Investors and initial risk

[Prinskaj]

I was recently confronted with the argument that investors should be heavily compensated for taking the initial risk, and thereby creating new jobs.
Can anybody provide a satisfying answer to why that is not true?

[RedRose]

What do you mean by compensated? Do you mean an investor gets back money for giving other companies money?
I'm realllllly bad an economics but I cannot see how that creates more jobs, what was the argument given for it making more jobs?

[W1N5T0N]

well, is the damage of tje risk foreseeable or disproportionate

[jake williams]

I was recently confronted with the argument that investors should be heavily compensated for taking the initial risk, and thereby creating new jobs.
Can anybody provide a satisfying answer to why that is not true?
There's a couple aspects of this. There's a question of how investors acquire investable wealth in the first place. Certainly sometimes it really does come from hard work, but typically it doesn't. So, if they're just getting wealth in the first place from crime, inheritance, social dispossession, corruption etc., it's not legitimate for them to profit because it's not legitimate for them to be able to profit.

The second aspect is, however, to me, more important. When the economy is structured around certain wealthy individuals - however they came to be wealthy individuals - making private, self-interested decisions about the allocation of capital based on the profit they expect to make, bad decisions get made. The whole structure of decisions about what gets produced, and how it's produced, are made by a specific community of people - investors - whose vested interests in production are not that of the general population. In fact, their interests are in exploiting (as workers) and deceiving (as consumers) the general population. Investments that are profitable are profitable for whatever reason. These reasons aren't generally good.

The argument about "creating jobs" is bullshit. Since they don't have a right to the wealth, it could be used instead by workers to make investments that wouldn't just create jobs, but would create more and better jobs doing the work that we actually decide as a society we need done. Also, what happens in reality is that wealthy investors often involve in non-job-creatinve activities - say, high volume financial trading - and thus prevent their wealth from creating jobs, instead destroying them. This is harmful, and they have no right to do this.

[Misanthrope]

That's what's considered risk in capitalism? Consider the risk of the workers across the globe. Workplace death and disease is a far greater risk then a capitalist losing his business.