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January 25, 2008


Theophile Escargot

Isn't this just a watered down form of debt bondage?

What happens if you decide you don't want to be a doctor or lawyer anymore, you want to drop out and become a Buddhist monk?

Or what about if you just change your mind and decide you don't want the investors to take 10% of your income?

If there's no coercion, it doesn't seem like a very attractive investment, since the doctor/lawyer can just change his mind and stop paying.

If there is coercion, then you're back to debt bondage.

I think an individual has human rights that a company does not. Libertarians would disagree, but I think that should include a right to break out of very long-term contracts.

Mike Woodhouse

If you bundle a group of people and sell shares in them, reducing the counterparty risk somewhat by introducing a legal umbrella-ish structure, why bother with the problems associated with selling it as a fund? You could call it something whacky like, oh, a "company".

And there are thousands of individuals trading through limited companies already. I've been one myself on a couple of occasions: although I didn't actually sell any shares in my company there was no legal restriction on my doing so.

I think the State-individual relationship is more along the lines of a swap than a share-holding one.

Still, something to ponder on over lunch.

Mark Harrison

I've no objection "in principle" to that kind of macro market.

Isn't the major practical problem as simple as "lack of sellers"?

My (unsubstaniated) hunch is that the vast majority of young lawyers, doctors, CTOs and fund traders would be sufficiently optimistic about their prospects to consider entering into such a trade at the beginning of their careers to be a wildly bad bet.

The other issue, which IS well documented, is that those who receive a lump inheritance at the beginning of their careers tend to do much worse in earnings than those who start with nothing. It's not the hazard of becoming a monk that worries me, but the hazard of becoming a "lazy lawyer".

Nick Rowe

If I buy a (voting) share in a company, I also get some control over how that company uses its resources.

If I buy a share in Randy Newsom, I (presumably) get no control over how he uses his resources.

Shares in human capital are like non-voting shares.


Along similar lines, I have been wondering recently whether the law should be changed to allow younger persons (of school-going age) to take on debt to fund their secondary education.

It seems ridiculous to me that children have no control over the one factor which shapes their lives to the greatest degree. Therefore allowing children to take on debt to move to the local private school (for example) would be a welcome move.

Together with school fee vouchers, would there be a problem with this?

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