Perry: Worker-owned businesses require workers to spend time on manage

Question

Perry: Worker-owned businesses require workers to spend time on management decision-making and investment strategy, tasks that are not directly productive. Also, such businesses have less extensive divisions of labor than do investor-owned businesses. Such inefficiencies can lead to low profitability, and thus increase the risk for lenders. Therefore, lenders seeking to reduce their risk should not make loans to worker-owned businesses.

Which one of the following, if true, most seriously weakens Perry’s argument?

(A) Businesses with the most extensive divisions of labor sometimes fail to make the fullest use of their most versatile employees’ potential.

(B) Lenders who specialize in high-risk loans are the largest source of loans for worker-owned businesses.

(C) Investor-owned businesses are more likely than worker-owned businesses are to receive start-up loans.

(D) Worker-owned businesses have traditionally obtained loans from cooperative lending institutions established by coalitions of worker- owned businesses.

(E) In most worker-owned businesses, workers compensate for inefficiencies by working longer hours than do workers in investor-owned businesses.

Bunuel · Accepted Answer

EXPLANATION FROM Fox LSAT

This one hits close to home. Fox LSAT is a worker-owned business. I’m the only worker. As such, I do have to spend time on management decision-making and other tasks that are not “directly productive,” i.e., not directly related to teaching. Fox LSAT has “less extensive divisions of labor” (no division of labor whatsoever, actually) than a bigger, investor-owned company like Kaplan would have. This is all fine; the argument doesn’t bother me up to this point.

But the next line says, “Such inefficiencies can lead to low profitability, and thus increase the risk for lenders.” Here’s where I get off the wagon. First of all, the sentence says “can” rather than “must.” So even if this is true, it still doesn’t have to apply to every single business. (I think I’m probably a lot more profitable per student than Kaplan is, because I focus most of my energy on teaching, which leads to a better product and satisfied students, whereas Kaplan focuses most of its energy on marketing, which leads to a **** product and dissatisfied students. But, I digress.) Since this premise doesn’t  have  to apply to every business, I think it doesn’t prove that Fox LSAT isn’t profitable, and if I’m profitable, then why would I be a bad risk for a lender?

The question asks us to “weaken” the argument, and my first guess is something like “Many businesses with no division of labor have high profitability.” Let’s see.

A) Meh. This answer choice, even if true, might only apply to those one or two businesses with the  most  extensive divisions of labor. And even then, those businesses would only “fail to make the fullest use” of their employees. So what? Those could still be great businesses, and businesses without divisions of labor could still be way worse. I don’t see how this would weaken the argument. No way.

B) The source of loans that are made to worker-owned businesses simply isn’t relevant, because it’s very possible that bankers are stupid. See the housing crisis of the first decade of the 2000s, caused primarily by banks’ outrageous greed and terrible underwriting. The argument was about whether there is risk, and this answer does not prove one way or the other whether there is risk. No way.

C) Same explanation as B. It’s not about the number of loans.

D) Same explanation as B and C. It’s not about the number of loans that are “traditionally” given.

E) Yep. This answer wouldn’t apply to Fox LSAT, because I am a lazy bastard. But  if it were true  about Fox LSAT, then I would be compensating for the so-called “inefficiencies” inherent in non-division of labor by busting my ass. If I busted my ass, then I could be profitable. If I was profitable, then I could be a good risk for lenders.

A through D were all really bad, and I can make a plausible case for E. So E is our answer.

sanjitscorps18 · Answer

Conclusion - Therefore, lenders seeking to reduce their risk should not make loans to worker-owned businesses.

The reason is inefficiencies in worker owned businesses.

The answer should be E as it weakens the relationship of the conclusion and its reasoning.

Posted from my mobile device

VerbalBot · Answer

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Perry: Worker-owned businesses require workers to spend time on manage

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