What's the difference between people and companies? That's the question raised by
rounders baseball player Randy Newsom's offer to sell shares of his future income (via).
Why isn't this more common? Why shouldn't doctors, lawyers and university students generally finance their education by issuing shares rather than debt? Why should it be only companies who have the luxury of being able to choose how they are financed?
(Of course, the Miller-Modigliani theorem says it shouldn't matter how people or firms are financed, but leave this aside).
The answer can't be that people are risky investments. Have you seen some of the rubbish quoted on Aim? Indeed, the most obvious risks to Mr Newsom's income - injury, loss of form - should be attractive to equity investors because they are uncorrelated with market risk. On this count alone, there should be decent demand for such shares.
Ideally, this would be a backdoor way of introducing macro markets. Enterprising young people might follow Mr Newsom's lead and issue shares in themselves. These could then be bundled together and sold as ETFs on (say) doctors' or lawyers' or even just graduates earnings. We'd then have markets in occupational earnings, allowing people in those occupations to reduce risk by shorting the ETF.
So why doesn't this happen? The problem, I suspect, is counterparty risk. People who had sold shares in themselves and become successful might insist on being paid in kind (or take leisure), thus depriving shareholders of income.
But is this really an insuperable problem, which can't be solved by careful contract writing? And is it really sufficient to make people very different from companies, which have ways of chiselling cash out of minority shareholders? I'm not sure.
What I do know, though, is that there's one organization that does hold shares in people - the state. You can think of income tax as a form of dividend payment on your human capital. Why should it be only the state than can receive such dividends?