tag:blogger.com,1999:blog-17232051.post6963749317350192373..comments2024-03-18T07:04:18.975-04:00Comments on Noahpinion: "Land of the brave" no more?Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger42125tag:blogger.com,1999:blog-17232051.post-42429786134378982522014-04-03T17:16:51.747-04:002014-04-03T17:16:51.747-04:00True, but some risks are a better bet than others....True, but some risks are a better bet than others. With one risk, your expected payoff may be moderately high and the variance may be quite low, but with some other risk, the expected payoff can be really low and the variance can be high. I'm not sure many people would choose the second risk if they viewed it quite that way, but a lot of people choose it anyway since they think that the high payoff that has a very small probability is actually very likely. And a lot of people end up suffering as a result.Bonnie Kavoussihttps://www.blogger.com/profile/08382789532806756095noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-30326836529919168492014-04-03T16:00:08.984-04:002014-04-03T16:00:08.984-04:00Everyone posting is a communist.Everyone posting is a communist.Anonymoushttps://www.blogger.com/profile/05881937470447603589noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-85824113276893003502014-04-03T10:27:31.402-04:002014-04-03T10:27:31.402-04:00"There has been a general transfer of risk fr..."There has been a general transfer of risk from employers and other institutions to the working individual. "<br /><br />'The Great Risk Shift', by Jacob Hacker.<br /><br />Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-2980926574068707682014-04-03T10:26:06.351-04:002014-04-03T10:26:06.351-04:00Note that the Peltzman Effect was disproven in it&...Note that the Peltzman Effect was disproven in it's original application, and is a conjecture.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-27744569805847380492014-04-03T10:24:44.812-04:002014-04-03T10:24:44.812-04:00"The real problem is unemployment right now -..."The real problem is unemployment right now - people will start taking up much more risks if they knew they would find a job if they failed. "<br /><br />Noah, this is something which you mentioned yourself and still didn't spot. The US is now a place where losing your job can trash you forever. As you mentioned, if you are unemployed for longer than six months, you are screwed, blued and tattooed. Now, how long does it take to find a white-collar job, after losing one? I'll wager that it generally takes six months or more (I've seen a comment by a recruiter printed who estimated that the death curve was actually now a matter of a few weeks).Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34763042236243081022014-04-03T10:22:48.746-04:002014-04-03T10:22:48.746-04:00Not a particularly good article. And please note ...Not a particularly good article. And please note that Europe has been hammered by (right-wing) austerity.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-20663345215923264022014-04-03T10:21:27.396-04:002014-04-03T10:21:27.396-04:00Google for 'Project Shame McCardle', and s...Google for 'Project Shame McCardle', and see what risks she ran in her life. She's been taken care of by a well-connected and well-off father.<br /><br />And in her 'journalist' career, she's made a very nice career out of being wrong on many, many facts, all the while failing upwards. <br /><br />If anything, she is an illustration of why people who aren't connected might be less willing to take risks.<br />Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-49595180280954566042014-04-03T10:19:29.381-04:002014-04-03T10:19:29.381-04:00"Truthfully, bankruptcy laws aren't reall..."Truthfully, bankruptcy laws aren't really the issue when it is relatively easy to start up an LLC and walk away if it fails."<br /><br />I'm making a guess here, but I'll wager that if you form an LLC with few or no assets, nobody is going to loan *it* money. They'll require *you* to sign for those loans, so that they have somebody to go after who actually has assets.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-62228144251665244742014-04-03T09:51:57.297-04:002014-04-03T09:51:57.297-04:00It's HOME of the brave! Geez. One PhD post a...It's HOME of the brave! Geez. One PhD post and 33 comments later, how has nobody noticed this?Heath Whitehttps://www.blogger.com/profile/13535886546816778688noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-33705550857577189502014-04-03T08:16:41.632-04:002014-04-03T08:16:41.632-04:00Noah,
You might want to look at the safety net we...Noah,<br /><br />You might want to look at the safety net we provide to the rich and corporations.PKINVSThttps://www.blogger.com/profile/02207215353806932473noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-55779739435318490182014-04-03T03:18:23.392-04:002014-04-03T03:18:23.392-04:00Thanks for the posting! Get business loans withou...Thanks for the posting! Get business loans without any difficulties from financial services company. <a href="http://selectivefinancialservices.com/" rel="nofollow">Selective Financial Services</a> is an international financial organization with Relationship Managers in major Financial World Markets.Backed by our Research Team, our clients benefits of geographic variety, superior market knowledge, and professional Consultation and advice in a wide range of Leveraged financial productsAnonymoushttps://www.blogger.com/profile/01951271743006071996noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-35435296989941599262014-04-02T12:54:22.895-04:002014-04-02T12:54:22.895-04:00I'm not sure if we want kids to take more risk...I'm not sure if we want kids to take more risks. They'll almost certainly fail if they try to do something like start a business or become an artist. Is there a non-sentimental argument for being something other than an overachiever who shoots straight for high-paying jobs with high job satisfaction and a well-defined path to success? <br /><br />Maybe we could make the argument that risk-taking is good for society in general, but I don't think it's good for the individual risk-taker. And parents obviously put their individual children above the good of society, for better or worse.Anonymoushttps://www.blogger.com/profile/05881937470447603589noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34716801837873254172014-04-01T15:31:40.285-04:002014-04-01T15:31:40.285-04:00A safe rule of thumb is that anything worthwhile y...A safe rule of thumb is that anything worthwhile you find in a McArdle piece, you brought there yourself. It seems to me that the risks are (as Noah notes) much higher, the consequences of failure (as Noah notes) also much more severe, and furthermore, the perception of risk (as Noah notes in passing in his comment on the Japanese Tourist Phenomena) has skyrocketed, thanks largely to media pounding on the Message Of Fear. That these three interlocking phenomena are largely due to the efforts of McArdle's paymasters, and with her enthusiastic assistance, just adds that lovely frosting on the usual "Libertarian" cake.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-89315771950451709802014-04-01T13:36:20.504-04:002014-04-01T13:36:20.504-04:00You lost me at Megan Mc......You lost me at Megan Mc......P-Doghttps://www.blogger.com/profile/15783568193630329886noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-56866304949772787312014-04-01T12:43:53.438-04:002014-04-01T12:43:53.438-04:00Also, Noah's link to the (October 2006) Great ...Also, Noah's link to the (October 2006) Great Risk Shift discussion at CT is like a fly frozen in amber moments before the meteor impact. I wonder, seven years and a few months on, what the authors might say now?Ryanhttps://www.blogger.com/profile/02649838727545288162noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67899637196578431092014-04-01T12:02:27.229-04:002014-04-01T12:02:27.229-04:00Sort of related to this, Incidental Economist is c...Sort of related to this, Incidental Economist is currently running a series of posts about Job Lock (not changing jobs because of healthcare benefits) which I've always sort of assumed was pretty related to the difficulty in being entrepreneurial and is sort of the positive version of Noah's point 1.<br /><br />Link to introductory post (with a ToC for the rest of the posts): http://theincidentaleconomist.com/wordpress/job-lock-introduction/Ryanhttps://www.blogger.com/profile/02649838727545288162noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47971033863847663132014-04-01T06:01:11.074-04:002014-04-01T06:01:11.074-04:00Starting a business is not the only risk-taking --...Starting a business is not the only risk-taking -- bike riding w/o a helmet is also "more risky" than bike riding using a helmet. But less fun. And, now in some areas, it is no longer legal. Wherever "risky behavior" becomes illegal, there will be less of it.<br /><br />And in starting a business, more business regulations and laws means it is more likely to be illegal. <br /><br />Yet the growth in rock climbing, as well as rock climber deaths and injuries, seems to indicate an increase in risk taking.<br /><br />Similarly, having sex w/o properly using birth-control -- most single mothers didn't want to become pregnant when they did, so they were engaging in risky behavior.<br />Because there has already been a BIG INCREASE in the social safety net. But the safety net for the poor is not much of a calculation for workers contemplating starting a business.<br /><br />This post seemed to be both about risk taking, not well discussing lots of risks, and new business formation, again not being clear about whether new business starts are a measure of Americans becoming timid or not.<br /><br />"But anyway, let's assume it's true, and that America has on the whole become a more timid nation. Why might this be happening?"<br /><br />All of #1, #2, and #3 seem to be about business starts, not risky behavior, and none mention the difficulty of creating a new successful business in any slow growth city. And #1, in particular, is false -- most failed businesses owners have more access to a gov't safety net today than in the last 100 or 50 or even 20 years. You fail to define "economic failure", but the level of consumption by those on welfare today seems higher than in 1995 before welfare reform. Comparing actual consumption of those at the bottom 10% income level today vs 10, 20, 30 years might well be good -- I recall seeing blog posts indicating higher color TV, car, and refrigerator ownership. Maybe there is more published. Of course, actually looking up the facts might contradict your comfy but wrong Dem assumptions.<br /><br /><br />Finally, cities that are growing make it easy to create a new restaurant, or any business, by attracting new customers from the new comers to the city. In a stable population city a new restaurant or business needs to change the already established behavior of current residents, which is much harder / less likely to be successful.<br /><br />Less pop growth means more difficulty in starting a business. If business starts are a proxy for risky behavior, stable populations will look more risk averse than growing populations. So it's not a good proxy.Tom Greyhttps://www.blogger.com/profile/15046612425809449502noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-1964562023325588282014-03-31T20:11:00.738-04:002014-03-31T20:11:00.738-04:00There has been a general transfer of risk from emp...There has been a general transfer of risk from employers and other institutions to the working individual. We don't have defined benefit pensions anymore. (The goalposts have been moved.) We don't have a living minimum wage anymore. (The floor has been lowered.) We don't have free public higher education anymore. (The ante is higher.) There is probably just as much risk taking as ever, its just less of it involves striking out in a new business.<br /><br />There's also the problem of business structure. Income associated with sole proprietorships has been shrinking for decades. This is partly about economies of scale. Mom and pop shops get replaced by franchises. Franchises get replaced by big box stores. Big box stores get replaced by distribution systems like Amazon. Its enhanced by modern command and control technologies. In the old days, a chef would be hard pressed to run two restaurants. Now he or she can run dozens and track things on a day by day basis. That's so many fewer slots for risk takers in the business ecology.<br /><br />Part of the result is that return on investment has fallen in general. 4% savings accounts vanished with bell bottom jeans, and they vanished for a reason. The risk premium in general has collapsed. There's a reason the market goes up during times of economic collapse. When there is no place to invest by buying capital goods or hiring workers, you put money into financial instruments. The stock market boom associated with the early 1990s recession was not an anomaly, but part of the new pattern. If the titans of finance can't get a return from building new businesses, perhaps it is not surprising that the little guy figures he doesn't have much chance.Kaleberghttps://www.blogger.com/profile/05283840743310507878noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-25364630715998044112014-03-31T17:09:45.072-04:002014-03-31T17:09:45.072-04:00A former boss of mine once worked as a loan office...A former boss of mine once worked as a loan officer and was critiqued by his boss for having too low a default rate. A certain percentage were always assumed to be destined for default, but which ones could not be predicted.<br /><br />The point here, which you miss, is fundamental to risk - we don't know which are good or bad until the cards are down.Raymondhttps://www.blogger.com/profile/08443348725919635102noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-35653393675135955332014-03-31T11:42:31.481-04:002014-03-31T11:42:31.481-04:00Is there any real evidence risk taking is declinin...Is there any real evidence risk taking is declining? The internet and housing bubbles were not examples of excessive risk taking? There was a lot of risk taking *before* the social safety net. What about people who go into dangerous lines of work, like selling drugs? Seems like there is a lot of risk taking entering illegal businesses in the inner city. <br /><br />Or, maybe productivity means people have more leisure time to take non-economic risks. Membership in the US parachute association has grown 10x since the early 60s while the population has only doubled. Over the last decade membership resumed climbing. And, rock climbing popularity is up too. Then there is mountain biking, road biking (a contact sport in the city), and the shooting sports (the NSSF recently reported that high school trap shooting is up. In Minnesota for example it has gone from 30 kids in 2008 to 6300 last year).<br /><br />As a society we are "taking risks" like repealing drug laws and decriminalizing drugs. <br /><br />Overall, I think you and McArdle are seeing what you want to see here. It's hard to rationalize the "decline" in risk-raking with the housing bubble. I could just as easily make a case that taking economic risks like changing jobs and starting a business are only a very limited dimension. Ample leisure time means people are more willing to take non-economic risks. <br /><br />"Starting a business" has become more complex since the 80s. In the dot-com era, lots of people quit to start a dot-com. Or, they threw their retirement savings into Yahoo or AOL. <br /><br />If there is less economic risk taking, and its not clear to me that there is, I would look to low inflation or aggregate demand first, not any of those other things. Inflation is a socioeconomic sign of scarcity. It signals expansion - get into the labor force and build more stuff. Every new project, whether its a new factory or new business, is risky. Investment is pro-cyclical. But before we go there how about first a coherent objective measure of risk taking.dwbhttps://www.blogger.com/profile/02799793864068767226noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6647385588689680602014-03-31T05:55:12.853-04:002014-03-31T05:55:12.853-04:00Federic Mari
Well said - but here is the real (unc...Federic Mari<br />Well said - but here is the real (uncovered) question - why is taking massive risks, necessarily a good thing. Maybe progress is driven mostly by incremental gains.reasonhttps://www.blogger.com/profile/10958786975015285323noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67469697566847584302014-03-31T04:29:09.894-04:002014-03-31T04:29:09.894-04:00The libertarians would reply that's just b/c t...The libertarians would reply that's just b/c the risks aren't big enough YET.<br /><br />If the gap between the rich and the poor keeps increasing and, absent huge risk taking, failure is a certainty, surely, it will be all the motivation needed for the middle class to finally take risks.<br /><br />Basically, make it an alternative between Russian roulette and a firing squad. Then, most people will finally choose the Russian roulette, as they should have in the first place.<br /><br />Give me Nietzsche's Superman or Death!<br /><br />My take: http://theredbanker.blogspot.com/2013/03/inequality-and-growth-sequel.htmlAnonymoushttps://www.blogger.com/profile/02635749385748660522noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-15891385291554258152014-03-31T02:41:03.421-04:002014-03-31T02:41:03.421-04:00"Discount rates implied by stock prices haven..."Discount rates implied by stock prices haven't fallen much, but I'm not sure that tells us a lot."<br /><br />If risk-taking has decreased, then discount rates should rise. I think the cost of equity has probably have fallen over the last say fifty years, but I agree that it probably doesn't mean much about risk taking in the sense you mean it.Charlie Clarkehttps://www.blogger.com/profile/02079017903923824877noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-2104741829131560282014-03-30T18:45:01.042-04:002014-03-30T18:45:01.042-04:00Benjamin - I expect the laws differ from jurisdict...Benjamin - I expect the laws differ from jurisdiction to jurisdiction but bankruptcy law is part of my practice as a lawyer. In my experience there are important liabilities that an LLC does not avoid.Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-79065129336427158692014-03-30T17:52:15.091-04:002014-03-30T17:52:15.091-04:00The Peltzman Effect vs/or/and crowdfunding.
The...The <a href="http://marginalrevolution.com/marginalrevolution/2014/03/the-peltzman-effect-in-children.html" rel="nofollow">Peltzman Effect</a> vs/or/and <a href="http://www.bloombergview.com/articles/2014-03-28/crowdfunding-is-not-a-scam-it-s-market-research" rel="nofollow">crowdfunding</a>. <br /><br />The size of the safety net that we, as a society, provide has to depend on what people are going out on a limb for. The more safety net we provide for stupid endeavors...the less safety net we'll have for brilliant endeavors. You know what I mean...right? It's your favorite concept...<a href="http://pragmatarianism.blogspot.com/2012/11/opportunity-cost-passages-quotes.html" rel="nofollow">opportunity cost</a>.<br /><br />The market works because we can all vouch/vet/validate what other people are doing with society's limited resources. Your blog has nearly 700 followers...mine has 10. Does this have any significance or meaning? Sure, far more people vouch for how you are using society's limited resources. Clearly you're going out on a limb for something that more people value. This means that far more resources should be allocated to your efforts. <br /><br />Where it gets funny/strange...is that my efforts have to do with pointing out the value of crowd vouching...while your efforts are the complete opposite. You point out the value of government vouching. More government vouching means less crowd vouching. LOL. The crowd vouches for your efforts to malign their value judgements. The crowd values your efforts to point out how their values are wrong. Sheesh. Sigh. <br /><br />Of course your crowd is just a subset of the crowd. A subset of the crowd who obviously fail to understand how and why markets work. It's an unfortunately large subset though. <br /><br />You should put your crowd to work. Create a blog entry where you propose starting an online forum that works exactly like our public sector does. If you get enough positive responses...then start a crowdfunding campaign to finance your top down forum. It's a brilliant idea right? As it stands...<a href="http://pragmatarianism.blogspot.com/2014/03/why-is-every-forum-market.html" rel="nofollow">every forum is a market</a>. I'm sure it's just a coincidence. Xerographicahttps://www.blogger.com/profile/14978832439622230018noreply@blogger.com