How To 'long Labour'

[Injin]

A typical HPC spectrum of knee jerk responses.

What I've outlined is only the free market response to labour shortages.

You guys really are not true free market types are you?

You really need to learn what a free market consists of.

[scepticus]

'Bonded' serfs - traded/bid on the slave markets by the rich Elites.

Do they get 30 lashes a month if they don't 'perform' as expected?

These bastards just get more perverse. Is this a yale, mit or harvard scheme?

that is rubbish. any prospective young student is entirely free to fund their education differently.

its much better that savers and pensioners put their money into the education of an increasingly scarce number of young people than into land, commodity or stock market speculation.

[huw]

[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?]

The same could be achieved with a traditional loan -- differential interest rates for basket weavers and drivetrain engineers.

TBBs may well be a misnomer. They have a lot more in common with an equity stake, than with a bond.

A disadvantage compared to a proper bond is that the "investment" is relatively less incentivised to produce wealth, since the more wealth he creates, the greater his liability becomes. With a regular loan or bond, the finance costs remain constant. Obviously, someone who doesn't expect to do well will prefer the former arrangement ... but is that the kind of person you want to attract into the scheme?

Another potential problem (with any scheme to go "long on labour") is that people can move to a new jurisdiction that doesn't recognise the bonds, or set up one of their own. Imagine if you'd had TBBs on Americans in 1776

[Injin]

that is rubbish. any prospective young student is entirely free to fund their education differently.

are they free to start any profession that they like without getting a licence?

its much better that savers and pensioners put their money into the education of an increasingly scarce number of young people than into land, commodity or stock market speculation.

Not in saving stuff up for later then?

Why all the guilt?

[scepticus]

The same could be achieved with a traditional loan -- differential interest rates for basket weavers and drivetrain engineers.

TBBs may well be a misnomer. They have a lot more in common with an equity stake, than with a bond.

[/quite]

yes, exactly.

A disadvantage compared to a proper bond is that the "investment" is relatively less incentivised to produce wealth, since the more wealth he creates, the greater his liability becomes. With a regular loan or bond, the finance costs remain constant. Obviously, someone who doesn't expect to do well will prefer the former arrangement ... but is that the kind of person you want to attract into the scheme?

the same is true of buying equity on the FTSE in an IPO.

also you presume that a young go-getter, having drawn down an initial loan to get through 3 years of a BSc, wouldn't want to draw down another 40 grand 6 years later to do an MBA, or, god forbid, buy a house.

but yes, there would need to be some deal whereby the contribution to the fund is capped at an upper level, so, 15% of earnings up to the average for all labour assets in the fund. So if you outperform the other assets then you keep the extra.

Another potential problem (with any scheme to go "long on labour") is that people can move to a new jurisdiction that doesn't recognise the bonds, or set up one of their own. Imagine if you'd had TBBs on Americans in 1776

I imagine you'd sign up to a penalty clause. In that sense it would be no different to doing a runner abroad to avoid debt. And presumbly most corporate employers would require you to authorise a check with the various labour bond firms before signing you up.

[Harry Sacks]

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

Sure, the "demographics" indicate chaos.

[scepticus]

Sure, the "demographics" indicate chaos.

that depends how markets, politicians and the people respond to them.

I feel there is a limit to the amount of chaos that can be caused by a preponderance of 80 year old ladies.

[huw]

the same is true of buying equity on the FTSE in an IPO.

With the difference that the extraction of dividends isn't likely to affect the motivation of most of the assets ... plant, salaried employees, business models etc. can be expected to perform the same before and after the IPO. The company's original owners might be demotivated by the dilution of their stake, but then investors in a corporate IPO presumably understand that the life-long commitment of the founders is not part of the deal.

And presumbly most corporate employers would require you to authorise a check with the various labour bond firms before signing you up.

Maybe, though we're talking about the creme-de-la-creme here, who's to say they'll need corporate employers?

Also, I suspect there would be employers and jurisdictions where competitive advantage trumps doing the right thing by an employee's equity-owner.

[scepticus]

Maybe, though we're talking about the creme-de-la-creme here, who's to say they'll need corporate employers?

I'm talking about the whole labour spectrum. The linked article restricted itself to high flyers. For the lower echelons - their wages will still rise relative to land and capital so they still remain a good investment - its just that more of them can be funded for a given initial investment, so although they earn less there is more of them.

[scepticus]

With the difference that the extraction of dividends isn't likely to affect the motivation of most of the assets

oh but it does. Thats why so many more firms now are ex-dividend than 30 years ago. Agency effects at work here, stock options incentivise management to maximise share price not dividend income.

[Tiger Woods?]

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?]

Really? I doubt it. What it will mean is that individuals and institutions with capital will claim even more of the productivity of the unwashed masses.

[(Blizzard)]

Machines. With an excess of slave labour there is less incentive to mechanise.

There are many jobs that could already be replaced by machines, and will be soon.

Also, A T-1000 would make a great care assistant.

[JimSkank]

I suspect you are being deliberately provocative here Scepticus.

The scheme would be a massive massive success in its first few years, and investors would greedily trade their labour bonds. Those students hand-picked to receive payouts would go on to make millions for themselves and their investors, re-investing their money themselves in labour bonds. Leverage would naturally be introduced and people would build up buy-to-work empires. The cost of education would rise exhorbitantly pricing many young children out as the greed phase kicks in. Perhaps these dissafected young children may frequent a website, labourpricecrash.com, as they are faced with signing away 50% of their future income in order to gain a substandard education.

It is actually the logical next step, ann d neatly draws parallels as above whilst showing the inevitable shortcomings in capitalism in this f*cked up world. If you created the product, of course my rational decision, would be to invest.

[Meat Puppet]

Am I missing something here? I thought the world's population is likely to keep increasing until 2050 or so when it will hit 9 billion. Won't immigration be the preferred solution to any labour shortage?

Also, as others have mentioned machines will continue to become more productive and some entrepreneur is sure to try his hand at cloning in the future.

[Laura]

Can I short slaves, in anticipation of them bidding for freedom?

Hacking off their lower limbs gives guaranteed results

[Sourman]

I'm glad the wolf has come out at last. Another predator on human misery... sorry "investor".

[The Spaniard]

link?

http://www.housepricecrash.co.uk/forum/index.php?showtopic=144774&st=18

[porca misèria]

Hacking off their lower limbs gives guaranteed results

Interesting. Is there a link where I can view your practical demo thereof?

[Laura]

No there isn't PM, sorry. - I'm behaving myself this lifetime

[Saberu]

Scepticus you are once again proving you live in a land of your own, and what pray tell will these trained people end up doing?

Seeing as our government prefers using immigrants for most new job positions which are only a fraction of the jobs our country needed to begin with as most manufacturing has gone to Asia.

Incidentally Asia is a pretty good place for jobs for young people these days, I'm sure they'd rather go there than be your slave.

[okaycuckoo]

Scepticus you are once again proving you live in a land of your own

Denninger:

Students in California have a proposal. Rather than charging tuition, they'd like public universities in California to take 5% of their salary for the first twenty years following graduation (for incomes between $30,000 and $200,000). Essentially, rather than taking on debt students would like to sell equity in their future earnings. This means students who make more money after graduation will subsidise lower-earning peers.

So there are things to like about this sort of proposal. But there are things to dislike too. One of the dislikes will undoubtedly be that colleges will immediately try to find someone (like, for example, JP Morgan) to securitize up and risk-shift this off the school itself, destroying the direct link between educational outcomes and college funding.

In order for me to support such a scheme the ability to break that link would have to be prohibited in some form or fashion. I doubt very much that any such prohibition would either be put forward or would stick if it were. Instead, what I suspect is that this sort of "wild scheme" would become just another way to try to extend the educational debt ponzi which is showing increasing signs of stress indicative of impending detonation.

http://market-ticker.org/akcs-www?post=204583

[scepticus]

Denninger:

Students in California have a proposal. Rather than charging tuition, they'd like public universities in California to take 5% of their salary for the first twenty years following graduation (for incomes between $30,000 and $200,000). Essentially, rather than taking on debt students would like to sell equity in their future earnings. This means students who make more money after graduation will subsidise lower-earning peers.

So there are things to like about this sort of proposal. But there are things to dislike too. One of the dislikes will undoubtedly be that colleges will immediately try to find someone (like, for example, JP Morgan) to securitize up and risk-shift this off the school itself, destroying the direct link between educational outcomes and college funding.

In order for me to support such a scheme the ability to break that link would have to be prohibited in some form or fashion. I doubt very much that any such prohibition would either be put forward or would stick if it were. Instead, what I suspect is that this sort of "wild scheme" would become just another way to try to extend the educational debt ponzi which is showing increasing signs of stress indicative of impending detonation.

http://market-ticker.org/akcs-www?post=204583

Thanks matey, good find!

For sure these assets would get securitised.