[michaelochurch]

1) Buying capital is much, much riskier than earning wages.

Not really. I hate this argument.

A person with $20 million who puts $500,000 into a new business is not taking that much risk. He's putting 2.5% of his net worth into it; if it tanks, he'll have other opportunities to do it again.

A person who puts 2000 of his ~3000 effective working hours per year into a job is taking on a lot more risk. He's putting about 67% of his working time in, and if that job tanks (company goes out of business, he gets fired) he can be seriously screwed.

Both deserve to be rewarded, for sure, but this mentality in which monetary investors deserve prima facie higher status than time investors is utterly fucking sickening. It reminds me that some people haven't got that we stopped having royalty more than 2 centuries ago.

[laaph]

You are having two different people evaluating different situations. Having the same person evaluate the situations would make for a different picture.

Put $500000 in to a new business: This may make lots of money, or you may lose it all. That part stays the same whether or not you are rich or have to beg, borrow and steal the money.

Put 2000 hours in to a job: You are almost certain to be able to collect the money from the hours you put in to the job, no matter if the company goes bankrupt or not. Your expect value may come out lower than starting a new business, but your worst case scenario is much better. Even in the case of the employer leaving town and a locked door when you go to collect your paycheck, most governments have some kind of program to pay employees when there employer does not and to chase down and punish the employer for not paying.

It's impossible for me to fully evaluate the two risks, but I agree with conventional wisdom that having a job is the less risky path for an average individual to take. For the investor, perhaps things are different.

I don't think it has anything to do with higher status, though.

[kd5bjo]

Employees never have 2000 hours worth of labor at risk; they (usually) get paid twice a month, so they only ever have about 80-100 hours worth of wages at risk at any given moment.

If their employment ends, they no longer have the income they used to, but they have 40 more hours a week to use. Most will try to find another employer that will give them money for their time, some will start their own business, and others will retire and use the extra time for leisure.

Investing your time in earning wages is one of the least risky investments you can make; on the other hand, returns on investment tend to be inversely correlated with risk.

[cynicalkane]

What? It's a fact that capital is riskier than earning wages. If you can earn $X working, and have a neutral choice between the two, you will want an expected value of >>$X to be a capitalist. Economists have found this holds across income strata. Don't compare capitalist millionaires to your average laborer; that doesn't tell you anything about the risk-return of capital ceteris paribus.

Anyway, I was just trying to answer the original poster's question. I'm sorry that you are "sickened". To be honest, what often sickens me is people who think their sense of moral superiority entitles them to ignore the way the world is.