Re:Is the world economy entering a wage-price spiral?
by stale2002 on Tuesday October 19, 2021 @09:27PM
(#28925777)
> Investment happens anywhere there is a chance of positive return.
Thats not how it works. Taking a higher percentage of returns, can leave the returns positive, but the expected value of risks negative.
EX: To make a simplified example, imagine that you can invest 10$, in an investment that has 50% chance of giving you an additional 11$.
That has a positive expected value. But if you put a 20% tax on the winning, now that investment no longer has a positive expected value, even though the returns in the wining case are positive.
Thats not how it works. Taking a higher percentage of returns, can leave the returns positive, but the expected value of risks negative.
EX: To make a simplified example, imagine that you can invest 10$, in an investment that has 50% chance of giving you an additional 11$.
That has a positive expected value. But if you put a 20% tax on the winning, now that investment no longer has a positive expected value, even though the returns in the wining case are positive.