Observing over my approximate half of a life I've noted a very intriguing trend -- one in line with "Privatized profit, socialized losses" which I believe I first heard through Noam Chomsky.
I've noted that there has been an increasing requirement for systemic risk to be absorbed by individuals in order to keep up in capitalism. For example once upon a time one could reasonably try and retire with Bonds as a major asset grouping. Later stocks were the minimum viable investment vehicle (more risk, for basic return), some might even say now inorder to get an ok return one needs to chase risk further with things like ARKK tech stocks and cryptocurrencies.
Similarly has been observed in employment. At one time, during strong unions, a lot of the risk was forced upon the employer -- for example defined benefit pensions, or disability benefits that might have seemed extreme by today's standards. Nowadays having a single employer is basically only slightly better than being a contractor, but pays much much less -- the livable compensation now requires much greater risk of being a contractor (from self insurance, contract stability, risk of not being paid etc).
In my experience corporations and employment are for "socialising profits". As skilled developer I can make good money on my own. In employment I have to sponsor admin stuff, less productive coworkers, shareholders...
Corporations are basically form of social welfare for most people. In past there were less unproductive people attached.
I don't buy risk being shifted. Housing or gold is very conservative investment, and it had good returns.
> Corporations are basically form of social welfare for most people. In past there were less unproductive people attached.
Very true! Unfortunately, those people were almost literally left in the dirt, so of course we wanted society to provide them welfare... and we have all the issues of socialism and free riders. We need to separate welfare of people (which is natural to have free riders, but also necessary cost of a society to maintain itself) and employment/corps who shouldn't be filling the job of welfare providers.
this kinda reminds me of the BS Jobs book[1]. People have been given bullshit jobs as we ran out of need for them in the workforce because America is having a hard time figuring out a way to give those people purpose and economic resources in the absence of a "job".
I believe that in short and due time we'll find that much of those returns were 1) non-real due to inflation, 2) will crash back to historical means when we return to less strange monetary policies (such as non-zero interest, and selling at the end of QE), and possibly an effect from retirement/inheritances of baby boomers
Only time can know if I'll be right or not. I actually have a bit of a hypothesis that cryptocurrencies like BTC isn't actually productive right now, it's just wealth preserving and looks like it's "exploding" only because it's relative to a inflationary fiat currency.
once reagan took over, busted unions and fired those unionized air traffic controllers / workers. it was a free for all on american workers. if the president was able to do that, it signalled to corporations, that they're now the robber barons with free reign over workers. ever since then the american worker, has been a puppet. pay can only go so much, even then pay can't get ya kid into a good school, can't help ya ease anxiety over healthcare, shitty police or infrastructure.
now things in america will slowly correct, if employees / fmr employees can hold on to their new found power. but don't worry, a war is being fought in the background to strip workers of this new power. don't be surprised around mid-elections if new irs reporting laws are introduced, so the common man can be hemmed up for unpaid taxes on his new side hustles.
Well the idea that risk is transferred to individuals via employment makes a ton of sense for reasons you highlighted. Companies basically were just selfish and realized they can get away with it. To continue the trend, look at uber which uses "contractors" to get even less obligations from workers. "Gig economy" workers proves your point even more.
BUT bond yields and the like are result of gov policy and QE that aren't made to provide employers with risk aversion (directly, cheap credit is good for avoiding risk). They were made to address economic issues unrelated to employment. This required riskier investments to get 7+% yield, but its not companies doing the shift like other examples. I think a better way to prove your point was the transition from Pensions to 401k's since this dramatically changes the "save enough to retire" risk, while providing less risk to companies on funding employee retirements.
I've noted that there has been an increasing requirement for systemic risk to be absorbed by individuals in order to keep up in capitalism. For example once upon a time one could reasonably try and retire with Bonds as a major asset grouping. Later stocks were the minimum viable investment vehicle (more risk, for basic return), some might even say now inorder to get an ok return one needs to chase risk further with things like ARKK tech stocks and cryptocurrencies.
Similarly has been observed in employment. At one time, during strong unions, a lot of the risk was forced upon the employer -- for example defined benefit pensions, or disability benefits that might have seemed extreme by today's standards. Nowadays having a single employer is basically only slightly better than being a contractor, but pays much much less -- the livable compensation now requires much greater risk of being a contractor (from self insurance, contract stability, risk of not being paid etc).
Anyone else observed similar patterns?