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The Ponzi Career

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Re: The Ponzi Career

#71

Post by 0x4d464d48 »

lifeisstillgood wrote: post #63

Is it just me, but isn't an Income Share Agreement ... taxes? Is this just a failure of government to supply the upfront investment in its citizens so that they pay enough tax in ten years?

"Is it just me, but isn't an Income Share Agreement ... taxes?"

No. Its profit sharing akin to how companies do so by issuing dividend paying shares.

So far as the government is concerned theyre just looking out for their most important stake holders, wealthy individuals and monied interests, by keeping taxes extremelly low. Universities being underfunded to the point they need to raise tuition to the point where students need to take on crushing debt is a byproduct of that.

Re: The Ponzi Career

#72

Post by prox »

tjs8rj wrote: post #66
mattzito wrote: post #14

There’s literally nothing in this article that you couldn’t replace “token” or “coin” with “contract” or “membership” and have it work exactly the same. The idea of selling contracts against future income is interesting but putting the blockchain here is yet another solution in search of a problem.

I’m usually in total agreement about blockchain just being stuffed anywhere, but observationally, there must be a good reason why blockchain shows up in these situations so often. There’s definitely the hype factor, but blockchain does have value in that it’s reasonably trusted by average people (perhaps unlike signing a contract everytime you wanted to purchase a piece of a creator - coins gamify it), and it’s easy…

Author mentions the ponzi scheme, and quite right. As long as the general trust is there and the investments are on the up and up you’re fine.

But the insidiousness is once you’re in, you’re in. Once you bought 4000 Tupperware to resell (insert any pyramid scheme here) , you can’t find fault in it, and when it crashes you’re burned.

I don’t want to bash blockchain, there might be interesting use cases, but I haven’t seen it yet in it’s current implementations.

Re: The Ponzi Career

#73

Post by ghaff »

danans wrote: post #54
bradleyjg wrote: post #48

Earlier quoted context omitted.

The difference isn’t the collateral, a personal loan like a credit card is unsecured. It’s how you calculate the payment. In a loan it doesn’t matter how much money I make, I owe what I owe. In the proposed equity arrangement I owe a percentage of my income. If I don’t make anything, I don’t owe anything. If I’m the next Musk, I owe billions.

> a personal loan like a credit card is unsecured. That's just another way of saying 0 collateral. > In the proposed equity arrangement I owe a percentage of my income. If I don’t make anything, I don’t owe anything I agree the calculation is different, but I doubt there is a lender that isn't going to demand the return of their principal at the least. Depending on the enforceability of such a contract (questionable…

>I agree the calculation is different, but I doubt there is a lender that isn't going to demand the return of their principal at the least.

You win some, you lose some. Presumably the person/organization making the loan has calculated that the upside pays for the students who end up paying nothing.

To the sibling comment about debt and equity, they're not necessarily as different as some assume. In this case, if I called it debt with a payback schedule based on ability to pay up to some cap, does that make it into something fundamentally different just because it's unusual?

Re: The Ponzi Career

#74

Post by bradleyjg »

ghaff wrote: post #73
danans wrote: post #54

Earlier quoted context omitted.

> a personal loan like a credit card is unsecured. That's just another way of saying 0 collateral. > In the proposed equity arrangement I owe a percentage of my income. If I don’t make anything, I don’t owe anything I agree the calculation is different, but I doubt there is a lender that isn't going to demand the return of their principal at the least. Depending on the enforceability of such a contract (questionable…

>I agree the calculation is different, but I doubt there is a lender that isn't going to demand the return of their principal at the least. You win some, you lose some. Presumably the person/organization making the loan has calculated that the upside pays for the students who end up paying nothing. To the sibling comment about debt and equity, they're not necessarily as different as some assume. In this case, if I ca…

There are hybrids all over the place. Preferred stock is a classic example.

But there’s still a basic framework before you get into the messy middle. Taxonomies are a useful technology, calling everything a loan obscures more than it clarifies.

Re: The Ponzi Career

#75

Post by dave_sid »

ChrisMarshallNY wrote: post #13

I enjoyed the piece. Personally, I want no part of it, but I think it might work well for people who are not me. I've always been "on my own." My life really is a series of watersheds, where I've been the only person to believe in me, before the event, and a whole bunch of folks seemed to believe in me, after the fact. Not a particularly good setup for selling "Chris-Tokens™." Not a bad thing, in the long run. It hur…

You sound like an ideal colleague.

Re: The Ponzi Career

#76

Post by citizenkeen »

gibybo wrote: post #12

If you're interested in this concept, you may enjoy the novel "The Unincorporated Man" which is set in a future where everyone (except the protagonist) has personal shares traded on an open market. It's a bit thick on ideological propaganda of the extreme capitalist/libertarian type, but I found the exploration of the concept fascinating enough to get through most of it.

It launches a decent series with each book having different premises, as well.

Re: The Ponzi Career

#77

Post by ghaff »

bradleyjg wrote: post #74
ghaff wrote: post #73

Earlier quoted context omitted.

>I agree the calculation is different, but I doubt there is a lender that isn't going to demand the return of their principal at the least. You win some, you lose some. Presumably the person/organization making the loan has calculated that the upside pays for the students who end up paying nothing. To the sibling comment about debt and equity, they're not necessarily as different as some assume. In this case, if I ca…

There are hybrids all over the place. Preferred stock is a classic example. But there’s still a basic framework before you get into the messy middle. Taxonomies are a useful technology, calling everything a loan obscures more than it clarifies.

Also convertibles.

And I don't disagree even though I had a long ago finance professor who hammered on the point that a lot of financial instruments weren't necessarily that distinct from each other just because they have different names. But, yes, we can generalize about the distinct characteristics of normal debt and normal equity.

Re: The Ponzi Career

#78

Post by ChrisMarshallNY »

dave_sid wrote: post #75
ChrisMarshallNY wrote: post #13

I enjoyed the piece. Personally, I want no part of it, but I think it might work well for people who are not me. I've always been "on my own." My life really is a series of watersheds, where I've been the only person to believe in me, before the event, and a whole bunch of folks seemed to believe in me, after the fact. Not a particularly good setup for selling "Chris-Tokens™." Not a bad thing, in the long run. It hur…

You sound like an ideal colleague.

Thanks. I've always thought so, but I have to respect that many others think otherwise.

I'm extremely fortunate, in that I don't really need to "play the game." I'm quite grateful to be in that position.

Re: The Ponzi Career

#79

Post by ChrisMarshallNY »

lisper wrote: post #58
darkhorse13 wrote: post #53

Earlier quoted context omitted.

I had the exact same sentiment. I'm a sucker for these types of reflective, self-deprecating descriptions for oneself. And good for him as well, because I don't doubt his honesty at all.

> I don't doubt his honesty at all. Neither do I. That the mark of a truly great con artist ;-)

:) It would be nice. I'm a bit "on the spectrum," and we don't make very good con artists.

We are, however, often perceived as arrogant, rude and unsympathetic.

Re: The Ponzi Career

#80

Post by stereolambda »

A couple thoughts if we were to "scale" the income-sharing contract concept beyond a novelty:

1. If there is, say, a hundred or even ten possible candidates to pick from, due diligence becomes brutal. Health information, full social media dumps, detailed financial disclosures etc. Also rampant discrimination. If it is unregulated, it's basically what insurance companies would like to be doing but with no limits.

2. If it is for five years and with no big payout at the end, the value of such a contract (via discounted cash flows) is likely pretty low and accordingly would be the funding. Note that LambdaSchool owns the whole "equity" of a person (no splitting into X shares) and gives you a service (at scale) instead of cash, so it probably makes sense for them.

3. It would be fun to see the accounting sorcery possible for shielding and offloading your earnings to other entities, to pay your investors (?)... preferably nothing.

Besides, people, as opposed to companies, are rarely truly profit-maximizing entities. Maybe in the second year your guy decides to be content with a mid-range salary and devote all his time to studying meditation. But hey, theoretically you could try to escape inflation with such a crazy scheme if the interest rates on "real" bonds would stay very low...

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