Economic Manifesto – 2

11 Dec

The argument is wrong on many counts.

Let’s take the first one, what if he had not invested.

I turn and say what if he had not invested, what would he have done with the money?

Money not invested is dead money. And money doesn’t increase in value lying in vaults and banks. The individual if he is to protect his self interest he needs to find ways to make money grow. So in that sense he had no other option but to invest, whether in his idea or someone else’s idea. Investing the capital is without option.

Now the other argument is, who bears the risk of failure. If the venture fails, the employees would lose nothing rather they would gain as they would received salary for the months they would have worked, while the investor would lose all his saving. Post which employees will find employment somewhere else, while investor would be left twiddling his thumbs.

This argument can also be answered saying failure is inherent risk and when the investment was made individual had no compulsion to take a particular direction, the decision was made on self volition. But that will not address the economic part of the question. Because the logic of the question is based on the argument that if a person to liable to lose everything with no one sharing the loss, he also has the right to gain everything without sharing it with everyone.

The argument highlights one factor and conveniently ignores the other. The impression they are trying to create is that the investor has put all his saving in the venture and its failure will make him a pauper. While on the other hand it tries to prject that the employee without much of an effort would find another replacement job.

If I were to reverse the logic and pose the same question differently. What if the investor after the failed investment, shuts down the venture, and moves on to something else, which succeeds, while the employees who had put all their efforts and commitment behind this business, get branded as failures and become unemployable? In such a case, what is the responsibility of the investor? And if this is a possibility, that what is the stake of the employees in the success of an idea?

To be continued…


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