Why has Communism failed everywhere ? A chance for commies to explain

[Kidlicious]

Originally posted by Kontiki


Actually, your fix still doesn't make sense in the context you're talking about since you don't add non risk related costs to your revenue.

But more to the point, it useless to what Flubber and I are talking about. Play along with your equation:

You are deciding whether to invest $100 million in a project that you figure has a 95% chance of a successful 20% ROI, but a 5% chance of complete failure (we're keeping this simple - obviously there are normally various possible outcomes). You go through your risk assessment and determine that it's worth the risk, since a riskless return is only 3%. Lo and behold, the project is a success, and you get your 20% return. Let's plug that into your equation:

$120MM (revenue) - $100MM (non-risk related cost) = $20MM profit

Where's the risk cost again?

Thank you for fixing what was hopefully my last error on that.

You took a risk and you won. So there is no cost, because there is no more risk.

[Kontiki]

Originally posted by Kidicious


Thank you for fixing what was hopefully my last error on that.

You took a risk and you won. So there is no cost, because there is no more risk.

OK, change it up so that you don't win:

$0 (revenue) - $100MM (non risk related costs) = -$100MM profit (or $100MM loss, if you prefer).

What's the risk cost here?

Or better yet, rework it so that there is a risk cost.

[Flubber]

@ bezerker

we should call it "kidiciousing" a thread-- sort of like danSing but it would refer to changing the context, outright misstatements ets etc-- unfortunately there are probably several otehr posters that would deserve the label more

But none of this bothers him-- he said I was raising a new point-- when I quoted myself to show my argument was consistent and he just went on to say it was irrelevant

I enjoy the banter but thats all it is . .. banter with an impractical idealist who seems bitter at the world that others "have " more than he does. His response is to blame the system and the world. Thats his right. But its my right to show up and say I think its crap.

Other communists, for example che, have theories but they seem to take a more proactive view of their ability to change their circumstances. Most of the other communists at least seem to have some consistency and logic to their views. Even if I reject something I still respect the thought process behind it

[Kidlicious]

Originally posted by Berzerker
You said some libertarians believe its better for the economy if poorly run businesses are allowed to fold. You are changing your argument again.

You lost me. I'm not changing my argument that I know of. All economists believe that poorly run businesses should generally be allowed to fail. The difference is that some believe that resources will not, and should not be used, and other believe that resources should always be used, and will always be used, save for govt intervention.

So you've added a new context and pretend its the original context in which you didn't even mention anything about a recession. There you go again...

I didn't change the context. People perish when they have no means for survival. Isn't that a recession?

Where did I mention "superiority"? If the implication of an efficient and inefficient business is that the former is "superior", then neo-classical libertarians do believe that some people are superior to others.

The producers themselves are not superior to the inefficient producers. They just have some lower costs because of geography and or access to resources.

[Kidlicious]

Originally posted by Kontiki


OK, change it up so that you don't win:

$0 (revenue) - $100MM (non risk related costs) = -$100MM profit (or $100MM loss, if you prefer).

What's the risk cost here?

Or better yet, rework it so that there is a risk cost.

Wha?! You are going from after the fact of the risk. You can't do that because the risk no longer exists.

[Kidlicious]

Originally posted by Flubber
Decent answers generally. This one requires a little follow up



Obviously in a democracy as well there are certain enshrined rights which are not seen as simply revokable at the will of the majority.

Would it be youir intention that certain principles be enshrined, perhaps as constitutional rights, and therefore be more difficult to change.


If so who decides what these principles are ?? My problem is when you talk about not allowing the majority to rule, then obviously someone else has set the rules (even if it was some decision by a prior majority).

But rights are a funny thing. What if your systemis tried and the economy stagnates such that a majority becomes convinced that the old ways were better. Does the clear majority have the right to say that the exploitation concept is silly and our right to work for whom we choose is paramount.

Note that you could still have the state offering its "fair wage" but I suspect it would be like the public service now and become a place where people earn LESS money

Obviously a state can not continue in existence if it istn't popular. I don't know if that answers your question. We probably agree.

[Flubber]

Originally posted by Kidicious


Wha?! You are going from after the fact of the risk. You can't do that because the risk no longer exists.

and at the time of assessment of the project these is no "risk cost" you can point at since what you have are probabilities of various levels of revenue and various levels of costs projected out over dozens of years.

[Flubber]

Originally posted by Kidicious


Obviously a state can not continue in existence if it istn't popular. I don't know if that answers your question. We probably agree.

It appears we do if you do not propose the continuation of a state in its existing form against the wishes of the majority

[Kontiki]

Originally posted by Kidicious


Wha?! You are going from after the fact of the risk. You can't do that because the risk no longer exists.

Fine - take my scenario and plug the numbers into your equation so that it works. I'd love to see how you can put in a number for the risk cost that is independent of revenue and still come up with a meaningful profit. Or if you don't like my scenario, create one of your own where you can put a value on risk independent of revenue.

[Kidlicious]

Originally posted by Flubber





and at the time of assessment of the project these is no "risk cost" you can point at since what you have are probabilities of various levels of revenue and various levels of costs projected out over dozens of years.

Why do you guys make things so difficult. You can't not insure your factories and not take into consideration that eventually some factories will burn down. If you make $20M profit because you didn't buy insurance and instead took a risk sure you have made profit, but if you keep doing that eventually you will pay the price.

[Kidlicious]

Originally posted by Flubber



It appears we do if you do not propose the continuation of a state in its existing form against the wishes of the majority

Again, I don't believe in majority rule, but I believe the majority should have a voice. If they are overwhelmingly against the govt then a peacefull solution is prefered.

[Kidlicious]

Originally posted by Kontiki


Fine - take my scenario and plug the numbers into your equation so that it works. I'd love to see how you can put in a number for the risk cost that is independent of revenue and still come up with a meaningful profit. Or if you don't like my scenario, create one of your own where you can put a value on risk independent of revenue.

Let's say that you invest in many projects. There is risk to everyone of them. The risk is low though, so you make good profit on most of them. But there is one project were you are unlucky, or whatever, and you take a loss. That loss is the cost of risk.

[Flubber]

Originally posted by Kontiki


Fine - take my scenario and plug the numbers into your equation so that it works. I'd love to see how you can put in a number for the risk cost that is independent of revenue and still come up with a meaningful profit. Or if you don't like my scenario, create one of your own where you can put a value on risk independent of revenue.

Kontiki

he can't-- the idea that there is a number on the analysis called risk cost is laughable. (unless he wants to go back to his previous use of the term referring to insurance premiums as a cost item)

Risk is generally simple (if hard to quantify). You assess the probability of various outcomes and the results are quantified. management usually wants to know the p50-- most likely return, the bounds of likely outcomes say p99 and p01 and the risk weighted rate of return. all of this goes into the decision making process and can result in a project with a higher likely rate of return being rejected in favor of a lower return with less downside risk

[Kontiki]

Originally posted by Kidicious


Why do you guys make things so difficult. You can't not insure your factories and not take into consideration that eventually some factories will burn down. If you make $20M profit because you didn't buy insurance and instead took a risk sure you have made profit, but if you keep doing that eventually you will pay the price.

I don't see how we're making this difficult - in fact, we're making it as simple as possible.

But even going with what you've said above, why don't you tell us what the risk cost is and why you will eventually pay the price? Do all factories eventually burn down at some point or another?

You built the equation, make it work!

[Kontiki]

Originally posted by Kidicious



Let's say that you invest in many projects. There is risk to everyone of them. The risk is low though, so you make good profit on most of them. But there is one project were you are unlucky, or whatever, and you take a loss. That loss is the cost of risk.

No, the loss is reduced revenue, not an independent cost of risk.