inequality can be reduced by learning how to gain from randomness, uncertainty , disorder, errors, stressors, etc rather than trying to stabilize them"

At the very least to honor people and try and increase the number in the tail who are willing to take on this risk, who want to risk gains from uncertainty,,,etc, rather than focus on govt programs aimed at the vast middle and stability.

However I do understand those of you who prefer to focus on stability and making the middle class more robust...I just ask you consider another approach that goes far beyond robust( see#4) in fighting inequality.

Again I have no issue with overprotecting the weak, the very weak, ----

Definition of ROBUST

---


btw1 ya ken you understood my post.. I think what the xpense is key. Do you have skin, real skin in the game, not what you believe is good or best with no skin.


1

a: having or exhibiting strength or vigorous health

b: having or showing vigor, strength, or firmness <a robust debate> <a robust faith>

c: strongly formed or constructed : sturdy <a robust plastic>

d: capable of performing without failure under a wide range of conditions <robust software>

[hrothgar]

PassedOut, on 2013-April-12, 09:26, said:

Absolutely! No one in business that I know romanticizes risk the way Mike seems to do.

Why would you listen to anything that Mike says?
Look at the following from his last post

Quote

As for Germany it seems that they took on great risk as a society when it came to a nuke first policy to stop Russian tanks that would render large parts of West Germany a wasteland for a thousand years. I mean their policy was to launch nukes on their own country. Germany took giant risks in intregrating East Germany back into one country.

1. Germany never had nuclear weapons
2. NATO policy included the possibility of launching nuclear strikes against the Russians, however, these policies were by no means popular in Germany (Germany had one of the strongest "No Nukes" movements in Europe)

[mike777]

fwiw germany agreed to launch nukes on and against its own territory to stop tanks..

This was a very brave and risky decision the brave Germans took. I honor them.


I am surprised people dont know history...recent historyh.

With that said there was robust debate on this topic in West Germany...not so much in the East.

[hrothgar]

mike777, on 2013-April-13, 21:05, said:

"To move the discussion regarding inequality away from risk; perhaps to a discussion that inequality can be reduced by learning how to gain from randomness, uncertainty , disorder, errors, stressors, etc rather than trying to stabilize them"

The problem with this theory is that economics and history both clearly demonstrate that humans are risk adverse.

If I offer someone a choice between

A. One dollar
B. A 50% chance of two dollars and a 50% chance of zeros dollars

the vast majority of people will choose option A

Indeed, if I offer someone a choice between

A. 98 cents
B. A 50% chance of two dollars and a 50% chance of zeros dollars

An awful lot of them will choose option A. This has a lower expected value, but people are willing to sacrifice $$$ to decrease their risk.

If you don't believe these types of experiments, consider insurance.
Buying insurance is sacrificing expected value for risk and its one of the biggest market out there.

[mike777]

I hope in my numerous posts I agree that risk takers are a tiny minority...I only wish to try and increase that number, to honor and enoble rather than degrade the few.

Thus my one recommendation which to be fair posters hated.

In any event I hope to move the discussion and the many thoughtful posters to the issue beyond robust for the vast middle and to overprotect the very weak.

I suggest a way to reduce inequality.

[hrothgar]

mike777, on 2013-April-13, 21:37, said:

fwiw germany agreed to launch nukes on and against its own territory to stop tanks..

This was a very brave and risky decision the brave Germans took. I honor them.

I am surprised people dont know history...recent historyh.

With that said there was robust debate on this topic in West Germany...not so much in the East.

Mike

1. My father taught East / East West German relations for years
2. When I was growing up, the Frankfurter Allgemeine Zeitung was required reading in my house for dinner table conversation
3. I spent many a summer living in Germany growing up
4. When I graduated college, my first job in DC was working for the Defense Budget Project at the Center on Budget and Policy Priorities working on inventory depletion models for ammo in Western Europe

I'm not the one that doesn't know recent history.

1. The German's had no effective voice in determining NATO first use policy.
2. Domestic polls in Germany clearly showed that the German population was opposed to NATO's first use policy

No German government has ever been willing to leave NATO over the first use doctrine.
However, this policy was never very popular within the country and the Germany was the first NATO member to formally petition that NATO adopt a no first use policy.

BTW, you might want to remember that those "brave Germans" were an occupied country up until 1955.
The US started deploying tactical nuclear weapons in West Germany at least a year before the end of the occupation.

[mike777]

regarding germany....posters make my main point


germans brave and risk takers between 1946 and 2000.

I respect and salute you.



See your own posts.


regarding the thread of ineq....I make a contrariwise post....

I hope you think my posts worthwhile to think about.

--

fwiw I view east germany as a liberal country and the worst....

[kenberg]

mike777, on 2013-April-13, 21:05, said:

btw1 ya ken you understood my post.. I think what the xpense is key. Do you have skin, real skin in the game, not what you believe is good or best with no skin.

If you mean to be insulting, you are succeeding. If you mean to be making a clear point, you are failing. What skin in what game? What is the difference between skin and real skin? An do you really want to get into a public discussion of who has more skin in some game or another? I really have no idea what you are talking about here, and I doubt I would much like it if I could figure it out. I guess your basic point, since you seem to think I understand your points and in some sense I think that I do, is that you are the one with real skin in the game, whatever this cliche means, and the rest of us are just posers out here babbling.
Message received, over and out.

[Winstonm]

It sounds to me like Mike is channeling Ayn Rand.

[PassedOut]

Winstonm, on 2013-April-14, 06:37, said:

It sounds to me like Mike is channeling Ayn Rand.

How can one know?

[jdeegan]

barmar, on 2013-April-12, 11:35, said:

It takes a bigger problem or mistake for a large business to fail than a small one. Its size usually gives it a bigger safety net.

You're right that a large business has greater inherent risk. For instance, the likelihood that there's an employee out sick on any particular day is probably close to 100%. But conversely, that employee is less likely to be critical to the success of the business -- the adage "no one is irreplaceable" is mostly true. A large company is more likely to make a mistake that costs the company millions of dollars, but that might be only 1% of annual profits for them, while a mistake of $100,000 could wipe out most of the profit of a small business.

I would like to add another dimension to this Goldilocks debate. Is the porridge too hot or too cold or just right? Properly done government regulation of food service health and safety makes it much easier for new potential entrants to the business. Otherwise, only local restaurants with long term community ties and the big fast food chains with well-established internal health measure controls will have a chance to break into a market.

[onoway]

jdeegan, on 2013-April-14, 09:21, said:

I would like to add another dimension to this Goldilocks debate. Is the porridge too hot or too cold or just right? Properly done government regulation of food service health and safety makes it much easier for new potential entrants to the business. Otherwise, only local restaurants with long term community ties and the big fast food chains with well-established internal health measure controls will have a chance to break into a market.

Not sure I agree. I believe the fastest growing segment of business in food service industry is the food truck business. They are causing any amount of controversy in some cities because they are seen by restaurants to have huge advantages. It generally takes a very large amount of money to start a restaurant, quite a bit less to start a food truck business. Those who start there can then make enough money to fund a more traditional style of restaurant. However, from the interviews I've seen, most of the owners would prefer to have more trucks out on the road, and at least two are working on franchises. Several owners cited fewer hassles as the major advantage. It's a very interesting development.

New restaurants often are higher end enterprises, and with fewer people able to afford them...... So wanna be restaraunteers fight back by taking to the streets maybe?

[onoway]

Another point is that the key phrase is "properly done".Some regulations are bizarre, as having to have a separate sink designated only for washing hands. I have seen such a sink passed by inspectors when it wasn't even looking as though it was hooked up to anything, it was just attached to the wall. Nobody missed it, they washed hands in one of the three other sinks in use. But if an inspector had wanted to, they could have forced the owner into spending several thousand dollars to hook that sink up. Just because.

Also, government regs are often ignored as any food inspector or anyone who has ever prepared or taken a food safe course can tell you. Basically no city I have ever heard of has enough inspectors to see if regs are being followed. Most places, nothing much happens even if they aren't unless it is a serial violation or extremely severe, like one restaurant having skinned coyotes in their freezer. That one hit so many buttons at once they could be and were shut down. However, as in most cities, the owners could just clean things up, change their business name and open up again.

In most places, once approved for business it's a gamble whether or not a place will ever get inspected again unless someone brings the place to the health department's attention. I bet every single person knows someone who has had at least mild food poisoning at one time or another, which suggests that something was very far indeed out of order with how the food was being handled. So it's actually often more stringent to get going now than to keep on once you've had the initial inspection, even if there are health regulation violations from the ongoing business.

[hrothgar]

onoway, on 2013-April-14, 15:32, said:

New restaurants often are higher end enterprises, and with fewer people able to afford them...... So wanna be restaraunteers fight back by taking to the streets maybe?

One major difference that I've noticed between the US and Asia is the lack of good street food.

If you travel in Thailand, China, Singapore, etc. you run across large numbers of vendors selling food on the street.
They'll have portable braziers, a wok, an ice chest, maybe even a table and a few chairs.
In many cases, the best meals that I encountered in these countries were a quick lunch from a street food vendor.
The food was cheap, quick, and often phenomenal. (I also got nailed by some nasty cases of food poisoning a couple times, so you take your chances)

Their really isn't anything like this in the US.
Even the food trucks are a weak approximation...