This is part of the Insane Ideas series. A group of blog posts that detail ideas, possible projects, or concepts that may be of interest. These are ideas that I don’t plan to pursue, and are thus available to any and all that would like to do something with them. I hope you find some inspiration – or at least some amusement in this.
There are many ways to invest in a variety of things, though there is one hugely promising front that has barely begun to emerge, that could have massive potential for profit, and incredible ramifications: the ability to invest in individuals. Some schools offer plans that use income sharing instead of requiring students to take out loans to cover tuition - this is just the start of what’s possible though. Imagine a future where you meet a bright young intern, and instead of just wishing them luck on their last day, you buy a few shares of their future earnings. Or when a colleague announces their retirement, you buy shares in the person you think is most likely to get promoted to replace them. Or when a friend’s child graduates from high school, instead of a pen or some other traditional gift, you invest in their future by buying shares.
Before I go on, this is a way that capitalism can be taken to a logical extreme, though one that is not only possible but could be desirable to some. It would change how people interact with the world, how people make decisions about their future, how companies operate, and so many other things. Some of this could improve quality of life, some things about this could substantially harm the quality of life and decimate personal privacy. I’m not recommending that this become the future; this is simply an idea that’s been floating around in my head for quite some time.
By allowing investment in a person, this completely changes the dynamic around the cost of education - that could be covered by the sale of stock - which allows greater focus on building a prosperous future instead of worrying about survival. It changes the way people start businesses by allowing people to invest directly into the founder and own part of their future success. It changes how people pursue jobs and career changes by changing the financial impact. It also creates opportunities for new safety nets, mentoring, guidance, and opportunities. Investors have a financial interest in the success of people, making them more likely to make additional resources and connections available to them to help them succeed. The more people who have a vested interest in someone, the more likely they are to gain connections and opportunities that will set them on a path to future profits.
I see the system working something like this:
- John Smith is born, within days a management company creates a company called John Smith Future, LLC - this company is the legal entity that people will invest in and will receive a percentage of all earnings that John Smith receives over his lifetime (for example, 10% of all income after taxes).
- John Smith Future LLC calculates the most likely earnings based on health, information on his parents and other relatives, location, and other factors. This calculation sets the initial sale price for the stock made available for purchase by the public.
- Each parent receives 10% of the total stock, and 20% is set aside for John, which will be transferred to him after turning 18.
- John Smith Future LLC releases its analysis of John Smith and makes the shares available for purchase on an exchange. The company holds all funds from investors for future use for activities that boost John’s earning potential.
- The company can then take various actions to help ensure success and investor return on investment. This assistance can include anything from adding the child to a waiting list for a highly rated preschool or purchasing life insurance to ensure that should John die, the investors will receive some return.
- Each quarter, the company will publish an updated analysis and earnings projection. These projections could change based on various factors; for example, if John and his parents move, moving to Silicon Valley versus a rural area with poor schools and high unemployment could substantially impact opportunities and future earnings.
- As John goes through elementary school, test scores and aptitude tests will be used to further refine projections.
- If John’s parents wish to place him in a private school, they can work with the company to determine the impact that will make to the projections and issue additional shares to help cover the expense.
- As John decides on universities to apply to and majors to consider, the company may arrange for career counseling or mentorship to help him make the best decisions possible. As the company’s primary responsibility is to optimize John’s earnings, it will use its resources and call on investors to assist as much as possible to ensure that John is producing as much money as possible throughout his entire life. While the company can’t make John’s decisions for him, they can help him make informed decisions.
- When John is accepted to a university, a special update is released by the company, based on the school selected and the major that John picked. Additional shares of stock are issued to cover the cost of tuition, and a financing package is put together - this can be covered purely by the sale of the new shares or a loan that factors in the future sale of these shares.
- Special updates are issued by the company for any life event that could impact current or future earnings. These events could be anything from failing a test to starting a job or developing a health issue. These updates and the quarterly analysis and projections will continue for the rest of John’s life.
- As John starts to earn money, a predefined percentage is collected by the company; some of this will cover operating expenses, some will pay for life insurance or supplemental health insurance to ensure that John remains healthy, some may be held for future investments (such as training & education) and the rest will be given back to the investors as a dividend. This percentage would apply to all earnings, not just wages - so if John makes a profit on an investment, for example, the same percentage would apply.
- If John wants to do something that could enhance his earnings, he can request funds from the company to cover expenses. The company will create a new projection for what happens if the request is approved (and John succeeds), and based on that, determine if it’s a good use of the investors' money. For example, if John wants to start a business, he would present the business plan to the company, and they would determine if it makes sense; they can then either release funds they are holding or issue new shares based on the updated projections. This would allow John to raise funds by letting people invest in him directly. Of course, if the business fails, the value of his stock would drop substantially, and investors would likely be facing a significant loss.
- If John gets a promotion, fired, or leaves to take a new job, special updates would be sent out, as well as for life events that could impact earnings or future decisions, such as marriage or divorce, having a child, or changes to John’s personal finances. If John’s spending habits change, debts change, or other changes occur that could indicate increased or decreased stability, investors will need to be aware of the potential impact to make informed decisions.
- When John retires, any money the company still holds for training and education will be returned to the investors as a special dividend.
- Upon John’s death, any insurance policies will be cashed in, the company liquidated, and all funds given to the investors.
For John, this arrangement provides funds to invest in his future as well as contacts and connections to help his career; for investors, this provides a way to put money into people that they believe have potential. If you were to invest in the next Elon Musk, the returns could be massive. If you invest in someone that typically works minimum wage jobs, the returns are likely non-existent. For those that show potential, it could give them greater opportunities than they would otherwise have.
From a technology perspective, these “shares” could be traded on a traditional exchange or traded in a more distributed fashion as tokens created by smart contracts using some variety of blockchain technology with a number of exchanges involved.
This system is, of course, problematic in a wide variety of ways; it binds children from birth to a system that they have no choice but to participate in, it exposes a great deal of information to the public - from health to credit to past wages. Of course, the privacy expectations of modern society are largely incompatible with this system. It also creates odd and potentially dangerous incentives. Decisions on hiring, firing, and promotions could all be tainted by personal profit motivations. If the exchange allows options trading, this becomes even worse - say a manager in need of quick money shorts the shares of one of their employees and fires them? An unexpected loss of income would drive the value of the shares down, allowing the manager to make a quick profit, and employees could be fired (or promoted) just so their manager can make some extra money. The updates, analysis, and projections could also be used during hiring, filtering out otherwise qualified candidates because of something on their record or being seen as unlikely to succeed if they’ve exceeded projections - meaning they are at the limit of what an algorithm thinks they can achieve. I could easily keep going.
This is, as I noted above, capitalism taken to a logical extreme - applying the dynamics of the stock market to individuals. A system that provides benefit, though also burden. A system that can open doors, and also close them. A system that would almost certainly exacerbate socioeconomic divisions. A system that aids those with wealthy friends far more than those without. But also a system that provides a route for seeing a person with potential, and providing them with additional resources.
Like most of the Insane Ideas series, this really shouldn’t exist, but it’s interesting to think about.