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I claim that simply providing that capital to others is itself a worthwhile service that deserves its income, even if all the other factors are completely lacking.

"Deserves"?

Perhaps a better word might be "entitled"? Is this some sort of financial "entitlement" mentality? Socialism for the providers of capital?

Your first two or three paragraphs were irrelevant to the point I was making. I'm well aware that expected risk is factored into financial transactions. My point was that when the models and the algorithms fail (as they sometimes do) resulting in income imploding and losses skyrocketing that should also be a part of your "proposition" but one which I didn't see mentioned.

I consider my own profession to be a "worthwhile service" to use your phrase. However, someone could invent something tomorrow which renders my service redundant and I'd be looking for a job. That's a "risk" I have to live with but it doesn't mean I deserve something if that "risk" becomes a reality.

We are discussing a moral principle and a matter of right, so yes we are talking about what men are entitled to. Men sometimes allege that interest is illegitimate, "unearned", and undeserved, and use this allegation to justify various forms of robbery directed at the rich or at all providers of capital, rich or not. And I am claim everyone engaged in that is a crook and a thief and pond scum, and no decent man should give them or their allegations the time of day.

Next I have to address the question whether there is a right to rob everyone who provides capital to another simply because he has done so. I claim there is not, in law or in equity. And I claim that you are pretending there is and don't have a leg to stand on.

One man lends capital to second, hoping to earn a profit on his capital. The second laughs and runs away with the money. I claim the second is a thief, has robbed the first, owes him what he took plus the interest agreed and probably damages as well. You claim the first "took a risk" and oops it "didn't work out" so he's just out of luck. In other words, you are proclaiming a right to rob anyone of capital provided to anyone else. And there simply is no such right. It is merely another attempt by populist deadbeats everywhere to justify their rapacious fraud against their creditors.

I can agree it is a rule of prudence to be careful about whom one lends to, and anyone may get "took" by thieves. But that isn't a defense of thievery or a denial of the rights of men robbed in that manner. It is merely a piece of street wisdom about where not to go in order to avoid getting mugged - not the legalization of mugging.

You on the other hand appear to be stumping for the legalization of mugging. Sorry, no, can't have that.

We can talk about prudence and policy about such theft when it does occur, endlessly, no problem. But first we have to be entirely clear that it is theft. Taking your creditors capital and walking away with it is not the creditor's fault for running the risk and his just deserts for being so gullible. It is just theft, and nothing can justify it, in law or equity or economics.