Lucrative vs. Useful Entrepreneurship

[prosopis]

Originally Posted by jrkliny

You are correct. I am pretty sloppy in using terms such as ethical, moral and socially responsible. So perhaps I can try to explain my point. I think there is a world of difference between managers who care about their employees and managers who try to manipulate and calculate what they should do. Most employees can see and feel the difference. There is often a difference in the final result. It is a lot easier to discount employees if you really don't care that much about them. That is not to say that I believe every decision has to account for the wellbeing and wishes of the employees. Sometimes things need to be done that involve some disagreeable tasks or even hardships. Most employees will rise to the occasion if they believe management cares. It is pretty hard to fake caring.

I think it is as simple as treating employees as you would wish to be treated - in a nutshell, that is being ethical. Whether doing so is just how the manager approaches life or something they can learn through trial and error, the end result is smoother sailing for their business.

This is the easy common ground to find in a discussion such as this. The trouble comes when we move on to whether a society can or should attempt to influence the behavior of businesses - by attempting to foster good practices or penalize poor ones. I tend to think not, because the metric by which judgement would need to occur is inherently subjective.

Originally Posted by jrkliny

Maybe I am wrong about Walmart. I suspect Walmart local management is inconsistent. Considering the number of incidents that keep making the news, I suspect Walmart needs to make some serious attempts to end discriminatory and illegal practices. Maybe instead of a secret shopper program, they need to institute a secret employee program. Anyway the last stunt requiring a dress code with specific items of clothing fell just short of requiring low paid employee to buy uniforms. That was done on a national basis at a time when there had been lots of other complaints and the issue of minimum wage is being discussed. At best the timing was poor.

Local management is certainly inconsistent, same to some degree with any big corp like that. I've even heard that Costco has its problems with local managers, though I suspect the phenomenon may be more rare with them.

[jrkliny]

Originally Posted by prosopis

...........


Local management is certainly inconsistent, same to some degree with any big corp like that. I've even heard that Costco has its problems with local managers, though I suspect the phenomenon may be more rare with them.

Costco is completely different from Walmart as an employer. I know people who work at Costco and are extremely happy with the management. That is saying a lot considering the difficulties of the job. The cashiers at Costco process tons of merchandise and do so very quickly. It seems that employees are always under pressure to keep the lines moving as fast as possible. You would think it would be a horrible place to work, but somehow Costco has gained the trust and support of the employees. It is not just that local Costco. National surveys have shown employees rate Costco very highly as an employer. Forbes listed Costco in the top 10 list for best retailers to work for. I am a big fan of Costco. They obviously make money. Prices are great. They are very selective with products and services. The stores are clean and convenient. Employees always seem happy, friendly and helpful. I even have a personal happy story. My wife and I were traveling and had all of our IDs stolen. We made the necessary phone calls and then headed straight to Costco. Several employees helped. They looked up our information and within a few minutes we had new American Express credit cards with our photos on the back. The new cards were great but the photo IDs proved essential when I tried to retrieve other replacement cards and drivers licenses sent to the post office general delivery.

[concept_fusion]

Originally Posted by kwhitegocubs

Creating jobs that have minimal utility actually destroys social value. It means you are literally wasting that person's life, almost in a comical/dystopian manner, but not increasing happiness or measurable outcomes (life expectancy, infrastructure, health, access to resources, etc...). It's like saying that building a 9000 square foot house for a childless couple is good because of all the carpenters who are employed (and electricians, etc...).

Not really. Depends on the nature of the work, and whether that person is "gainfully employed" as opposed to just having a "job". Even just having a "job" isn't bad, it keeps many, many folks out there out of trouble and they'll tell you exactly that.

[brocco]

Originally Posted by concept_fusion

I disagree, respectfully.

There's definitely some social utility implied in every business charter in this century. Businesses that only exist to make money overstep every ethical and moral ground. They definitely exist, they are (mostly) legal, and they are not something which we should promote as a society.

I'm not sure you see the difference between cause and effect here

[Malloric]

Originally Posted by concept_fusion

It seems to me, a lot of entrepreneurship is concentrated in things which are:

Not terribly useful to society, but lucrative:
Examples:
-High Freq. Trading
-House Flipping
-Finance
-Apps / Software
-Advertising
-Questionable Health Industry Stuff

And yet those trying to solve "real" problems, don't get as much money from their businesses as those who are simply going after the money.

Meaning entrepreneurship isn't necessarily a game of being of the most utility to society, but a game of finding where to exploit easy profits from flawed mechanisms.

Am I wrong? I'm both a practitioner and theorist of the subject, and looking for insight.

Yes.

High frequency traders provide liquidity to the market. Most aren't entreprenuers, as the people making money off high frequency trading do so because they can react in the milliseconds longer the low frequency traders take. So what they do is notice trades coming in at $100.04 while there's currently ones for sale for $100.02. So they buy at $100.02, hold it for a few fractions of a second, and turn around and sell it for a .02 cent gain. That's not really entrepreneurs but nonetheless they do add liquidity.

House flippers do the same. They put a floor on the market, renovate properties, and either rent them for a short time or turn around and sell them. That's not any less of a real problem than the entrepreneur who is doing something that isn't really profitable. Say the guy who does your gardening. In either case, they're functioning the same way. The gardener sees a situations that's easy to exploit (people don't like to mow their own lawns) and the "flawed" mechanism that labor is pretty cheap so it doesn't really cost him that much to cut lawns for people that are too lazy to do it themselves. A plastic surgeon sees that it's easy to exploit rich women who want to look younger or women who want bigger boobs. He takes advantage of the "flawed" mechanism that using a vacuum to suck fat out or putting some silicon pouches in a woman's boobs costs very little but people are willing to spend much more for it than it costs to provide.

[NJ Brazen_3133]

Originally Posted by prosopis

Because it takes a certain degree of previous experience to acquire the good judgement necessary to do so efficiently. Many homeowners who have the interest are well able to acquire that judgement - but far more have no interest in the subject and just desire the results. Hence the market for improved homes.

They hire a contractor to improve it for them, not do it themselves. If they can pick a nice home out of a pool, then surely they will know whether the contractor does a good job.

[prosopis]

Originally Posted by prosopis

Because it takes a certain degree of previous experience to acquire the good judgement necessary to do so efficiently. Many homeowners who have the interest are well able to acquire that judgement - but far more have no interest in the subject and just desire the results. Hence the market for improved homes.

Originally Posted by NJ Brazen_3133

They hire a contractor to improve it for them, not do it themselves. If they can pick a nice home out of a pool, then surely they will know whether the contractor does a good job.

You've missed my point.

Most people who improve their own home do hire contractors, yes.

Far more people desire to buy a home that does not need improvement - for a variety of reasons. Typically they don't know what they want until they see it, they are not into design, they just want the results.

Hence the market available to someone who can do all or most of it themselves - they can make a profit by not having to hire lots of contractors. The most successful flippers tend to be contractors, because they can work with some real wrecks without losing all their profit. If only they would get some design advice and avoid all those neutral colors!

In some cases they are taking the capital risk that the eventual buyer cannot - the bank generally doesn't want to lend you money for remodeling unless its something like a variable rate equity loan (very safe for the bank, less so for the borrower).

If everyone could not do any of this kind of work themselves, and not even manage the various sub-contractors on a big project, then yes, there would be no point to it all and house flippers would not exist. That the flippers do exist tells me they are making a profit by filling one or more of the roles in their remodeling projects. In a hot market with lots of buyers who are not prudent, we seem to get flippers who aren't doing much, but that kind of market is pretty rare.

[Troyfan]

Useful entrepreneurship is what I do. Lucrative entrepreneurship is what you do.