[dvt]

> On the other hand, employees aren't liable for the company's losses and debts, so it works out in the end.

How can anyone seriously type this? If you fuck up bigly enough, you will 100%—without fault—get sacked. Again, not even talking about long tails (bad economic conditions, layoffs, etc.).

This is under totally normal situations: if you lose the company money, you will be fired. As a bonus, you also lose unvested options or equity. These kinds of posts are exactly why engineers have garbage bonuses compared to finance even though they probably generate an order of magnitude more value.

[chii]

> If you fuck up bigly enough, you will 100%—without fault—get sacked

which is to be expected - making a big mistake might not be something that can be forgiven and overlooked (depending on the magnitude of the mistake).

But you will not lose capital as an employee, since you did not put in capital to lose. Your time would still have been paid, up to the day you are fired.

Therefore, you obviously have no incentive to take on a risk that can result in a mistake (but which the reward you take no part in). You just do your assigned job, and whether it saves the company money or not, as long as you can cover your ass, you're golden.

Unless the company incentivize you to save money - for example, via a bonus through hitting a target or achieving some goal that was set.

[dvt]

> But you will not lose capital as an employee, since you did not put in capital to lose.

The conversation is a lot more complicated because there's an opportunity cost, you lose time (your time is finite, company time is infinite), you lose reputation, and so on. Besides, your argument is a bit weak as it's not like hedge fund managers put up the cash themselves, either.

My point is only that value-generators should be rewarded as such, and it's a bit weird that engineers are totally cool with not getting a piece of the pie.

[gottorf]

> My point is only that value-generators should be rewarded as such, and it's a bit weird that engineers are totally cool with not getting a piece of the pie.

Software engineers are some of the best-paid labor in the world with great benefits and workplace conditions. They often receive equity as a compensation, even when the salary is still vastly above many other lines of work. They are absolutely getting a piece of the pie, and in much greater proportions than almost any other economic activity.

You may be discounting the value of capital, management, sales, and other roles in a successful software-related business.

The remuneration that labor and employees receive is never going to be in line with the value that they generate, precisely because the former group doesn't take any risk. They don't invest any personal capital and they aren't liable for anything. They can walk away any time, sometimes voluntarily, sometimes not. In return, they work fixed hours and get paid on a routine basis. The owners receive only what remains above and beyond all that, which could be great profits, just breaking even, or even losses.

> there's an opportunity cost, you lose time (your time is finite, company time is infinite)

Everyone everywhere loses time, because time passes whether or not you choose to do anything with it. Employees aren't unique among economic entities that they face opportunity costs.

> it's not like hedge fund managers put up the cash themselves, either

This is actually a good example to dive into. Hedge funds are typically paid "2/20", meaning 2% of assets under management every year whether or not there are any gains, and 20% of any gains above some benchmark. It's similar to, say, a commission-based sales role that gets paid a certain fixed salary and a percentage of sales they make. Whether or not 2/20 is "fair" is solely up to those who buy their services, since there is a competitive market of providers of fund management (the "employee") and providers of capital (the "employer").

And in some situations, the "employers" do in fact lose a lot of money, while the "employees" walk away; the limited partners of Melvin Capital, for example, lost many billions of dollars, all while Melvin Capital itself continued to charge the 2% management fee.

And within hedge funds itself, there are again employees who receive a stable salary and maybe some performance-related bonuses on top of that, versus the principals and owners who have personal capital invested. When LTCM blew up, for example, it's estimated that its owners lost $1.9B[0].

[0]: https://en.wikipedia.org/wiki/Long-Term_Capital_Management

[lmm]

> The remuneration that labor and employees receive is never going to be in line with the value that they generate, precisely because the former group doesn't take any risk. They don't invest any personal capital and they aren't liable for anything. They can walk away any time, sometimes voluntarily, sometimes not. In return, they work fixed hours and get paid on a routine basis. The owners receive only what remains above and beyond all that, which could be great profits, just breaking even, or even losses.

The people at the top get an even better deal. They get given stock options, so they get the upside but not the downside. They can also walk away, but they'll get a big payout if they walk away involuntarily. They work fewer hours whether you're counting butt-in-seat time or making-efforts-about-work time (some people, bizarrely, compare the CEO's making-efforts-about-work time to the employees' butt-in-seat time and conclude that the CEO "works more").

> And in some situations, the "employers" do in fact lose a lot of money, while the "employees" walk away; the limited partners of Melvin Capital, for example, lost many billions of dollars, all while Melvin Capital itself continued to charge the 2% management fee.

You're flipping the categories. Being the "investor" can be a bad position, sure. Being the manager, the decision-maker, is where you can't lose. Concluding that that somehow makes employees better off than owners is ass-backwards.

[anonymouskimmer]

> But you will not lose capital as an employee

It depends on how much you mess up. Mess up large enough as an employee and you can end up sued by your former employer. Losing a lawsuit is losing capital. A probably not comprehensive list of reasons an employer can sue an employee, not all of which are because of negligence or malfeasance: https://www.mylawteam.com/employment/can-an-employer-sue-an-...

Depending on the state you can also have your pay docked (if that's not a capital loss, at least for transportation costs, then I don't know what is): https://www.avvo.com/legal-library/employment-law/paycheck-d...

[robertlagrant]

You've completely missed the point. Businesses can lose money for all sorts of reasons. Owners have to eat the losses while keeping on paying salaries.

[anonymouskimmer]

No they don't, they can instead fold the company and sell it off in parts.

[robertlagrant]

That's absolutely the last resort and worst thing to happen for them.

[anonymouskimmer]

Sure. They could instead split the company and dump all of the poorly performing assets and debt into the split off company and on the bond holders.

https://en.wikipedia.org/wiki/Texas_two-step_bankruptcy

https://www.businessinsider.com/corizon-health-bankruptcy-ye...

> If successful, Corizon's Two-Step would avoid a much wider range of liabilities than previous companies who've used it — not just injury lawsuits, like J&J, but the routine debts to vendors that companies rack up every day. If the company succeeds, it provides a "roadmap for eliminating virtually any unsecured liability owed by any corporate entity, regardless of whether that entity is solvent," Ian Cross, a Michigan civil-rights attorney who represents multiple prisoners who have sued Corizon, wrote in a procedural objection in April.

or do a leveraged buyout in which: https://www.investopedia.com/articles/markets/111015/10-most...

> The goal of leveraged buyouts is to make a large acquisition without committing much capital investment.

[robertlagrant]

Sorry - the owners would do a leveraged buyout of what?

[anonymouskimmer]

Their own company, using a handful of additional investors.

Or they'd sell to other investors, who are using a leveraged buyout, in order to get a better selling price than they would have otherwise. Meanwhile the new investors would take enough in income to cover the amount they put down, plus some, and then the company would eventually fail because it had too much debt.