scepticus

How To 'long Labour'

50 posts in this topic

I was ruminating the other day about how you 'go long labour' in a future characterised by demographically induced labour shortages. I came up with the idea of labour backed bonds in which you invest in a mutual fund that educates young people in a given specialism, and in return these young people promise a %age of their future income for a given period to the fund. Kind of instead of student loans or taxpayer funded education.

In a future constrained more by labour availability than by land or capital shortages, this would likely be the best asset class in which to save. I was thinking like, 'the goldman sachs long AAA United Kingdom PHD medical practitioners 5yr'. That is, the fund invests in the education and training of future medical doctors and takes a percentage of their first 5 years income.

I thought this was a pretty clever idea on my part, but as with all good ideas, turns out someone already thought of it:

http://ftalphaville.ft.com/blog/2010/08/12/313361/teenage-backed-bonds/

" The world of complex financial products can often seem like a bizarre alphabet soup. To many of those outside high finance, securities like CDOs, ABS, RMBS, and CMBS are nothing more than a jumble of letters. And to many of those who remember all too clearly the economic crisis of 2008-2009, these little acronyms sound downright dangerous.

The problem then was bad assets. The solution is good assets.

And Thackeray Walsh knows where they are. They’re everywhere across our vast country, in our schools, our homes, our baseball fields, even our malls. They’re America’s most accomplished teenagers. And the future lies with them.

But many of them need money. They need it to go to the best colleges, get advanced degrees, and become the engines of America’s economic growth.

That’s where TBBs come in.

TBB is shorthand for teenage-backed bond. Thackeray Walsh has pioneered the architecture for TBBs and plans to launch the first one in October 2013.

That debut is called Genius Trust 2013 (GT). Further issuance of TBBs arranged by Thackeray Walsh will be executed under the Genius Trust© name.

How does a TBB work?

As crafted by Thackeray Walsh, TBBs are very similar to student loans, with a few key differences.

One is that the ultimate lender to the student isn’t a bank, it’s an investor.

When GT launches, for instance, the first batch of investors* to purchase the bond will effectively be lending their money to the batch of teenagers backing GT.

In return, the investors will, after a very long grace period, receive a return on their investment. Those payments will come from a share of the teenagers’ earnings, most of whom will be working adults once the grace period is over, in 13 or so years.

The risk of the bond – whether investors will get their money back and reap an attractive return – lies with the teenagers and whether they become productive, high-earning individuals in their late 20s and beyond.

That’s why Thackeray Walsh’s staff of seasoned bankers has rigorously selected for the highest caliber students. These are freshman, sophomores and juniors in high school that have shown they have what it takes to succeed and become driven, prosperous Americans.

*This explanation simplifies the structure, as the investors holding the bond can change over time, especially since we anticipate active trading in its 30-year life."

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Sounds like you want a return to indentured servants. Unfortunately the government has beaten you to it with student loans, which even bankruptcy won't clear.

Edit: I agree that 'long labour', if you can figure out how to do it, is the trade of the quarter century.

Edited by Dorkins

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Sounds like you want a return to indentured servants.

its no different to a graduate tax (current tory proposal I think), a student loan or whatever.

the point is it is arranged by the private sector, for the private sector.

the second point is that before very long the only asset class that will be holding its value is labour. About time too.

and that means people will want to invest in it, and the market should ensure that the young students get a fair price.

[edit: and of course part of the beauty of it is that it introduces a price signal that transmits information about the skills industry actually needs. You want to do underwater basket weaving? That'll be 20% of your income for 20 years then. Why not consider 'electric drivetrain engineering' instead?]

Edited by scepticus

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its no different to a graduate tax (current tory proposal I think), a student loan or whatever.

the point is it is arranged by the private sector, for the private sector.

the second point is that before very long the only asset class that will be holding its value is labour. About time too.

and that means people will want to invest in it, and the market should ensure that the young students get a fair price.

[edit: and of course part of the beauty of it is that it introduces a price signal that transmits information about the skills industry actually needs. You want to do underwater basket weaving? That'll be 20% of your income for 20 years then. Why not consider 'electric drivetrain engineering' instead?]

I already put forward this suggestion on this forum and it met with quite a lot of agreement from those not taking on the risk!

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I already put forward this suggestion on this forum and it met with quite a lot of agreement from those not taking on the risk!

link?

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I showed this thread to my mathematical partner & asked him for an equation we could use to reliably work out the securitization costs of a chipped chav.

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link?

I can't find it. You may be able to. the search function here doesn't seem to pick anything up after 2009!

Anyway - mine was slightly different in that I felt the university should disburse the funds and take the risks...that way they would be incentivised not for drawing people in to do useless things that people want and then repent at their leisure (and it probably would be leisure albeit uncomfortable), but on things that are likely to add value, get a job etc.

Aside from altering the balance of subjects taught, they would also examine the quality of their teaching staffs, their courses and actively incentivised to help with careers etc.

All in all a jolly good half thought through idea.

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I showed this thread to my mathematical partner & asked him for an equation we could use to reliably work out the securitization costs of a chipped chav.

was there one?

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There's too many people working already and not enough jobs. All the economic/environmental/social problem we face are symptoms of over production/consumption. The future is less work.

Is this a practical joke BTW?

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was there one?

He thought so

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All the economic/environmental/social problem we face are symptoms of over production/consumption. The future is less work.

demographics don't support this conclusion. Sure it is true today, but in 10 years, different story.

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Mark Webber did this when he was just breaking into F1. I remember there was a program about it with shots of him practicing on the playstation because he couldn't afford to go to the tracks for real.

Looking back on it, that seems a bit wierd as all the teams have silulators... hmm.

Anyway, if it did it exist and I didn't dream the whole thing I bet if you had put money in you would be doing alright out of it by now.

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Hasn't this already been done?

Bonds, student loans, the current monetary system?

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Hasn't this already been done?

Bonds, student loans, the current monetary system?

Yep.

Nothing wrong with it ofc, provided

1) The people involved are adults.

2) These things collapse on bankrucy.

3) Anyone can create the medium they are to be paid out in.

Almost certainly it's going to be foisted on the ignorant, probably the underaged and tied into them for eternity. All these schemes are merely the powerful with a massive sense of entitlement demanding from strangers their wedge simply for being alive.

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Hasn't this already been done?

Bonds, student loans, the current monetary system?

to some extent yes. the major vehicle for saving for the future has been to loan those saved funds to other people and take their house/land as collateral. This only works in an era of rising land asset prices.

In the future land asset values will fall as the population ages then falls, so land is not a good security for lending. An asset with rising relative value to anything else must be picked. In an ageing society labour is that rising value asset.

However taking human capital as collateral is somewhat more complex than taking land as collateral, but then that is why we have computers, actuaries and banks.

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Almost certainly it's going to be foisted on the ignorant, probably the underaged and tied into them for eternity. All these schemes are merely the powerful with a massive sense of entitlement demanding from strangers their wedge simply for being alive.

yawn

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I was ruminating the other day about how you 'go long labour' in a future characterised by demographically induced labour shortages. I came up with the idea of labour backed bonds in which you invest in a mutual fund that educates young people in a given specialism, and in return these young people promise a %age of their future income for a given period to the fund. Kind of instead of student loans or taxpayer funded education.

In a future constrained more by labour availability than by land or capital shortages, this would likely be the best asset class in which to save. I was thinking like, 'the goldman sachs long AAA United Kingdom PHD medical practitioners 5yr'. That is, the fund invests in the education and training of future medical doctors and takes a percentage of their first 5 years income.

I thought this was a pretty clever idea on my part, but as with all good ideas, turns out someone already thought of it:

http://ftalphaville.ft.com/blog/2010/08/12/313361/teenage-backed-bonds/

" The world of complex financial products can often seem like a bizarre alphabet soup. To many of those outside high finance, securities like CDOs, ABS, RMBS, and CMBS are nothing more than a jumble of letters. And to many of those who remember all too clearly the economic crisis of 2008-2009, these little acronyms sound downright dangerous.

The problem then was bad assets. The solution is good assets.

And Thackeray Walsh knows where they are. They’re everywhere across our vast country, in our schools, our homes, our baseball fields, even our malls. They’re America’s most accomplished teenagers. And the future lies with them.

But many of them need money. They need it to go to the best colleges, get advanced degrees, and become the engines of America’s economic growth.

That’s where TBBs come in.

TBB is shorthand for teenage-backed bond. Thackeray Walsh has pioneered the architecture for TBBs and plans to launch the first one in October 2013.

That debut is called Genius Trust 2013 (GT). Further issuance of TBBs arranged by Thackeray Walsh will be executed under the Genius Trust© name.

How does a TBB work?

As crafted by Thackeray Walsh, TBBs are very similar to student loans, with a few key differences.

One is that the ultimate lender to the student isn’t a bank, it’s an investor.

When GT launches, for instance, the first batch of investors* to purchase the bond will effectively be lending their money to the batch of teenagers backing GT.

In return, the investors will, after a very long grace period, receive a return on their investment. Those payments will come from a share of the teenagers’ earnings, most of whom will be working adults once the grace period is over, in 13 or so years.

The risk of the bond – whether investors will get their money back and reap an attractive return – lies with the teenagers and whether they become productive, high-earning individuals in their late 20s and beyond.

That’s why Thackeray Walsh’s staff of seasoned bankers has rigorously selected for the highest caliber students. These are freshman, sophomores and juniors in high school that have shown they have what it takes to succeed and become driven, prosperous Americans.

*This explanation simplifies the structure, as the investors holding the bond can change over time, especially since we anticipate active trading in its 30-year life."

[/quote

Swell idea,

when the system collapses, instead of chopping heads off the privilege for being naturally exploitative, why not embrace their view of capitalistiim ,let them live, give'm

a hug & securitize their productivity there on [ theft etc] , I'm in.

" the wxnkers elite DNA yield guranteed trust 2020" .

appreciate your post scepticus i used to think banking was deposit/lend , securization is pass the[ occasionally lethal] parcel time.

Securitization a chavs dream, how to get in though?

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That's why Thackeray Walsh's staff of seasoned bankers has rigorously selected for the highest caliber students. These are freshman, sophomores and juniors in high school that have shown they have what it takes to succeed and become driven, prosperous Americans.

I wonder if that sounds a bit like the official description of how they picked mortgages to put into MBSs. The only difference is that the mortgages were capable of going bad straight away, whereas here the investors will have to wait 13 years.

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