But the business bears the risk of running into significant debt if things go bad, as an employee you don't take that risk. Often business owners have invested significant capital in order to get things going, and they are not guaranteed a return on that investment.

I am not arguing anything about the risks the business owners is taking, I am saying taking a job is not the low-risk, low-reward option it used to be.

Years ago there was an implicit agreement when taking a job: work here for 40 years and you will not get rich but at least you will always have a job. That agreement is gone. Work for one company until you are in your 50's and you will be "laid-off" and replaced with a younger worker. Many people still think starting business is high risk compared to working for a company, but over the past 20 years the risks have changed and no longer makes sense to bear all the risk of losing your job with none of the commensurate up side of owning a business.

Looking at it from another angle, the laid-off employee loses nothing - they simply stop receiving. However, the owners are on the hook if the company goes belly-up

The entrepreneurial system is organized so that the risk takers are the money makers when a company succeeds. It doesn't really make sense any other way - why else would someone start a business that might fail and cost a fortune?

A lot of those laid-off people who "simply stop receiving" their paychecks are losing their houses. And the whole point of incorporation is that if the company goes bust, the owners are not personally liable.

The risk-reward incentives for being an employee vs. employer are not quite so simple as you make out.

A lot of those people who are losing their houses are losing them because they treated money they had not yet earned as an asset. Unless your employment contract says you have tenure, you should act as if it does.

Then nobody would ever be able to buy a house with anything less than cash.

Nobody has a guaranteed job for the next 30 years

"Then nobody would ever be able to buy a house with anything less than cash."

I've heard worse advice. That would have avoided the mortgage crisis anyway. The fact that the default in so many markets is to 'buy' things with borrowed money is probably for the worse.

I'm not saying one should never go into debt, but, plan ahead. Your job is not a given so make sure you have a buffer.

Remember the mortgage is secured on the house, so in a non-recourse state, you can simply hand the house back to the lender and walk-away.

This is how commercial real estate works. Can't fill the building? Hand it back to the lender.

If you don't have a guaranteed job, don't take out a mortgage under the assumption you'll never lose your job.

In a public traded company, the owners are the stock holders. Some of the people running the company hired by the shareholders are paid well and do not suffer any consequences if they do a poor job. This is how big corporations work.

No they aren't - that's what "limited liability" means.